Food makers feel their way towards online future

Tue Jul 1, 2014 1:22am EDT
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By Martinne Geller

PARIS (Reuters) - Grocery manufacturers are struggling to adapt to the online world and need to invest in smarter packaging, presentation and supply chains to reap the long term benefits.

E-commerce accounts for just 3.7 percent of sales for fast-moving items like food, drinks and personal care products, market researcher Kantar Worldpanel says, forecasting a rise to 5 percent by 2016 as supermarkets develop their web sites and online only retailers like Amazon and Ocado take them on.

Greater e-commerce could save money with more targeted marketing, including via social media, and lower product development costs, but industry insiders say manufacturers are put off innovation by the so-far small volumes of goods sold over the internet.

At a recent meeting of the Consumer Goods Forum (CGF) in Paris, Amazon Vice President of Consumables Doug Herrington berated them over the presentation of their goods, saying his firm had to photograph items to show their scale.

"This is a space you should have been a leader in and instead I find we have to innovate on your behalf," he said, noting items often arrived leaking or in unattractive bubble wrap. "The first moment of truth for the customer is not what's on the site, it's what arrives at their home."


Most food makers remain "seriously unprepared for online retailing," said Rabobank analyst John David Roeg saying they would have to expand their product assortments, since online shoppers are more likely to use search terms like "organic yogurt" or "gluten-free bread".   Continued...

An Amazon delivery truck drives in down town Los Angeles, California  May 13,  2014.    REUTERS/Mike Blake