E-Commerce Category Leadership – When New Meets Old

This is a story that integrates the old (old school buyer/supplier relationships) with the new (Digital shopping).
Let’s start with the old:
The ways that suppliers used to go to market with buyers that was not very effective. It wasn’t so long ago that I was a retail buyer, running the Baking & Spices Category at Sam’s Club. However, some of the principles that my supplier partners brought to the table back in 2008 seemed like they could have used some refreshing. Picture the following story and I expect to hear a chorus of “Amen’s” because I know you’ve seen it / done it this way…

A supplier would come to a meeting with me armed with a great powerpoint presentation that contained some Nielsen or IRI data (or NPD etc). That syndicated data would be so sliced and diced that it was virtually unrecognizable from its intended format. The end result was that every time I looked at a supplier presentation, their brand was either #1 or #2 in the category/ sub-category. It didn’t matter whether it was 18th in market share and not growing, I was shown some version of the data that placed the brand on the medal stand. The implication? “Buy my brand in order to grow your business.”

My initial reaction (and those of most of my colleagues in merchandising who had similar conversations) was skepticism at best, cynicism at worst. Either way, it did little to help me make a decision about a brand and nothing to help me make a decision about the category. I lamented to one of my colleagues one day: “don’t they realize that I don’t care about brands, I care about the category?!” That statement wasn’t entirely true. Of course I cared about brands. However, I only cared about BRANDS so long as buying them helped grow my CATEGORY. I was goaled on growing total category sales and a myopic view only at a brand level did not give me insights into the category. Most assortment decisions in brick & mortar retail are zero sum and buying one brand would require cutting another. Repeatedly I wished that I had more category level insights and activation plans.

This is why Category Management is so important. Good retailers and brands are looking at the business from the perspective of the total category. They are partnering together on insights, strategies, and tactics that can affect the category rather than a narrow focused decision just at a brand level. This is the only way to stand out. Category Management is changing rapidly to capitalize on this changing landscape and has moved beyond just creating POGs.

Now for the new…

E-Commerce and Digital. When I had the opportunity to transfer to Walmart’s E-Commerce division in San Bruno, CA from Bentonville, I was incredibly excited to learn the intricacies of a new channel. I assumed it would be a tour of duty and I would eventually go someplace else in Walmart after having checked the box for having digital experience. Wow, was I naïve thinking that I’d be done learning E-Comm in 2 years.

Now more than 5 years later, I have a different perspective. I realized that E-Commerce is the only growing channel of distribution in the US. I also realized that, just like Alice discovered in Wonderland, the rabbit hole goes incredibly deep. There are so many nuances that are unique to E-Commerce that don’t have any equivalent in brick & mortar (e.g. ratings & reviews, product detail pages, buy box, etc). It doesn’t stop there! With voice shopping, stores with no registers, explosive growth of the click & collect channel integrating brick & mortar with e-commerce, digital is going to be a fascinating place to be for years to come.

So where does that leave us now? As you know, the Category Management Association (CMA) and The Partnering Group (TPG) have been the industry leaders for decades in category management. Recently, we have connected the old and new concepts that I described above. With the growth of the e-commerce channel coupled with the need to go to market not just at a brand level but at a category level, jointly created what is known in the industry as E-Commerce Category Leadership (ECL). This program integrates the key digital principles of E-Commerce with the movement towards focusing on retailer/supplier partnerships to grow the entire category, and it is taking the industry by storm!

ECL creates the process, tools, and resources required for retailers and suppliers to jointly develop growth plans that create engaging shopper experiences in their digital channels. The objectives of ECL are to:

  • Foster collaborative e-commerce growth plans among Retailers and Suppliers
  • Accelerate use of new e-commerce data, technology, analytics, & research
  • Design improved shopper experiences via digital marketing campaigns and e-commerce content
  • Define organizational, talent development, and cultural requirements

We have numerous ongoing pilots with retailers and manufacturers in launching ECL across the industry. Furthermore, we are holding a training session in Bentonville, AR on September 12 to help participants understand how to optimize their E-Commerce category leadership with their trading partners. Contact me for additional information about ECL and register here for our ECL Training Course.

Authors: Kenji Gjovig, Partner, E-Commerce & Digital