Operations
24 March
Nestlé's center of scale, content studios drive ecommerce efficiency
Nestlé's annual report outlines steps for ecommerce to reach 25% of sales by 2025.
Photo by Prasann Tank on Unsplash
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In 2022, 15.8% of Nestlé's sales came through ecommerce. By 2025, the world's largest food company wants to increase that share to 25%.
While the annual results tell a story, the company's recently-released annual report makes clear that it is the activities taking place across teams and technology that will ultimately push it toward that goal. In 2022, the Gerber and Purina owner prioritized building skills on its teams, focusing on digital shelf execution and advancing analytics.
The report illustrates a balance that the company is striking on the path to its 2025 goal: It is aiming to drive growth of sales across digital channels, while at the same time increasing efficiency in the operations that drive them.
Here are takeaways on this progress in ecommerce from Nestlé’s recently-released 2022 annual report:
Building community
Nestlé is working to build digital skills across the organization. To advance this effort, the Gerber and Purina owner created a global community of 3,000 employees who connect to share best practices, and even challenges. Webinars and trainings have reached 11,000 people across the company.
Perfect shelf execution
Nestlé’s vision for the digital shelf is called “Perfect Shelf Execution.” It measures by market and retailer, and down to the SKU level. With a standardized approach in place, Nestlé said it is able to improve the text, content, ratings and reviews that are major ingredients of success on ecommerce platforms.
Retail media
Nestlé is working to advance retail media, which is a fast-growing form of advertising that places advertising on ecommerce marketplaces, close to the point of purchase. With retail partners, Nestlé is focusing on both how teams work, and driving return on investment.
Amazon center of scale
As channels expand, Nestlé is also creating ways to do “more with less,” the report states. With Amazon, the company created a center of scale, in which the team outsources and automates routine tasks so that teams can focus on tasks that provide the most value.
Analytics are ‘critical’
The ability to use data to gain deeper insight into operations and make changes quickly is of growing importance to businesses. In 2022, expanding this capability was especially important to Nestlé as it navigated “an extremely volatile retail environment and rising costs of raw materials,” the report states.
Nestlé’s analytics activities include a strategic revenue management program, which now covers 95% of its markets. It is also tapping AI and end-to-end analytics on collaboration with customers, product assortment and promotions.
In marketing, the company is investing in proprietary solutions that are being deployed to increase effectiveness of marketing investment.
Nestlé also recently launched a data science hub in Bangalore to track return on investment and predict scenarios for particular channel strategies.
More efficient content
Nestlé said 55% of its media spend is directed to digital platforms. With this, the company has worked to build a more efficient model for creating and optimizing content that is tailored to each platform.
As a result of work to build out this model in 2022, Nestlé now has 37 content studios operating, and has reduced creation costs by 50%.
The company is also using AI to track and adjust the relevance of more than 500,000 digital assets across digital platforms. This produced a 66% improvement in return on ad spend on Meta-owned Facebook and Instagram.
Online recipes
The report highlighted one example of how Nestlé is reaching consumers with content that can be put to use as people prepare products from the company. Online recipe platforms are reaching more than 100 million consumers annually in Latin America.
Receitas Nestle features 20,000 recipes, tutorials and a feature that allows consumers to ask chefs questions. Working with retailers, Nestlé is also driving customers toward shoppable recipes that allow consumers to order ingredients that arrive at their home.
In Brazil, the platform helped to drive a 30% frequency increase in consumption of Nestlé products.
It's an example of how digital commerce can take familiar forms of content, create a more interactive experience, ease the path to a sale. When they enjoy this process, consumers are more likely to seek out recipes again and again.
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Retail Media
8h
Gopuff moves fast on a new retail media approach: Non-endemic ads
The quick commerce marketplace is partnering with Rokt to expand beyond CPG advertising.
(Photo via Gopuff)
In some ways, retail media campaigns function like promotions in a brick-and-mortar store.
With retail media, brands can reach customers with advertising on the websites where shopping is taking place. This proximity to the point of sale provides an opportunity for brands who are already selling within a marketplace to take advantage of opportunities to elevate their position in search results, and stand out from a crowd of listings. This is the same goal that many brands have when they purchase highly-trafficked space in a store. But instead of checkout aisle and endcap placements, there are now sponsored products in search results.
But that’s not the end of the story.
The fact that retail media is internet-based and powered by first-party data collected at the purchase level is poised to open up new opportunities to reach consumers that go beyond today’s norms.
One such example is the introduction of non-endemic advertising. This allows brands that aren’t directly selling a product within a marketplace to purchase ad space.
Why would a brand want to advertise in a place where they can’t make a direct sale? The thinking goes like this: The marketplaces have the audience, and the data on them that allows for precise targeting. They can be places to learn about a new product, just as much as they can be a place to buy.
One early example of the recognition of the opportunity in non-endemic advertising arrived this month. The quick delivery marketplace Gopuff partnered with ecommerce technology company Rokt to enable brands outside the CPG category to advertise on Gopuff’s app.
Under the hood, the companies are combining machine learning technology from Rokt that is designed to present relevant offers to customers with a Gopuff audience that is made up of Gen Zers and millennials, engaged and curious about trying new brands.
The partnership will enable advertisers to target customer segments by demographic and location. Customers will also receive offers to try new brands, such as Hulu, AdoreMe and Noom.
What sets this advertising approach apart will be the consumer categories where it is focused. Typically, ads on Gopuff are focused around the convenience store items already available on the app. Now, shoppers will see other kinds of products in the mix, and they will click through to checkout pages that are outside Gopuff if they are interested in buying. This also has the potential to change how advertisers approach media spend. It means everyone from a sporting goods brand to a car company can now consider Gopuff as they plan. They must also consider how these channels work together as a whole.
"We are thrilled to partner with Gopuff and enhance its ad business, helping it move beyond the CPG category," said Elizabeth Buchanan, CCO of Rokt, in a statement. "By delivering relevant offers to Gopuff users, Rokt will help Gopuff Ads' brand partners across all categories create more meaningful customer connections and drive incremental sales."
The partnership underscores how retail media networks have three key building blocks for digital advertising: They’re a destination that people visit with an intent to shop, they have the audience that brands want to reach and they have data that can help to reach the right consumers.
It points to how ecommerce marketplaces can not only become the new store, but also emerge as ad networks like Facebook and Google before them. It’s a big reason why retail media networks have exploded over the last year, and why growth is forecast to continue to accelerate.
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