How brands attract online food buyers

Cure Hydration’s stroke of luck came at a strange time.

Walmart, CVS and Whole Foods, owned by Amazon, began transporting the start-up’s fruit-flavored hydration powder during the pandemic. Still, electrolyte boxes and packages often stayed in the back of stores while busy employees tried to replenish shelves with high-demand items, such as hand sanitizer and paper towels. Its main sales driver – offering free samples at sporting events like triathlons or after classes in fitness studios – has stopped. Customers were not discovering the brand when shopping online or did not see it as they passed through the aisles on their way to the store.

So instead, Cure Hydration’s founder and CEO, Lauren Picasso, decided to try another strategy for putting her products in customers’ baskets: Free samples saved in Walmart’s sidewalk collection orders.

“As an emerging brand, we wanted to find a way to get ahead of customers knowing that they were no longer browsing the stores as they used to,” she said.

She said the samples increased sales, costing less and scaling more easily in about 1,000 stores.

Add sampling to the list of pandemic-related changes that may persist. As more food buyers use pickup and delivery on the sidewalk, packaged consumer goods companies have had to experiment with new ways to present their products to people. Major retailers are trying to capitalize on increasing demand by charging brands for access to their customers and the data they have collected on their preferences – while enchanting customers with gifts.

For years, packaged consumer goods companies have paid retailers for top-tier real estate in stores that helped them get consumers’ attention – like protective caps, a display of products at the end of a corridor. That equation has changed as more shoppers recover their bagged purchases in a store’s parking lot after ordering them online.

Online food sales in the U.S. grew 54% in 2020 and are expected to exceed $ 100 billion for the first time this year, according to eMarketer. The market research firm said these habits will outlast the pandemic because customers see it as a more convenient way to shop, even after being vaccinated. Next year, eMarketer expects more than half of the U.S. population to be an online food buyer. In 2023, online food sales are estimated to represent 11.2% of total food sales in the United States.

Walmart’s e-commerce sales in the U.S. grew 79% in the past fiscal year compared to the previous year, driven by supermarket orders, but have yet to make a profit.

Sampling is an opportunity to make money for Walmart. The retailer started a collection and delivery sampling program in 2014, but is receiving more attention as more customer traffic moves to the parking lot. The retailer charges companies when their product is added to a delivery or sidewalk order.

Walmart is looking for new revenue streams as it reconciles the additional costs that come with online ordering, such as taking grocery orders off the shelf and sending purchases to customers. At a recent investor meeting, Walmart CEO Doug McMillon said he wants to use his reach as the world’s largest retailer to expand other businesses, including advertising. He said he wants to monetize the data he collects about buyers.

Even the big brands are realizing it. General Mills increased the number of samples it paid to place on sidewalk collection orders at retailers, including Walmart, Kroger and Target.

Jay Picconatto, director of trade brand experience at General Mills, said sampling in food collection “is something we wouldn’t have touched two years or 18 months ago.” Still, as store traffic plummeted last spring and retailers limited in-store demonstrations, he said the company had leaned aggressively.

For example, some Walmart buyers may have received a sample of Old El Paso taco seasoning with recipe cards near Cinco de Mayo. Walmart distributed its Annie’s and Bunny Grahams fruit snacks at a Walmart drive-in movie event.

“So we found out, hey, it works and we really like what’s going on,” he said. With more buyers picking up groceries on the sidewalk, he said, “It’s a place we want to keep playing.”

Alvis Washington, Walmart’s vice president of marketing, store design, innovation and experience, said his sampling program can help brands connect with the right customers. Customizing the samples that a customer receives is a fundamental objective.

It can also be used to deepen customer loyalty to Walmart, Washington said. He transformed some of his parking lots into drive-in cinemas and trick or treat sites. At a store near his Arkansas headquarters, there was a special Mother’s Day event. He lit up the sky above several stores for a holiday drone show.

At each event, participants were surprised with a free gift bag with samples. Washington said the company wants to expand this into more Walmart and Sam’s Club stores. He described this as a “triple win” – making Walmart a more attractive shopping destination, offering a fun activity for customers and creating an opportunity for suppliers to “introduce their new and innovative products to customers”.

He said Walmart could start charging an insertion fee for the gift bags, as it does with its business model for sampling on the sidewalk, along with companies covering the cost of products.

Walmart also tested a welcome box for customers joining Walmart +, its subscription service launched in the fall. Each includes a Walmart + bag and product samples. He said the retailer is expanding the program and plans to adapt the box more to customer preferences in the future.

Picasso said that new approaches to stimulate product discovery are easier and more economical. On a good day, she said that a demonstration at the store distributed about 300 samples – which cost about 50 cents per sample, including the reservation fee for store space and staff. She said the cost of including a sample in a sidewalk or gift bag collection order varies by retailer, but typically ranges from 10 to 30 cents each.

“It ends up being much more economical to get into people’s hands in other ways,” she said.

Picasso said the company is testing demo stations again at some Whole Foods stores, with a pandemic turnaround. Each packet of powder is individually packaged and people can pick up an energy stick and a bottle of branded water, so they can safely try the product at home.

For other foods and beverages, however, she said the “ick” factor could outlast the pandemic, as consumers remain aware of the germs and don’t want to eat a chopped granola bar.

In addition, she said, retailers are becoming more sophisticated and allowing companies to add samples to some collection orders on the sidewalk rather than others based on the customer’s purchase history – a more targeted approach than trusting certain strangers to pass by. and take a sample.

General Mills will continue to pay for store windows, Picconatto said. But, he said the pandemic has changed “the way we think about the balance between store levers and online levers” – particularly because e-commerce drives a larger percentage of their overall sales.

“What really matters is getting on that shopping list,” he said.