Before 2020, online shopping most commonly involved buying things like clothing, electronics, or specialty items not found locally. Thanks to the culmination of stay-at-home orders, industry innovations, and changing consumer demands, ecommerce has evolved for good – especially for the food and beverage industry.

This sector saw unmatched growth compared to any other in 2020, with sales increasing 58% year-over year.

Because of the complicated nature associated with shipping temperature-controlled products, both retailers and customers alike have been slow to shift to ecommerce. For many sellers, the logistics of shipping perishables seemed too difficult or costly to even bother. However, thanks to innovations in shipping and ecommerce automation, the tide has turned.

  • Online food and beverage sales for 2022 are expected to exceed $21 billion
  • By 2025, online sales are expected to make up 15-20% of all food and beverage sales, a 10x increase over 2016 numbers
  • Online shopping from grocery retailers has grown 230% year-over-year

Buying essentials like food and beverages from home is both a necessity and a luxury, creating a unique one-two punch of purchasing power other industries don’t share.

This growth couldn’t have happened without significant innovations in the ecommerce space over the last several years. Taking cues from industry leaders, we’ve got 7 tips to help you master your online shopping experience for perishable items.

1. Personalise the experience and share your team’s knowledge

Help inspire customers to buy products they might not have come looking for with personalized recommendations. Invite customers into the fold by showing them popular items that are currently trending, but be sure to also make suggestions based on their unique browsing habits. Customers are more likely to buy suggested products if they’re truly curated to them as an individual. In fact, 80% of customers are more likely to buy from a company that offers personalized experiences.

Using the robust customer browsing and buying data you already have, you can build and optimize recommendations for each customer. You can further tailor these recommendations by product types or customer segments for maximum impact.

While personalized recommendations and the AI that powers them allow you to leverage data you wouldn't otherwise have access to, you shouldn't underestimate the knowledge of your team itself. When it comes to buying food and beverages online, goods are often on the higher end of the scale. Customers aren't just shopping with you for your products, they also want your expertise. You can meet this need by replicating an in-store scenario where customers can ask directly for advice and recommendations.

AI is incredibly valuable, but can only go so far – it can’t compete with the knowledge of a food or drink expert. If you know which accompaniments best complement your goods, let your team use their expertise to ensure these are offered to the customer.

What you can do

Find the balance between personalization via AI or through human insights. Leverage a recommendation engine on-site to find the best possible product suggestions, and diversify suggestions based on parallel categories and products. Marry this offering with personalized service from your team for the best possible experience.

For example, a cheesemonger knows which crackers and chutney are best to accompany each type of cheese, along with the best wine to pair it with. Feed recommendations using a combination of expert advice and AI insights. This will help not only improve average order value (AOV), but customer trust in you and your brand. If they appreciate the pairings you suggest, they are more likely to come back for more.

2. Invest in “win back” communications

Just because a customer has abandoned a cart or not returned for a second purchase, doesn’t mean they’re a lost cause. Setting up some basic email automation to bring back customers or help new leads over the line is an easy win.

Keep in mind that abandoned cart emails perform significantly better than other forms of email marketing: 50% of them are opened and 21% receive a click-through. A further 50% of those who click through ultimately purchase the item, marking a huge opportunity for re-engagement. Getting specific with the content in these emails makes them even more effective.

With food and beverage it simply boils down to timing. Have an abandoned cart email ready? Be extra relevant by scheduling daily just before lunch or dinner. Can you track expiration dates on products or the average consumption rate? A follow-up message at the right time shows an extra level of personalization and care.

What you can do

Sometimes users who abandon an order need something a little extra to help them cross the line. Think carefully when it comes to content. Often it is easy to showcase products as they come – in the packaging. But “factual” is rarely appealing. The key is to add lifestyle imagery to your campaign to sell the culinary dream.

Provide beautiful, engaging imagery to remind customers about the experience they’ll have if they come back to complete a purchase. You can rely on human biology here – our appetites are easily swayed by a whole host of different things including color, textures, smells and presentation. The more you can do to incorporate these in your abandoned cart messaging the better.

3. Experiment to find effective advertising strategies

PPC is a key acquisition channel, with the potential to drive new customers at product and brand level. When it comes to ecommerce, one metric matters above all else: conversion rates. Growing your conversion rates should be the key factor in establishing your advertising strategy. However, it’s important to keep in mind the value of each conversion on your site. If ad clicks and engagement end up costing more than conversions are worth, it’s not an effective strategy.

In other words, if your conversion rate is too low for your product margin, you will lose money on every ad click or view, regardless of how awesome and on-brand your ads are.

Food and beverage retailers should be especially sensitive to these margins. Unless you are a supermarket, your AOV is likely relatively low, especially if you’re an artisan or specialist food & beverage seller. These smaller margins can make it especially hard to get a solid return on ad spend.

Additionally, there are restrictions on advertising alcohol in most countries that prevent you from using advanced techniques such as audience remarketing. This means that – even more than it would ordinarily – literally every conversion counts.

What you can do

Calculate a return-on-ad-spend that aligns with your AOV and product price points to use as a baseline. This is used to compare against your cost per acquisition. More specifically, you will need to work out what your actual average product margin is. For example, 30% is very common for online merchants but it can be anything depending on the vertical.

Next, use this number to work out your baseline Return on Ad Spend (ROAS). In this case, that would be about 400% once you allow for shipping costs and taxes. Then use a ROAS focused bidding model. Most pay-per-click (PPC) platforms support this these days. Start low at around 200% to get the data coming into the accounts. Then work this up to your target after about 6 weeks. You will want to aim for at least double your baseline ROAS, or the highest you achieve in a campaign, before it negatively impacts revenue.

4. Be proactive about compliance and laws

The first step in creating a strategy for shipping perishables is to understand the laws and restrictions around it. These food shipping restrictions generally center around food safety, putting extra emphasis on safe packaging practices.

If you’re shipping food, you can most likely ship freely within your home country. However, shipping food across international borders can be legally complicated. For example, as a result of Brexit, confectionary sales and shipments from mainland Europe to the UK are now heavily taxed and restricted, creating a bevy of issues for UK importers and their European counterparts.

Shipping alcoholic beverages can be even trickier. To ship alcohol internationally, you’ll need to understand the legal restrictions and requirements for the country you’re shipping to, and stay compliant with relevant taxes and tariffs.

Unfortunately, shipping alcohol within the U.S. isn’t always simple either. Many states including Alabama, Arkansas, Delaware, Kentucky, Mississippi, Rhode Island, and Utah have strict guidelines regarding alcohol deliveries.

Additionally, carriers themselves have restrictions about what they can deliver and where. For example, USPS does not ship alcohol. UPS and FedEx require people who ship alcohol to have specific licences and be accepted into their respective alcohol shipping programs.

What you can do

The most effective way to manage and minimize issues and oversight is to automate your processes. Start by creating shipping rules that account for the relevant restrictions within a shipping scenario. These rules can limit which shipping methods a customer sees, add surcharges for packaging, prevent shipments to restricted areas and much more. Shipping rules are totally customizable, meaning that whatever restriction you need to account for, you can.

5. Perfect your packaging

Getting products to customers in good shape is paramount to a positive experience. It’s also a food safety requirement, making it one of the most important factors of your strategy.

The right packaging materials will depend heavily on what exactly you’re shipping.

Common lightweight perishable packaging types include styrofoam boxes, custom styrofoam cut sheets, insulated liners, air-filled insulation liners, and insulated pads. There are also heavier duty packaging options, including glass and insulated containers.

Be sure to consider whether you need to add additional packaging like padding, insulation, watertight plastic bags, or wrapping, all of which protect products from temperature changes.

The type and the level of cold storage materials you’ll need will depend on the packaging you choose. With styrofoam, the thicker the packaging, the less ice or coolant you’ll need. So while using very thick styrofoam might seem appealing, the packaging will come at a higher cost and take up more room in a package.

What you can do

You’ll need to find an optimal compromise between cost and space to decide how to keep items cold. Ice packs and gel coolants are more affordable, and work well for items that should be refrigerated, but not frozen.

Dry ice, however, can keep items frozen for much longer. But shipping with dry ice also means your shipment may be treated as hazardous material, increasing costs and red tape. To avoid the hazardous material headache – and ensure that your shipment can travel by air – keep dry ice contents per package less than the maximum weight of 5.5 lbs.

6. Show delivery dates - and stick to them

Getting shipments to customers on time is even more important when they contain perishables. Carriers recommend (and sometimes require) the transit time for these items take a maximum of 30 hours. To ensure a package’s journey is smooth and predictable, you should include custom delivery dates into your shipping strategy.

Showing delivery dates improves the process in several ways. Most importantly, it communicates clearly to your customer when their package will arrive. This ensures they’re available to receive the package when it arrives, mitigating the chances of a missed or late delivery. Additionally, it gives you a timeline to work off of, helping you prioritize your logistics operations. For an even more curated experience, you may want to offer delivery time slots to your customers.

What you can do

To build a delivery calendar, you’ll need to determine how long each step of your fulfillment process takes. This means you’ll need to nail down lead times, including production times, handling time, and any other factors that affect the timeline. Additionally, you may want to establish cutoff times to account for orders submitted later in the day or during periods where fulfillment is paused. Cutoff times for holiday deliveries are also useful when shown at checkout to drive conversions in customers who want to ensure on-time delivery.

Once again, automation is key. To be able to show accurate delivery dates, each step of the process must also be accurate. This means that the methods offered at checkout must adhere to shipping transit times (e.g. less than 30 hours); consider weekends, holidays, and carrier availability; and rely on accurate lead time information. By automating your delivery dates, each of these factors is taken into account, displaying the most accurate possible delivery date.

7. Minimize mistakes with accurate rates

A less obvious factor in getting deliveries right is ensuring the small details are accurate. To make perishables shipping realistic long-term, you need to charge accurate shipping rates to avoid losing money.

There are many factors that affect shipping rates, and getting each of these factors right is key to showing accurate rates. Typically, ecommerce platforms don’t include native functionality that allows retailers to customize rates on a granular level.

One scenario that might be affected by this lack of flexibility is a retailer shipping a lightweight, but large package. By default, the package’s shipping rate is calculated based on its dead weight. However, this rate could likely be incorrect because of a few factors. First, carriers base their rates on dimensional weight, which accounts for both dimensions and weight. Second, packaging or insulation materials that go in the package aren’t always accounted for, which may return a rate lower than it should be.

Last-mile delivery can also affect the rates you show. The last step of a shipment is often the most costly, often taking up as much as half of the overall shipping charge. The cost of this part of the shipment depends largely on the type of address it’s being delivered to. A residential address carries a surcharge, as it typically requires a carrier to go out of their way and into a neighborhood to deliver the package. A commercial delivery is cheaper because it requires the driver to deliver packages in more densely populated areas, costing them less time and effort.

What you can do

Work with a shipping solution partner that offers tools to increase rating accuracy. Start with address validation. Getting addresses and address types right can affect both the speed and cost of your delivery. Address type validation double checks that the address a customer enters is the type they’ve indicated, whether commercial or residential.

In addition, retailers should rely on dimensional weight rating and be sure to include packaging materials in package weights. By improving accuracy within your shipping process, you’ll lose less money and improve customer satisfaction.

To wrap

Ultimately, the strategy you go with must align with the goals you’ve created. Every food and beverage company is different, with rules and regulations that affect operations, ad spend, shipping costs and much more. However, here is what we consider key catalysts for success in ecommerce for the industry.

1. Create promotions that fit your business model

2. The most common reason for cart abandonment is unexpected costs at checkout

3. Invest in Shipping Rate Management software like ShipperHQ for a smooth user experience

4. Fully utilize the potential of PPC as one of your key acquisition channels. Use a Certified Agency like Fisheye, who specializes in PPC for Ecommerce for maximum growth and ROI

5. Work with a growth focused Ecommerce agency like Fisheye, with experience in perishables to provide continuous support and strategic development

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Need help transforming your business and think Magento and Fisheye could support you? Contact us to see how we can help.