Mondelez seeks bigger space on online shelf
E-commerce is now important for the chocolate major as India is identified as a key market to achieve its $1 billion global online sales target by 2020
Cute Martians wiggling their tails have been drawing the attention of chocolate eaters for some time now in India. Lickables, the brand promoted by the animated characters, is just one of the many products that Mondelez, the country's largest chocolate maker, is pushing online besides making it available offline.
With an ambitious target to touch $1 billion (or ~65 billion) in global e-commerce sales by 2020, India, Mondelez says, will be critical to achieving it. Currently, about one per cent of overall sales for Mondelez India comes from the online channel. It hopes to take this number to 5 per cent of overall sales by 2020, implying the task at hand for it is huge.
Some help, Mondelez says, should come from the number of people migrating online to shop. According to an IBM and Kalaari Capital report, the country’s 850 million Internet users and 90 per cent smartphone penetration should help India achieve the $1-trillion value from its digital economy by the year 2025.
With rising Internet penetration in urban and semiurban areas and traditional consumers joining digital natives to shop online, chocolate majors will increasingly see sense in investing there.
“Unlike the offline environment, e-commerce allows us to uniquely identify shoppers, giving us a richness of data that simply isn’t possible from brick and mortar purchases,” says Abhishek Ahluwalia, e-commerce lead, Mondelez India. “That would mean tailoring (chocolate) offerings to better fit needs of individual shoppers,” he says.
According to Mondelez, shopping online also allows people to access brands they are unable to locate in traditional retail outlets, giving companies leeway to push limited edition packs and digitalonly brands, a trend that is slowly but steadily gaining ground in consumer goods.
Personalisation is key
For an impulse category like chocolates, sales messaging and promotions acquires a different colour — away from the larger grocery or beauty segments — which are gaining traction online significantly.
Mondelez, which holds 65 per cent of the nearly ~85 billion domestic chocolate market, has to count on personalisation to make an impact in the e-world. This is different from the strategy used offline where mass media such as television are used to push a largely uniform product across markets.
For its personalisation strategy, Mondelez is turning to international learnings. Its US parent came up with limited edition Trident gum packs last year, which were available in collectible Star Wars bottles.
These containers were exclusively available online and due to the extra value for Star Wars film buffs, did well in terms of sales, officials said.
“Chewing gum is bought off the retail counter. But since Mondelez created a story around it, this became compelling for people to buy,” says Karthik Srinivasan, a Bengaluru-based brand expert.
Srinivasan says that the Indian unit of the company will have to identify brands and sub-brands that can be pushed in online packages easily, with communication that points to its digital exclusivity.
Mondelez is now looking at which brands can fit the bill to attract both digital natives and conventional shoppers. Gifting, an area developed well by Mondelez during festivals, is now becoming its go-to strategy to build online traction. Given the paucity of time, e-commerce has become critical during festivals and long weekends for those seeking a gift for near and dear ones.
Mondelez hopes to raise the bar in the online gifting space given that the sky is the limit here when it comes to exploring product permutations and combinations.
The company in recent months has also tied up with ecommerce majors such as Amazon India, BigBasket and Snapdeal to sell everything from Bournvita Biscuits to Cadbury Dairy Milk and Cadbury Fuse chocolates to the premium Silk Oreo bars and its variants in a bid to lure the online shopper. These products have hit online marketplaces first before making it to retail stores, a strategy Mondelez will pursue aggressively in the future.
Some e-commerce channels are stitching up special alliances too, something that is common between manufacturers and offline retailers. Amazon, for instance, had entered into a tie-up last year with Mondelez to establish a virtual chocolate and sweet store on its platform. The store had Mondelez’s complete list of products with pictures.
Earlier this year, Mondelez had launched a limited edition augmented reality gift box containing Silk chocolates for Valentine’s Day. Once sent, the receiver experienced the box coming alive with animation and a personalised message, powered by an application.
The chocolate major has also recently launched its direct-to-consumer website called cadburygifting.in to create new gifting options for buyers, especially in the corporate gifting space. “We have identified a massive opportunity in the corporate gifting category that we aim to leverage through the web platform,” says Ahluwalia of the foray.
But challenges abound. Brand strategist Ambi Parameswaran says shipping could be an issue for chocolate companies when going online. “Cadbury has had its fair share of product infection problems in the past. And e-commerce could literally open up a new can of worms for the company,” he says in reference to the famous ‘Worms in Chocolate’ controversy that plagued it a decade and a half ago and hit sales as well as brand image.
Mondelez India says its investment in research and development is helping it counter these problems. The company says it reviews product packaging on an on-going basis as part of its quality control norms and is cognizant of online supply-chain needs. Its journey here has just begun.