In this newest guest post from Profitero’s VP of Strategy & Insights Keith Anderson, we get insider details on why online baby products help create regular online shoppers.
Online Baby Products: the #1 Gateway to eCommerce Success
The birth of a baby can also be the birth of a new way of shopping. When new parents have a child, they often find themselves turning to the ecommerce channel for baby food and baby care products, even if they’ve never been online shoppers before.
That comes through loud and clear in a dunnhumby report released earlier this year that shows baby milk is the #1 product that over-indexes in the grocery baskets of first-time online shoppers. Here’s the breakdown of the top 10 bestsellers (note that baby food indexes seventh and diapers/nappies come in 10th).
And that’s just for starters. The dunnhumby research also found that baby food/baby care was the second most popular grocery category for all multichannel shoppers.
The Gateway Effect
I spoke to Julian Highley, dunnhumby’s Global Director of Customer Knowledge, about the behaviors uncovered by the research. He put it in simple terms: “Across the 14 countries in our multichannel study, having a baby is a key trigger for people to start shopping online for their groceries. The dominant reason is convenience. Caring for a baby places high demands on parents, and babies operate on their own schedule.
“Given the choice of hauling a baby into the car, travelling to the supermarket, trying to find a parking space the width for you to easily get the child out, going around the store and then doing all this in reverse (all the while, the child can be awake, asleep, or screaming at the top of their lungs) or logging on and doing a shop in 20 minutes while they are asleep in your own home… Which would you choose?”
Highley’s conclusion: “Baby food and baby care products not only appear in the top categories, but are also clearly important gateway products for new online shoppers.”
Parents Are Time-challenged and Information-starved
There’s an additional consideration when discussing the time savings of buying baby products online. It’s that baby consumables like formula and diapers are highly replenishable. But rather than making return trips to the market every week or even ordering the same items online regularly, parents can enroll in subscription programs like Amazon’s Subscribe & Save that let them “set it and forget it” (perfect for baby food and diapers, for example) and move on to the next parenting challenge or adventure.
The effect is powerful and prolonged: subscription programs lock a household into a given retailer and brand, sometimes for many months—effectively taking them out of the rough-and-tumble of transaction-by-transaction competition within the category. These programs have been so successful that some brick-and-mortar retailers are beginning to emulate them.
Additionally, parents may be information starved… until they venture online. They find the digital shelf to be a rich source of product information, with sought after details on ingredients, benefits, and safety features all presented on fact-filled (one hopes) product pages. They can also generally access a wide array of ratings and reviews, which allow them to learn from a trusted, like-minded customer group—namely, other parents.
Given the importance of households with children, some retailers have invested in strategic programs targeting them directly. Amazon Family (Amazon Mom in the U.S.), for example, offers additional incentives for parents to buy online, such as 20% discounts on diaper subscriptions.
A Remedy to Shifting Customer Loyalties
The subscription programs come at an opportune time, as brand loyalty in the online baby product marketplace has been hard to come by. A recent Nielsen survey showed that 70% of global shoppers say they have switched baby food brands and diaper brands when ordering online. There are many reasons for the changing preferences of these consumers, a few of which are cited below:
Top 5 Reasons for switching baby food:
- 40%: Feedback/advice from family and friends
- 34%: Recommendation of a health expert
- 23%: Medical reason
- 21%: Promotion
- 19%: Internet/blog information
Top 5 Reasons for switching diapers:
- 35%: Feedback/advice from family and friends
- 27%: Lower cost
- 27%: Promotion
- 21%: Recommendation of a health expert
- 21%: Out of stock
The survey also found that shoppers are switching to organic baby food brands. The food value sales of organic brands increased 26% over the past two years in 16 select markets, while non-organic products declined 6%.
Naturally, some of these reasons for switching are beyond brands’ control. But others, such as promotions and lower cost, are directly related to how brands and retailers are positioning themselves to consumers and against the competition.
To succeed, these brands and retailers need to be able to monitor competitor pricing and promotions on a continuous basis, and gain actionable insights from this intelligence. It’s one of the levers they can use to maintain their competitive edge in an ever-changing environment.
Successful Brands and “New Arrivals for the New Arrivals”…
According to Profitero’s Amazon FastMover reports for September of 2015, the following brands led the baby products category in the U.S.:
And in the U.K.:
Still, even with the success of these brands, there is plenty of room for “new arrival” products. In September, there were 13 new arrivals in the top 100 baby products on Amazon in U.S., and 23 in the U.K. It points to the vibrancy of the baby products category, and to the fact that as long as savings and convenience can be found online, there will be plenty of room for global growth.
Keith Anderson leads the continuous innovation and development of Profitero’s online insights solution for retailers and brands, helping global companies gain a deeper understanding of their online presence to optimize both online and in-store sales.