E-commerce effort pays dividends at Kellogg

Article courtesy of Food Business News here


Sales teams of consumer-packaged foods companies must be fluent both in retailers’ needs for brick-and-mortar channels and e-commerce as well, said Julie Bowerman, chief global digital customer and consumer experience officer at Kellogg Co., Battle Creek.


While digital and non-digital business had separate buyers in the past at many retailers, the functions increasingly have been integrated, she said. In a Sept. 30 interview with Milling & Baking News, Ms. Bowerman described a major e-commerce strategy developed at Kellogg two years ago. The initiative began paying dividends for the company before 2020 and put Kellogg in a strong position when the coronavirus (COVID-19) hit, she said.


The strategy was launched not long after leadership of Kellogg was assumed by Steven A. Cahillane, chairman, president and chief executive officer. Boosting top-line growth was an early priority identified by Mr. Cahillane, and e-commerce quickly was seen as an avenue for achieving this objective.


“E-commerce was one of the drivers of that overall company growth strategy,” Ms. Bowerman said. “We put in a global e-commerce (strategy), what I call a freedom and a framework type approach. We set a clear vision with clear metrics of what we want to achieve, capabilities we needed to develop. We created a framework that allows the local market to adapt to that based on the dynamics of that market. So, the Latin America e-commerce market looks very different than a Europe market.”


The approach has allowed Kellogg to develop an overarching e-commerce strategy while giving the regional leaders the flexibility and agility to ensure that rigid strategy and analytics are not followed at the expense of quick and successful execution.


“Fast forward to 2020 and COVID hit,” she said. “We had done a lot of the heavy lift already in building those core foundation needs of a healthy e-commerce business. We were able to capitalize on COVID at an accelerated pace.”


In a presentation earlier in September, Kellogg said its e-commerce business nearly doubled as a percentage of global retail sales, to about 6% in the second quarter ended June 30. Additionally, sales growth accelerated as the quarter progressed. Roughly 90% of the company’s global e-commerce sales were generated by its top 20 brands.


Ms. Bowerman identified three areas included in the heavy lifting that made this sales growth possible — talent, setting a strategy and investment. For talent, Kellogg began by creating a corporate team led by Ms. Bowerman.


“We also brought in across our four regions key leaders, a lot of external leaders, candidly, who are relatively new to the company, who had come up in technology and the digital e-commerce space,” she said. “So we really upped our game on talent.”


Central to developing the strategy was identifying core key performance indicators aimed at ensuring that progress was measured appropriately.


“Growth is easy in e-commerce,” she said. “What’s not easy, is how do you grow your share at the pace or better than offline? How do you make sure it’s not dilutive to the P&L? How do you make sure your leading category growth in the markets in which you are participating? How do you make sure your brands are healthy so that they have good search rankings and ratings and reviews? It’s those core KPIs that we consistently measure against.”


Investments included digital shelf analytics tools and training.


“Here’s a good example,” she said. “We just completed a several-months training process with the US sales organization. About 300 people went through an e-commerce fundamentals training. The thinking there is we just need everyone in the organization, not just people with an e-commerce title to be articulate on e-commerce, to be able to talk to a customer, be able to address an e-commerce customer’s needs and speak that language. We continue to make significant investment in the training of our people.”


Elaborating on the importance of training, Ms. Bowerman said a ranking US retailer announced plans about year ago to integrate e-commerce and offline sales.


“Most customers are doing the same,” she said. “If you think about multi-channel customers, multi-channel being on and offline commerce, they have in most cases integrated that line relationship. So it used to be in the early stages of e-commerce grocery, they might be separate buyers. You could have an e-commerce salesperson and a brick-and-mortar salesperson. By and large that doesn’t exist anymore with the multi-channel customers. We need to have one account person or the team of account people be able to work with that buyer and be as articulate in the online world as they are in offline world, if that’s how the retailer operates.”


Kellogg’s divides e-commerce into three pillars — e-retail, business-to-business (B2B) and direct-to-consumer (D2C).


Managers in each region where the company operates are expected to analyze the three pillars and decide where Kellogg “should play,” Ms. Bowerman said.


Retail development, consumer adoption, the competitive landscape and other factors help determine which pillars Kellogg should address with commercial activity and implementation, she said.


“In the US, e-retail is obviously critical, because there is very strong retail development,” she said. “There is strong consumers and shopper adoption. It is growing very fast. So we put a lot of emphasis on that part of the pillar.”


Kellogg also is making a large B2B investment, allowing retailers to migrate from manual ordering processes to digital ordering. The shift allows Kellogg sales teams to focus on customer management and strategic selling rather than the more manual tasks of the sales process, Ms. Bowerman said.


She said digitizing ordering provides the company and customer with further benefits.


“What we’re able to do with that is understand much more robustly the cadence of that retailer’s ordering process — what they order,” she said. “We can help them manage and stock much more easily. Serve new products to them or pricing promotions to them in a much more digitized way.”


While D2C e-commerce is progressing in the United States, it’s not as important to Kellogg as the other pillars.


“It has a role in terms of brand building and brand engagement,” she said.


RXBAR is an example of a brand with a direct-to-consumer platform.


“I wouldn’t say across our entire portfolio would you be able to do that,” Ms. Bowerman said. “We follow the consumer on this to be honest with you. By and large, our consumer doesn’t want to have to go to a separate branded store to buy something I buy every week in my grocery store. That’s not the role of B2C — stock up and replenishment of our core brands and packs. Consumers aren’t shopping that way.”

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