Forget checkout counters: Search is king in online confectionery sales

In both markets, online confectionery growth is significantly outperforming that of physical stores and multipack formats dominate the so-called ‘First Page’ search result returns.

While in 2014 only 1% of US grocery sales were online, this will rise to 5% by 2018 and 10% very soon after. Barriers are falling as online delivery models mature and consumers are willing to try online grocery, according to recent webinars on US and UK candy and confectionery online sales broadcast by Clavis Insight, a provider of cloud-based e-commerce intelligence.

In the UK, meanwhile, the total online grocery market is worth in excess of £8bn and is growing at 20% annually, according to the organization. Total online UK confectionery sales exceed £100m and online confectionery sales are up 30% year-on-year.

Environment matters​

Online sales and retailing in brick and mortar stores are completely different environments for confectionery makers and success in off-line sales does not automatically translate into thriving online sales.

One of the main differences is different consumer exposure to confectionery products, as consumers in real stores usually have multiple opportunities to add products to their baskets in the main aisle and in the checkout counter, while in the virtual shopping world consumers need to seek out sweet purchases actively.

Katherine Wilson, director of marketing insights at Clavis Insight, said: “Checkout location is gone from online, where you really only have that main candy aisle, more in a catalogue format. You are seeing a list view and are looking at a product one at a time, instead of in-store where you have that whole shelf to consider and look at​.”

Performance indicators​

Clavis Insight recommends that confectionery makers approach managing their online presence by focusing on the online fundamentals, especially on four Key Performance Indicators (KPIs) - collectively known as the Clavis Insight Index (CI²​):

• Availability: is the product in stock and available for sale?
• Search rank: Can shoppers find your product based on category keywords?
• Image presence: Does the online product listing contain a key brand image?
• Content integrity: Is key product information present and correct on product landing pages?

Successful or poor implementation of the KPIs can make or break sales in the online medium.

“What we see a lot of times is that the largest offline brands are not necessarily poised for success. We do see that with Cadbury in the UK where it is the number 1 UK chocolate brand, but it is not breaking into the top 10 chocolate brands on our list. Kit Kat is really leading the way instead, with very strong availability and content [integrity]​,” Wilson noted.

With regard to the type of candy orders fulfilled online, big sizes still dominate the supply side.

“The multipack format is getting preferential treatment. Single-serve is not shipping at any of these retailers [as] the economics do not work right now. We have this rule of thumb … a $15 price per pound is what really makes shipping viable and profitable for consumers. Candy does not really make that cutoff in a lot of cases, so that is one of our real barriers, but look for that to change​,” said Wilson.

Ferrero dominates on US Amazon​

A comparison of search results for chocolate products on the Amazon.com online retail platform in February revealed that Ferrero was winning for search on Amazon.com, followed by Sharffen Berger, Ghirardelli, Hershey’s Kisses and Dove.

Ghirardelli also wins four of the six first returns for ‘dark chocolate’ search in Amazon, creating a strong visual dominance on the search results page.

As regards Amazon.com search returns for non-chocolate brands, smaller brands were able to capitalize on their online presence. YummyEarth had the highest percentage of their portfolio returning on the first page of search returns, followed by Skittles, Wonka, Haribo. Albanese Confectionery and Werther’s shared the fifth spot. 

“Search is the new shelf. About 30% of Amazon shoppers are clicking beyond the first page of search results So if you are not returning on the first page of search term results, you are essentially not in distribution for those shoppers who are shopping via search​” explained Wilson.

Cadbury absent from UK Top 10​

The Clavis Insight analysis of the UK online retail market (Asda, Ocado, Sainsbury’s and Tesco) in February revealed that Kit Kat and Nestlé brands lead the chocolate category across the four UK retailers.

The Top 5 chocolate ranking by CI² ​ranking is led by Kit Kat, followed by Green & Black’s, Lindt, Milkybar and Milka. Interestingly, the number 1 offline brand – Cadbury  – does not appear in the Top 5.

“What is worth noting is the absence of Cadbury," ​said John Neilson, marketing director at Clavis Insight. 

"The no. 1 confectionery brand in the UK is not appearing within the CI² ​Top 10. As we’ve seen in other categories, the offline or bricks and mortar leader within a category does not always translate that performance to online​,” 

In the UK sweets subcategory, Haribo is in a strong position in the UK, followed by Bassets, Werther’s Original, Skittles and Chewits. Haribo is also the leader in the offline market, driving online performance through dominant search across the four analyzed online stores.

The two Clavis Insight webinars can be viewed here: US market and UK market​