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Sana Commerce

Food and Beverage E-Commerce Demand is Now 2X That of Other Industries


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Demand for online food and beverage sales is staggering in both B2B and B2C, but the challenges associated with executing e-commerce in such a highly regulated industry mean that — despite this call-to-action — online sales make up only 2% of total food and beverage revenue.

A Lens on B2B: Food and Beverage E-Commerce Demand

If you think slow e-commerce revenue growth in the food and beverage industry is fine for now (while businesses work out the kinks of offering an online sales channel), consider the fact that 37% of B2B buyers in the sector want to make over 90% or all of their purchases online. This is 2X the percentage reported by the other industries we surveyed in our latest research report, and 20% more than the average reported by U.S. B2B buyers overall.

 

 

And this isn’t just an isolated trend for B2B customers in the industry.

Flip-Side: What This Demand Looks Like in B2C

In B2C, as many as 59% of U.S. food and beverage consumers are ready to shift to online purchasing: 11% more than was reported just last year. '

This tells us that the demand for e-commerce is growing even in spite of how few organizations in the industry are offering an online sales channel, and in spite of how challenging it currently is to efficiently sell food and beverages online.

Understanding these challenges, however, B2C buyers are also leaning into an e-commerce approach that’s melded with offline elements: click-and-collect. Currently, with food and beverage e-commerce capability being so sub-par, 38% of consumers are also seeking a partially-online experience to bridge the gap, looking to take advantage of click-and-collect options as soon as possible.

So, if the demand for both B2B and B2C e-commerce in the industry is so staggering, why aren’t food and beverage organizations selling more online?

The E-Commerce Opportunity: A 5-Year Look Ahead

As we’ve mentioned, e-commerce sales make up only 2% of food and beverage sales revenue. But this data does not reflect the staggering growth the industry has seen to this point (or will continue to see) in e-commerce. This mere 2% is a result of online grocery sales more than tripling in the past five years.

In the next five years, today’s number is expected to quadruple.

Taking a 10,000 foot-view, the outlook looks something this this: Globally, online sales will make up 15-20% of the sector's overall sales by 2025: 10x more than it did in 2016.
Thus, it’s clear that the outlook is overwhelmingly positive. But hurdles and challenges threaten to stifle this anticipated growth spurt.

What are the Challenges Associated with Food and Beverage E-Commerce?

There are a handful of factors that are essential for food and beverage consumers and B2B buyers.

When buying food, end-consumers focus on:

  • Quality
  • Freshness
  • Nutritional value
  • Price
  • Delivery speed and delivery costs

On the B2B side, organizations look for:

  • Efficiency and speed of fulfillment
  • Streamlined logistics processes
  • Competitive prices
  • Sturdy relationships with vendors and supply chain partners

 

But slow, mostly-offline processes today make all these needs difficult to meet without surging the cost of doing business. With e-commerce, this is no longer as big of an issue, thanks to the efficiency of digital tools and channels. Thus, the first step to addressing these challenges is digitization, and further — automation. Why?

 

 

According to our 2019 Food and Beverage Trend Report:

“An automated and optimized supply chain can remedy your primary logistical pains. This opens up the digital playing field and provides space for more growth and returns.”

This is a great approach to start, but organizations will have the take their strategies even further to keep pace with growing demand.

What Can Businesses Do to Further Capture this E-Commerce Opportunity?

Because many food and beverage businesses still use paper documentation and manual processes, this way of working can often impact speed of processes and fulfillment. It also means an increased risk of mistakes with order entry and more. This translates, eventually, to more costs.

Automation, even in its elementary stages as it’s being leveraged presently, minimizes these error margins. Plus, ERP systems like Microsoft Dynamics (when integrated with your e-commerce experience) are an excellent way to avoid order errors, so this may be a solution to consider if your business is facing this challenge.

Today, organizations “are rapidly adopting alternative fulfillment methods"  for better e-commerce," but this will need to continue (and to be built upon) in order for these businesses to continue to see online success in the industry.

For even more insight into industry trends and digital disruptors in 2019, read our newly released Food and Beverage Trend Report.

 

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