The global digital commerce market is expected to total over $200 billion in 2021, according to research company Kantar,* which represents an increase of more than 27% on last year.
For Unilever, online shopping continues to be a key growth driver. In fact, Covid-19 triggered such huge disruption that, in some markets like the US, we saw many years of growth within three months.
We spoke to Global VP of Digital Commerce Claire Hennah to find out how we’re operating in this fast-paced, ever-changing environment.
How much does digital commerce contribute to our overall sales?
So far this year, digital commerce delivered €5 billion of sales and in quarter three alone grew at 38%. It now accounts for 12% of total company sales.
What has sparked the rapid rise?
In 2020, with more people shopping online due to Covid restrictions, our digital commerce business grew by over 60%.
Covid certainly continues to boost online traffic, especially among baby boomers (those born between 1946 and 1964). A certain amount were already early adopters of online, but the pandemic has pushed more towards the channel. There’s also been an influx of other new user groups, the most obvious being the digital native Gen-Z (those born between 1997 and 2012).
As the channel matures and retailers invest more to make relevant content available and accessible across all demographics, we can reach far more online shoppers than ever before.
Also, new models such as quick commerce (rapid order to delivery time) and social commerce (buying through platforms like Instagram and Pinduoduo) are emerging across the world, with consumer expectations setting the pace for convenience.
How are our brands adapting?
When designing for digital commerce, it’s imperative to keep the consumer experience at the heart of everything we do. Many brands have embraced the changes they needed to make to be unmissable. This is an ongoing journey and dependent on a whole host of elements and approaches according to the different subchannels (pure play or omnichannel) and modalities (delivery models such as click and collect). Each modality has its nuances and keeping these in mind allows our brands to come out on top with the customer algorithms, whether at an Amazon or a Walmart.
One thing’s for certain: having stock available to despatch immediately and an agile supply chain is key to competing across the different business models. That means accurate forecasting is critical, especially when coping with sudden spikes in shopper demand.
Which brands are leading the way?
To really push omni-commerce growth, the UK Foods team created a framework that allows them to make data-driven, consumer-centric decisions to prioritise which products to concentrate on and exactly what we need to do to make the most of each opportunity.
We’ve seen fantastic early results with the best-in-class launch in the US of the Melé skincare range from Beauty & Personal Care. Through a co-creation approach with melanin-rich consumers, this skincare brand has purpose at its heart, coupled with powerful digital commerce content to support its message. Earning organic media coverage and multiple online beauty awards, consumer sentiment speaks for itself with an average of 4.6-star reviews on Target.com.
After identifying a gap in the Turkish market, Yumoş pivoted from a softener brand into a clothes care brand. The team landed a well-executed launch, leveraging various media platforms to reach consumers. The campaign went viral, with Yumoş detergent virtual bundles becoming the best-selling bundle in the FMCG category in Trendyol, the country’s largest digital commerce platform.
In Vietnam, the Dove team truly exemplified the approach of designing specifically for digital commerce with a new face wash product range. They were able to launch in the right demand space at the right time, with fit-for-channel packaging. They optimized live streaming and partnered with over 120 key opinion leaders (KOLs) to promote the launch. Consumer sentiment was positive with 4.9-star reviews, achieving top ranking in Shopee’s ‘face cleanser’ category within four months.
We’ve also seen some great examples from China. For instance, the Comfort team are passionate about helping disadvantaged children in rural areas. To help raise awareness and donations, they teamed up with Viya – a hugely successful online influencer – to host charity sales on BAZAAR for a one-hour live streaming event. Also, Lux has partnered with Alibaba’s Tmall innovation centre. By using consumer insights, the team can test new product innovations before they are launched by optimising a mix of media and sampling. This led to the successful launch of the Lavie, a premium bath and body range.
What upcoming trends do we need to embrace?
In terms of new business models, it’s the two I have already mentioned. Outside China, social commerce is small but developing fast. In quick commerce, our ICNOW (Ice Cream NOW) team has done an incredible job building our presence in this channel, but over the last year the opportunity has spread to every category, which means we can build penetration and share across more brands.
Within our digital commerce landscape, we look to China to indicate the upcoming trends as our most mature market. This year, we saw our China team deliver the first-ever TikTok (Douyin) super brand day. The team elevated the shopping experience by leveraging a mix of KOLs and in-store livestreaming to recruit and engage shoppers. Partnerships with KOLs such as TikTok presenter Professor Liu and celebrities including popular talk show host Hu Lan provided an immersive, enjoyable and unique experience for consumers and highlighted that the growth in social commerce is only set to continue.
Sustainability is key. The channel has huge growth potential, but we need to consider the related impacts in terms of CO2 emissions from more delivery vans and packaging waste. We’re aiming to become an industry leader in this space so that, as the channel grows, we ensure our wider company commitments aren’t undone.
Increasingly, artificial intelligence (AI) and automation are becoming table-stakes. We are re-architecting our technology blueprint to consolidate existing tools and automate core business processes, so we can save to reinvest. We’re also testing AI for content to enhance the quality of our user experience, which in turn will boost sales. In digital commerce, we think in quarters not years, so as we move from start-up to scale-up, integrating digital commerce across the business is key.
What are the biggest obstacles to success?
Being such a rapidly expanding and ever-changing channel naturally brings challenges. However, this also provides many opportunities for us to become true pioneers.
Listening to consumers and building those relationships is a way to stay ahead of the curve. Having the data and insights to drive our decisions is essential, as well as being quick to pivot when, for example, something isn’t working. In digital commerce, you can fail fast, but it’s what you do with that learning that’s critical.
The continuing fragmentation of the landscape and business models means we must be ready to act fast, so we’re adopting new agile methods. We’ve seen some fantastic markets like Canada embrace this way of working to accelerate growth. And we have a new Home Care and Beauty & Personal Care end-to-end Digital Commerce team in the UK, focused on getting our product offerings exactly right.
The whole team’s hard work has delivered amazing results, but we have so much more scope and opportunity. This is an area that will continue to evolve fast. All of which makes it an incredibly exciting time to be working in digital commerce.