The past 2.5 years have been a wild ride for the CPG industry—especially food and beverage ecommerce.
Early on in the pandemic, as people around the world acclimated to staying home with above-average disposable income available, demand for doorstep snacks and drinks surged.
For now, it looks like that surge is here to stay.
And consumer demand wasn’t the only thing to spike during the pandemic. A socially distanced community structure also forced people to seek out digital and touchless solutions with more necessity. With the increase of technological fluency came a similar increase in consumer options for engaging with brands in meaningful ways.
That matters, according to the Consumer Brand Association (CBA): “A brand’s ability to provide more transparent and detailed information may translate to greater trust in the ones that provide it.”
Consumers are smarter than ever, and they’re demanding more than the traditional customer-business relationship. As a food and beverage brand, to sustain profitable growth, you have to adapt.
Here’s a look at the current state of consumer packaged goods (CPG) ecommerce, what trends are emerging as a result, and strategies to help you scarf down the competition.
CPG ecommerce: how the pandemic irrevocably changed the game
The CBA keeps a close eye on the happenings of the CPG industry and frequently analyzes economic trends that impact it.
In a recent study, the association found that while the CPG industry saw record-high demand at the start of the pandemic, demand has not slowed. Just the opposite.
Month after month, demand for consumer packaged goods continues to topple its own records. Even as restrictions ease and consumers start to feel some semblance of normalcy, this consistent upward trend indicates that consumer shopping habits have changed—and are clearing the path for a new definition of normal in CPG.
High demand doesn’t necessarily spell success for food and beverage ecommerce brands
When shoppers want the products in your industry, it’s usually something worth celebrating. But current economic headwinds are making it more and more difficult for CPG brands to turn a substantial profit.
Labor shortages are rampant across the supply chain. Coupled with high demand from consumers, this means that the cost to make and ship CPG products has soared.
Wholesale costs, measured by the Bureau of Labor Statistics’ Producer Price Index, are increasing annually. As of June, costs were up 11.3%.
High wholesale costs for goods don’t reflect the full impact of how expensive it is for CPG brands to manufacture products. “Wheat that goes into a host of food products is up 64% and aluminum for packaging has swelled 88%,” according to the CBA.
Moving goods across the country is even more pricey. With diesel fuel costs up at least 60% YOY in summer 2022, combined with a truck driver shortage, brands are shelling out a lot of extra funds to transport products.
This means trouble for consumers’ wallets. Inflation recently surpassed 40-year highs and the federal government raised interest rates for the first time since 2018.
For the time being, consumers are seeking out your products. But you need a strategy in place that helps your brand acquire and keep them—for the long haul.
Plan ahead: upcoming food and beverage ecommerce trends to inform your marketing strategies
The food and beverage CPG industry has changed. That’s a given. And a recession is looming. But change can be a force for good—a fresh opportunity to seize previously unforeseen paths toward growth.
At a time when more sales don’t necessarily equate to increased margins or consumer loyalty, it’s time to figure out a new plan forward—one that brings value to your customers and revenue to your bottom line.
Pay attention to the following forecasted trends in CPG ecommerce to start thinking and planning ahead.
The rise of the omnichannel shopper
According to McKinsey & Company, more than 60 of consumers shop across sales channels—in an omnichannel way. This means brand consistency and cohesiveness are important as a result of the way people shop, which now can be anywhere at any time.
Each touchpoint a shopper encounters from your brand should feel like a natural extension of the one before it.
But that’s easier said than done. A high-quality omnichannel experience requires a brand to meet rising customer expectations in UX, personalization, and delivery speed—all while keeping delivery costs under control.
“The challenge is significant, but consumer-product companies that respond effectively to the changing market environment have an opportunity to gain an advantage over their peers,” reads a report from McKinsey & Company. “Players that fail to make this shift will struggle to remain competitive.”
It all starts with getting to know your customers. Seriously. Talk to them and understand what exactly it is they want or expect from your brand.
Personalized experiences through Customer-First DataTM
Customer-First Data—the combination of zero- and first-party data—is information your customers hand over voluntarily.
The first-party data piece of Customer-First Data is an essential component of audience segmentation, which is usually based on directly observable behavior like purchasing trends, website activity, email and SMS engagement, and customer service interactions.
First-party data can usually provide answers to the following questions—and many more:
- Who has or hasn’t made a purchase?
- How long do they wait before ordering again?
- How much money are they spending, and when, and why?
- Who has a habit of buying only during gift-giving holidays?
- What makes someone unsubscribe?
- Are people more likely to open transactional emails, but more likely to click on promotional or educational ones?
- What makes someone bounce, and what makes them buy?
Your online store, ecommerce customer data platform, and any integrations you use on the back-end (like your 3PL, loyalty program tools, customer review tools, etc.) are a good place to start looking for these kinds of valuable first-party data points.
Klaviyo’s ecommerce platform integrations
Give your marketing team the power to grow your brand’s owned audience, build unparalleled customer experiences, and put customer data (collected with consent!) at the center of your company’s strategic efforts with a unified customer platform like Klaviyo.
Food and beverage CPG brands can also improve personalization efforts by collecting zero-party data from customers about characteristics and preferences like their birthday, flavor preference, typical snacking or drinking routine, and even what problems they’re having with their current diets.
When brands fail to listen to their customers and assume a one-size-fits-all approach, true omnichannel experiences are nearly impossible to deliver.
Transparent and sustainable brand values
Market saturation for CPG brands is high. It seems like a new alternative soda brand pops up weekly. And while options are great for consumers, it’s not as much of a benefit for brands trying to build a loyal base of customers.
Moreover, 60% of consumers have faced an out-of-stock notification in recent months, and only 13% of them waited for the item to become available again. With so many CPG brands to choose from, consumer patience and allegiance are harder to come by.
One way to earn—and hold—their attention is by using your brand values to create connections beyond the transactional relationship.
For CPG brands, sustainability is at the forefront. People are growing increasingly worried about the state of the planet’s climate crisis. In November 2021, 80% of Americans expressed concern about the environment, according to the CBA.
That means “a company’s success and sustainability are inextricably linked,” says John Hewitt, the CBA’s vice president of packaging sustainability.
The amount of information available at someone’s fingertips has only accelerated conscious consumerism. The way a consumer perceives a brand, and their decision to make a purchase (or not) from that brand, is increasingly rooted in social and environmental values.
Health-Ade is on top of it. The kombucha brand not only has a clear stance on doing right by the environment, but also invites their customers to participate in that philosophy. In a recent campaign, the brand pledged to plant a tree for every order placed.
Below the promotion, Health-Ade encourages recipients to learn more about the brand’s dedication to sustainable operations and how they plan on making a positive impact in their community.
Similarly, olive oil brand Brightland proudly highlights how the very foundation of its business benefits the environment.
In this email, Brightland shares how their brand actively replaces water-intensive almond orchards with low-impact, drought-resistant olive production—keeping their love for their home and the environment at the forefront of what they do.
Leaning into retention to offset rising acquisition costs and strengthen brand loyalty
Retention isn’t a strategy that kicks in after someone makes a purchase. It’s a constant consideration from a customer’s first interaction with your brand to their last.
Introduce your customers to a variety of SKUs
For food and beverage brands, retaining customers long-term means exposing them to a wide selection of your products, not just a handful of your bestsellers.
You can encourage product discovery in a few ways:
- Product bundles: Try selling your most popular product in a group with other items that your customers purchase less frequently. It gives your customers the opportunity to have a trial run with something new and gives you a valid reason to reach out about restocking the order—that is, the fan favorite which people are likely to consume more quickly.
- Variety packs: You can also group and sell your products by similar categories, like tropical or berry flavors. When a customer has a chance to try many things instead of just one, they have a better chance of finding something they love. In a post-purchase flow, you can ask the customer, “Which was your favorite?” Then, send them to the product page so they can reorder the one they liked best.
- Mini sample packs: If your product has a higher price point than other brands in your immediate industry, offering a smaller, discounted version of them could help sway those who are hesitant to buy. Whatever the reason—your product is small batch, artisanal, made from local ingredients, handmade, or just flat-out high-quality—small samples allow customers to experiment with flavors without feeling the burden of committing to the full price of your product.
Aloha releases seasonal bundles to entice subscribers to try new products. They provide 6 different bundles, plus a “choose your own adventure” bundle where customers can pick whichever combination of snacks they want.
Aura Bora’s drink flavors skew from flowery to herbaceous, and they offer variety packs that group together like-tastes. Customers can try a 3-pack of all the flavors that lean more earthy and herby, or a 3-pack of the floral and fresh ones.
Instead of calling them mini samples, Haus refers to their smaller product offerings as “starter kits.” It’s a brilliant way to introduce new customers to their flavors or existing customers to ones they haven’t tried yet—while also imparting a sense that these kits will help lay the groundwork for more long-term interest.
Encourage customers to join a subscription
Subscriptions put the process of making repeat purchases on autopilot. You subscribe to receive a certain food or drink every month or every couple of weeks, and poof! Like magic, without fail, it appears at your door—the epitome of convenience.
For brands, subscribers are so much more than reliable sources of revenue. They can function like a niche research and development arm of your CPG business.
Take Magic Spoon, for example. The brand gives subscribers 25% off MSRP on the product, but also offers early access on launches and invitations to participate in product development and feedback. Magic Spoon even goes as far as including some subscribers in taste-testing and positioning brainstorms.
The brilliant brains behind Magic Spoon’s successful program have some additional tips to share:
- Instead of selling your subscription program to customers in post-purchase automations, sell the products and then incorporate messaging that shows how subscribing gets them more of the stuff they love.
- Give shoppers another chance to subscribe within their checkout cart, not just on the product detail page.
- Make subscription onboarding and management a priority. Reinforce the impact and savings of choosing to be part of the subscription program. Provide clear and detailed FAQs on how to self-manage subscriptions to prevent possible churn.
“Retention ultimately comes down to customer trust—trust that you’re going to deliver a high-quality product and trust that you care about treating your customers right,” says Chandler Dutton, director of retention at Magic Spoon.
CPG industry email benchmarks: abandoned carts come out on top
When you’re trying to get a sense of the full picture of something, you have to look at all the pieces that make up the whole to come to a conclusion.
That probably goes without saying. But you should apply the same idea to measuring performance.
If you just looked at your email campaign and flow metrics in a vacuum, without considering the standards of performance in your industry or by business size, you wouldn’t have an accurate gauge of how well—or not well—you’re performing.
Benchmarking your metrics against industry averages is the first step to take when you’re trying to decide what areas of your email program you need to improve.
According to data from Klaviyo, email flows outperform campaigns across all metrics in the food and beverage industry—which means your one-off promotions aren’t likely to drive as much engagement or sales as, say, your welcome flow.
Within flows, abandoned cart email automations take the crown for the most lucrative ones of the bunch. They have the highest average click rate (7.34%), conversion rate (4.03%), and revenue per recipient ($2.60). This means that if you’re in the CPG food and beverage industry, an abandoned cart automation should be at the top of your list to set up and something you’re constantly iterating on to make improvements.
Welcome email flows are a close second, with an average click rate of 6.71%, an average conversion rate of 1.96%, and an average revenue per recipient of $1.25.
Post-purchase email automations have the highest open rate for food and beverage CPG brands, which indicates that replenishment is top of mind for consumers.
CPG industry SMS benchmarks: texts are worth their weight in gold
Email is an established channel. Most marketers know that when implemented correctly, email programs will demonstrate hefty ROIs and generate revenue for their business.
Because SMS is the new kid on the block, it can be harder for brands to decide whether it’s worth the investment. But if you’re in the food and beverage CPG ecommerce industry, implementing an SMS program is a must.
That’s because consumers in this industry not only engage with texts, but use them as a way to fulfill and complete orders. Klaviyo has the data to prove it.
SMS campaigns in the food and beverage industry have the highest conversion rate (0.23%) and revenue per recipient ($0.16) compared to other top industries like health and beauty, automotive, apparel and accessories, home and garden, and more.
And SMS form conversion rates for the industry stand at 3.15%, second only to the health and beauty industry (3.28%).
All that’s to say, you don’t want to sleep on SMS marketing. Your customers use texts to shop. Make it easy for them.
Email and SMS strategies to help you stand out in the CPG industry
Owned channels like email and SMS are high-performance drivers for the food and beverage ecommerce industry—we’ve established that.
But how do you make the most of them? That’s what ultimately matters at the end of the day.
Here are some strategies to help you build an integrated approach to your entire marketing funnel, top to bottom.
Build an audience and collect Customer-First Data via forms
Emails and texts are effective as long as you have people to send them to. So the first step to creating a winning CPG ecommerce strategy is finding people who want to play ball.
You can build an audience base in a couple of different ways: through word of mouth, your organic social channels, paid advertisements, or even in-person events. But one of the most tried-and-true methods is sign-up forms on your website.
Forms not only give consumers a way to tell a brand they’re interested in keeping in touch. They also give you—the brand—an opportunity to learn about the shoppers engaging with your site and scoop up that ever-valuable Customer-First Data.
The traditional pop-up form route is always a safe bet. Use a pop-up form to collect the basics like first name, last name, email address, and potentially phone number if you’re aiming for SMS subscribers as well.
But you can also get creative with it. Take Aura Bora—their sign-up form is anything but traditional.
At first glance, these questions may seem…odd. But they’ve got spunk, and they’re unexpected—and as you get to know the brand and their products more, they make perfect sense. The form also feels like a mini online quiz—a tactic some of the top ecommerce brands are using to reach new engagement and conversion heights.
“Quizzes are force multipliers for an ecommerce brand’s SMS and email marketing,” explains Ben Parr, president and co-founder of Octane AI. “They increase the number of email addresses and phone numbers a brand can collect because engagement rates are significantly higher than pop-ups.”
“They also help brands gather valuable Customer-First Data that they can’t get anywhere else—and this data supercharges SMS and email by hyper-personalizing flows and campaigns,” Parr adds.
Plus, Aura Bora uses a multi-step form to increase the likelihood of getting both an email address and a phone number instead of neither.
Use segments and automations to nurture subscribers after they sign up
Once you have a list of subscribers, the next step is sending them content that is personalized to them and their interests.
Segmentation is the key to providing experiences that feel 1:1, even if the automation you’re sending out is going out to thousands of people. You can segment by things like:
- Demographic information
- Purchase history
- Preferred communication channel (email vs. SMS)
- Website activity
- Source of opt-in
- Purchase quantity and value
That’s just naming a few. In Klaviyo, you can group your audience by almost any criteria you can think of—as long as you have the data—and tack on as many attributes as you want until you segment your audience exactly to your liking.
Once you’ve segmented your subscribers into their respective buckets, you can set up automations that are triggered to send when they take certain actions.
A welcome series engages with your subscribers after they’ve signed up to your list. This could be something as simple as a thank-you message for existing customers, or you could include a discount code if you’re sending it to subscribers who’ve never made a purchase.
Aura Bora’s welcome email is a perfect example. They include a 15% discount code for subscribers who’ve never made a purchase and provide information about their brand—their values and the quality of their products.
The brand value section isn’t just for show—it’s a way to educate new subscribers on product information in an effort to inch them closer to purchasing if they’re not quite ready.
Abandoned cart series
Klaviyo’s email benchmark data highlights the importance of an abandoned cart series for brands in the food and beverage CPG industry. After a welcome series, it should be at the top of your implementation list.
You can segment your audience to your heart’s desire, so that every subscriber receives a message that’s relevant to their shopping activity.
If you know certain segments of your audience prefer to engage with texts, you can even add SMS into your abandoned cart flow.
Better Brand makes it incredibly easy for their subscribers to return to their carts and place their bagel order. The brand reaffirms why someone would connect with their mission in the first place and then includes a link to the subscriber’s shopping cart.
Better Brand also includes an image of what was left behind, as well as the price of the item. That way, if some time has passed and the customer forgot what they were thinking about ordering, a clear reminder is readily available.
Browse abandonment flows function in a similar way. While expressed interest isn’t as clear from the customer since they only viewed certain pages rather than adding products to their cart, you can still use product-specific user-generated content to encourage subscribers to click through to your site, or cross-sell them on comparable items.
Break down your post-purchase experience from a customer journey perspective
Here’s the thing about consumer packaged goods: you’re going to run out of them. They’re not long-lasting—you use (or, in this case, eat and drink) them up until there’s nothing left.
For brands in the food and beverage industry, this means your customers—if they love your product—could potentially place tons of orders. And that should change the way you think about the post-purchase experience.
First-time purchasers vs. returning customers
The content you send to someone who’s placed their first order should be different than someone who’s placed several.
Lexi Bennett, an email marketing freelancer who specializes in Klaviyo, recently spoke with CPG House about how you can mold your post-purchase experience to different stages of the buyer journey.
“For a first time purchaser, being mindful about the average time it takes them to receive something is key,” Bennett says. “You don’t want to send an email thanking your customer while simultaneously trying to up-sell them to a subscription when they haven’t even received their order yet, much less tried it.”
Stick with a personalized thank-you message to start. Restate your brand values and provide some educational content that imparts valuable information about where you source your ingredients or how you implement sustainable practices—anything that’ll build anticipation for the incoming order.
Brightland choses the educational route. They share the 411 on everything olives—highlighting where certain varietals come from, how they taste, and how customers can weave them into their cooking routines.
Good Meat thanks their customers and details their brand mission in a way that makes them feel like they share in those values—a clever way to put the customer first.
Returning customers have already demonstrated that they’re bought in (literally) to your brand, so reward them for it. Highlight your VIP, loyalty, or referral program, or incentivize returning customers to share user-generated content and reviews.
Hearthstone Farm uses SMS as a specialty channel, giving subscribers early access to a one-time promotion. People who are subscribed to the brand’s texts can shop before anyone else and scoop up the most desirable bundles before they sell out.
Bull & Cleaver outlines all the ways their customers can share their love of air-dried beef snacks—tag the brand on social media, leave a review on their site, or simply recommend the deliciousness to a friend.
Aloha really leans into the refer-a-friend tactic. Their email outlines a promotional rewards program that benefits both the customer and whomever they choose to refer to the brand.
The bottom half of the email clearly lays out the steps, so there’s no confusion about the process.
The timing of your replenishment flows
You likely know your product like the back of your hand, so you’ll know about how long it takes an average person to run out of it.
Cue the replenishment automation.
Once you’ve led with value-add content and you know your customer is about to run out of their snack or beverage, it’s time to send them a personalized notification to restock—via either email or SMS, depending on your customer’s preferences.
And you don’t have to base these triggers on your best guess. There’s software, like Repeat, that’ll do the hard work for you.
With a replenishment automation built just for Klaviyo, Repeat analyzes your customers’ single-purchase behavior, tracks and indexes replenishment intervals on a per-SKU basis, and uses that logic to give your customers a reminder at just the right moment.
This kind of thoughtful, data-powered flexibility makes your automations feel more tailored to your customers and the products they’ve ordered—because no two are the same.
Magic Spoon’s replenishment email copy plays on a known unpleasant experience: beginning to pour yourself a bowl of cereal only to realize there’s hardly enough left for a spoonful. The brand times their email to help customers avoid disaster.
Make reordering a no-brainer
You’ve sent off your replenishment email and your customer is stoked to get it. Mission accomplished, right? Almost—but not quite.
You still want to be mindful of the actual experience your customers will have as they try to place their order from your email or text.
Imagine someone receives an automated message encouraging them to restock the last item or items they bought. It’s not really helpful if the CTA button just brings them back to the homepage of the site. It’s a bit of a hassle—and hassles can dissuade people from placing an order.
A positive reordering experience is:
- Quick and easy
- Customized based on what the customer likes and their unique shopping history
Remember that handy Repeat integration with Klaviyo? You can also use it to power dynamic reorder buttons, banners, and links that take customers directly back to their carts.
These personalized carts not only are pre-filled with items from past purchases, but also have a merchandising section that promotes new product discovery—and you can tack them on to any campaign or automation you like.
Olipop adds this feature to the footer of their emails, so customers always have quick access.
“The ease of including personalized cart links in our campaigns and automations allows us to combine engaging brand content with seamless prompts to reorder, helping us to create messaging that really converts,” says Michelle Paulhus, senior growth marketing and retention manager at Olipop.
Truff opted to add a dynamic banner to their Father’s Day email campaign, just in case customers want to gift and get their own.
Best of all, they work. Like, really work:
- Truff reports 89% higher revenue per session and a 61% higher conversion rate from banners leading back to personalized carts compared to sending customers to their main site.
- Olipop increased revenue per session by 6.9x and achieved a 4.9x increase to their conversion rate.
5 email and SMS examples from food and beverage brands to inspire your next send
Here are 5 additional examples of CPG brands that not only provide valuable, entertaining, and, at times, witty content, but also create email and SMS experiences that convert.
1) Health-Ade uses email to highlight competitive advantages
The language in the email is simple. It definitively establishes two sides of the soda industry: Health-Ade, which stands on the healthy and delicious side, and traditional sodas, which are just sugar mounds in a can.
The email doesn’t bog readers down with lengthy paragraphs explaining why Health-Ade’s soda is better than others. Instead, the copy is direct and succinct—and two very visible CTA buttons make it easy for subscribers to shop good-for-your-gut drinks if they so choose.
2) Yellowbird automatically applies a discount code at checkout via an in-text link
SMS is a very direct and personal channel—much more so than email. So you need to have a good reason to send a text message to your subscriber’s device.
What better than a 40% off sitewide sale? Yellowbird wants to give subscribers the opportunity to find the perfect spring sauce, and they make it incredibly easy to do so. The link within the text applies the discount code automatically at checkout, so shoppers don’t have to search around for a specific promo code as they try to make a purchase.
3) Liquid Death uses their signature brand humor to sell merch
If you’re familiar with this sparkling water brand, then you’ve probably seen one of their many hilarious ads or promotional videos. If not, you don’t have to go far. There’s one at the very top of their homepage.
Liquid Death carries that ironic and joking spirit well through the emails they send to subscribers. This one in particular entices customers to purchase the brand’s specially-made cat toys.
Without missing a beat, Liquid Death crafts email copy that speaks directly to their end customer—in this case, cats.
4) Winc collaborates with other businesses to increase brand adoption
When brands share the same mission—of living a healthy lifestyle, eating clean, or embracing wellness and self care—it makes sense that they would benefit from shared promotions.
Winc partnered with fellow subscription-based brand obé fitness to promote a 30-day free trial of the exercise platform in celebration of a “Wine & Unwind” stretch class obé was hosting. Lifting each other up increased brand awareness for both companies, tapping into the power of two massive audiences instead of just one.
5) Grind uses playful gift guides to share a variety of ways customers can purchase
For Valentine’s Day this year, Grind coffee was all about the bundles. Their email was an interactive questionnaire and funneled subscribers down different product paths based on the attributes of the person they were buying a gift for.
While gift guides are a common promotional tactic, this one feels engaging and like the brand is trying to provide the right gift for different customers.
Prep for the future of CPG ecommerce
CPG ecommerce isn’t what it used to be. The brands that want to occupy the top echelons of success in this industry need to marry product quality with consumer expectations, while also creating exceptional customer experiences along the way.
But the good news is that your customers in the food and beverage industry will always need your products—you provide sustenance, which is necessary compared to material goods.
Using owned marketing channels like email and SMS will help future-proof your business. You’ll own your data and the relationships you create from it. The next step is making sure your tech stack is ready to support whatever growth goals you have in store.
Written by Klaviyo(Author: Emily Riedy and Tess Allen)
Link to Original Blog: https://www.klaviyo.com/blog/cpg-ecommerce-best-practices