E-commerce chocolate

Hershey is winning in the digital space. Here’s what it does to attract more online shoppers

By Douglas Yu

- Last updated on GMT

Hershey says it's winning in the digital space. Pic: Andy Melton
Hershey says it's winning in the digital space. Pic: Andy Melton

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Hershey has recently released several key strategies it has been implementing to attract more online shoppers as it expects e-commerce penetration for US FMCG to reach mid-single digits in the next five years – more in line with Europe, which is currently at 5.8%.

These strategies are centered around four core pieces: connections, content, convert and community, according to Doug Straton, Hershey’s chief digital commerce officer.

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He said during a recent analyst event that Europe started online grocery shopping ahead of the US due to its dense population and high competitiveness among local retailers.

“If you look in the UK in particular, which is kind of the leading-edge European market… Tesco launched online grocery 18 years ago, and [it’s a] big head start,”​ Straton said, adding that all major retailers across the continent joined the e-commerce space shortly after Tesco went online.

Additionally, he noted 60% of the UK population lives around London, which makes it easier for retailers to do grocery delivery services.

Brick-and-mortar strategies are relevant

The question is when it comes to purchasing sweets and snacks online, can retail strategies in brick-and-mortar stores still be applied?

Hershey’s CEO Michele Buck said many of the company’s capabilities in physical retailers are still relevant and translatable to the digital space.

Hershey Performance

“Think about ‘click and collect’ (consumers order products online and pick up in grocery stores) and the expertise we have in merchandizing where we’ve always partnered with retailers to reinvent front-end, to reinvent different areas of the store, to understand traffic patterns,”​ she said.

The click and collect model is important for Hershey’s business because “a good portion of our portfolio is obviously relying on temperature,”​ noted Straton.

He said, what has been seen over the past couple of years is Hershey’s ability “to either deliver or serve, in some way from a digital perspective, goods that need temperature control in some way shape or form.”

Buck added Hershey’s knowledge about media and having the right product placement are also key to winning in the digital space.

“Consumers are buying larger quantities online… that’s an opportunity to think differently,”​ she said.

Impulse purchase still exists online

The increased online shopping may cause fewer physical trips to grocery stores, but it doesn’t necessarily mean manufacturers are losing their opportunities of capitalizing on consumers’ impulse purchases, according to Straton.

His presentation shows Hershey targets GoPuff, an app-based impulse continence retailer, with instant consumable focused items that are often found in c-stores. While on Amazon and Staple, the company mainly focuses on selling large bags and multi-packs of single serve bars.

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“[GoPuff] is really big on college campuses, and they deliver to you in 30 minutes. Their average order size is around $40 to $45, and their highest traffic period is around midnight to 2 a.m.,”​ said Straton.

To further drive impulse purchases via click and collect model, he added: “… the retailer or the brand could message you and say ‘hey, you’re picking up your order, do you want to add a Reese’s, KitKat or a Hershey bar’?

Many shoppers even run back to the store to buy additional items after picking up their groceries, said Straton.

According to Hershey, the company’s e-commerce model has been financially attractive, and its online share has increased by 250 basis points year-to-date.

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