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Expanding Your Food and Beverage Business with Online Retail

Expanding Your Food and Beverage Business with Online Retail

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Expanding Your Food and Beverage Business with Online Retail

May 24, 2022

John McCurdy
A graph showing increasing sales numbers.

Online shopping has come a long way from its humble beginnings back before the “dot-com bubble” burst. While trusted names like eBay and Amazon have weathered the years and remain dominant players, many more were mere flashes in the pan and lost to time. For instance, the fantastic failure of WebVan proved that while purchasing food and beverage products online was definitely appealing to customers, the service was difficult to pull off in practice.

Today, however, the story is different—what was once a novel way to buy goods is now a staple of our economies, and food and beverage businesses are dialing in their approaches to online retail and nailing the execution to great success. The numbers speak for themselves—findings published by ReportLinker had the global online food and beverage market at $31.25 billion at the end of 2021, with a compound annual growth rate (CAGR) of 23.2% and a projection to reach nearly $67 billion by 2025.

As a food and beverage manufacturer, you know that this growth represents opportunity, and that keeping pace with your competitors will require exploring how you can cut a slice of this pie for your business. Read this post to understand online retail in the food and beverage industry at a higher level, as well as how your company can capitalize on increasing consumer demand via this channel.

Online Sales in the Food and Beverage Industry: 4 Main Varieties

Your first step in venturing into the food and beverage online retail landscape will be to learn about the four forms it takes in the modern marketplace. While not all are relevant to your company as a manufacturer of food and beverage products, knowing that each of these outlets constitutes a portion of the dollar figures referenced above is necessary for a complete understanding of the space.

  • First, there is the click-and-collect model, whereby consumers select and purchase items online via a retailer’s website and then pick up their order curbside at a physical store location. Walmart+ is one of the leaders in this area, and they have helped push the proliferation of micro-fulfillment centers to manage fulfillment via automated means.

  • Next, there’s retail grocery delivery, which Amazon has held a near-monopoly over since its purchase of the Whole Foods chain back in 2017 and continues to expand as other brands flock to the platform. As of this writing, customers can purchase shelf-stable items and enable auto-deliveries via Amazon.com or use Amazon Fresh to schedule same-day deliveries of perishable food and beverage items.

  • Concierge services, led by the highly visible Instacart service, are another form of food and beverage online retail. These third-party operators allow users to create their shopping list and specify brand preferences, and then a “shopper” (either a full-service independent contractor or part-time, in-store employee of the third party entity) picks the items from the shelves and conducts or coordinates delivery.

  • Finally, there’s direct-to-consumer online sales, which is just what it sounds like—online sales fulfilled by the manufacturer and delivered to consumers’ homes. Establishing this channel for your business can be quite resource-intensive, as it entails significant investment and marketing, but it is also cuts out any intermediaries who might otherwise eat into profits.

$67

billion projected valuation for online food and beverage sales in 2025

Online Retail Options and Best Practices for Food and Beverage Manufacturers

With both click-and-collect and concierge services geared toward providing only “last-mile” fulfillment once products have reached retail, that leaves retail grocery delivery and direct-to-consumer models on the table for businesses like yours to consider. Several important steps are involved before your company can enter either arena.

Forming a cohesive online sales strategy should precede any other procedures on this front—you have to know which channel you’re going to focus on, as well as which team members within your organization will lead the charge. If no one on your staff has experience in the space, you may need to consider hiring individuals who can optimize your efforts with their expertise.

If your company chooses retail grocery delivery as an avenue to pursue, you’ll need to decide between a first-party or third-party relationship for order fulfillment. Typically, the first-party setup is better for larger manufacturers, as they can benefit from the relationship with Amazon and take a more “hands-off” approach. For smaller brands, though, a third-party arrangement is typically better, as distribution can be outsourced (or, if preferred, executed entirely by the manufacturer).

For those businesses that choose to create a direct-to-consumer outlet for their food and beverage goods, there are even more questions to be answered and changes in order. They need to maximize flexibility and organizational agility, drive traffic to their online storefront to generate sales and devote time and money to building out a fulfillment network.

Two further matters to take into account are the pricing structures and appeal of your digital “store shelf.” Online shoppers are much more likely to select discounted multipacks of the items they buy when they’re using online retail for their food and beverage shopping, as purchasing individual units is far more costly and inefficient. Likewise, your online product listings—whether they’re on your own digital storefront or Amazon—should be rich with detail and imagery and ideally offer interactive elements like reviews and coupons.

Setting the Technological Foundation for a Successful Foray into Online Sales

We’ve already covered many aspects of the preparatory process for a food and beverage manufacturer looking to get involved in the online side of sales. But there’s one more subject that must be discussed, and that’s your organization’s tech stack and business software.

If the words “digital transformation” are at all familiar to you, you’re on the right track—you might think of it more along the lines of “going paperless,” but regardless of the terminology, it’s vital in today’s world. This is an initiative that many food and beverage companies are undertaking with an aim to prepare for the future and be ready to maximize their results.

The idea is to create a holistic approach to technology with purpose-built solutions, and it’s absolutely vital if you’re planning an online retail launch. For example, if you want to be able to align your production, supply chain, financials and marketing using one platform and a “single source of truth” in terms of your data, you’ll absolutely want an industry-specific enterprise resource planning (ERP) system.

This software can act as the brains behind all your operations, especially if you choose an advanced offering like our own Aptean Food & Beverage ERP. It doesn’t stop there, though—we also offer Aptean Pay and Aptean EDI, which are essential for food and beverage manufacturers who need to be able to accept orders, process digital payments, manage inventory and coordinate fulfillment effectively.

There’s still more to love, too, with our extensive track record of more than 1,000 successful implementations to date, lightweight cloud deployments and 99.9% uptime or better. Aptean also strives to act as a partner to each and every client, collaborating on a timeline and overall plan for rollout and providing support and advice on best practices every step of the way.

So, if you’re ready to learn more about how Aptean Food & Beverage ERP can open up your online sales opportunities, reach out to us today. You can also schedule a personalized demo to see the solution in action.

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