Business News

Free Roadside Samples With Your Groceries: How Manufacturers Are Coming To Walmart's On-line Customers

Cure Hydration was picked up by major retailers during the pandemic. With no in-store demos, it had to find creative ways to get its fruit-flavored electrolyte beverages into shopping carts.

Cure hydration

The happy break from Cure Hydration came at an odd time.

Amazon-owned Walmart, CVS, and Whole Foods carried the startup's fruit-flavored hydration powder during the pandemic. However, boxes and packets of the electrolyte drink were often left in the back of stores as busy workers tried to replenish the shelves with high-demand items such as hand sanitizer and paper towels.

The main seller, offering free samples at sporting events like triathlons or after class in gyms, stalled. Customers didn't discover the brand when shopping online or didn't see the brand as they raced down the aisles on trips to the store.

Cure Hydration's founder and CEO, Lauren Picasso, therefore opted for a different strategy to get their products into the shopping baskets: free samples tucked away in Walmart's roadside pick-up orders.

"As an emerging brand, we wanted to find a way to reach customers who knew they weren't browsing stores as often as they used to," she said.

She said the samples increased sales, cost less than in-store demonstrations, and were easier to scale to around 1,000 stores.

Add a sample to the list of pandemic-related changes that may persist. As more grocery shoppers use roadside pickup and delivery, consumer goods companies have had to experiment with new ways to get their products in front of people. Large retailers are trying to capitalize on rising demand by charging brands for access to their customers and data they've gathered about their preferences – while delighting customers with freebies.

The Walmart + home screen on a laptop in Brooklyn, New York on Wednesday, November 18, 2020.

Gabby Jones | Bloomberg | Getty Images

An opportunity to make money

For years, consumer goods companies have been paying retailers for prime real estate in stores that help them grab customer attention – like end caps, a product display at the end of an aisle. That equation has changed as more shoppers check their boxed purchases in a store's parking lot after ordering them online.

Online grocery sales in the US rose 54% in 2020 and are projected to exceed $ 100 billion for the first time this year, according to eMarketer. The research firm said these habits will last the pandemic as shoppers see it as a more convenient way to shop even after vaccination. By next year, eMarketer expects more than half of the US population will be online grocery shoppers. It is estimated that online grocery sales will account for 11.2% of total U.S. grocery sales by 2023.

Walmart's US e-commerce sales increased 79% year over year in the past fiscal year. This is due to food orders but has not yet made a profit.

Sampling is an opportunity for Walmart to make money. The retailer started a collection and delivery sampling program in 2014, but it's gaining attention as more customer traffic shifts to the parking lot. The retailer charges businesses when their product is added to a curb or delivery order.

Walmart is looking for new sources of income as it creates additional costs associated with online ordering, such as buying and selling items online. B. Picking grocery orders from the shelves and shipping purchases to customers. At a recent investor meeting, Doug McMillon, CEO of Walmart, said he wanted to use his reach as the world's largest retailer to grow other businesses, including advertising. He said it wants to monetize the data it collects on buyers.

A worker delivers groceries to a customer's vehicle outside of a Walmart Inc. store in Amsterdam, New York on Friday, May 15, 2020.

Angus Mordant | Bloomberg via Getty Images

Brands of all sizes

Even the big brands are taking note. General Mills has increased the number of samples paid for roadside collection at retailers like Walmart, Kroger and Target.

Jay Picconatto, director of General Mills Commerce Marketing, said sampling at grocery collection "is something we wouldn't even have touched two years ago or 18 months ago." But when retail traffic collapsed last spring and retailers restricted the in-store demos, the company leaned forward aggressively.

For example, some Walmart shoppers may have received a sample of Old El Paso taco seasoning with recipe cards revolving around Cinco de Mayo. Walmart handed out its Annie & # 39; s Fruit Snacks and Bunny Grahams at a Walmart drive-in movie event.

"Then we found, hey, it works and we actually like what happens," he said. As more shoppers pick up groceries from the roadside, he said, "It's a place where we want to keep playing."

Alvis Washington, Walmart's vice president of marketing, store design, innovation and experience, said its sampling program can help brands connect with the right customers. Personalization of the samples a customer receives is an important goal.

It can also be used to build customer loyalty with Walmart, Washington said. Some of its store parking lots have been turned into drive-in theaters and trick-or-treating sites. A special Mother's Day event was held at a store near headquarters in Arkansas. It lit the sky above several stores with a drone show while on vacation.

At each event, the participants were surprised with a bag of samples. Washington said the company plans to roll this out to other Walmart and Sam & # 39; s Club stores. He described it as a "triple win" – making Walmart a more attractive shopping destination, providing a fun activity for customers, and enabling suppliers to "bring their new and innovative products to customers".

He said Walmart could start charging an insertion fee for the pouch bags, as it does with its roadside sample collection business model, and the companies would cover the cost of the products.

Walmart also tested a welcome box for customers who join Walmart +, the subscription service that launched this fall. Each contains a Walmart + branded shopping bag and product samples. He said the retailer is expanding the program and plans to tailor the box more closely to customer preferences in the future.

Cure Hydration founder and CEO Lauren Picasso had to find creative ways to get the company's fruit-flavored products into shoppers' baskets due to the pandemic.

Source: Cure Hydration

More for the money

Cure Hydration's Picasso said the new approaches to product discovery are simpler and cheaper. On a good day, she said, an in-store demo gave out about 300 samples – which cost about 50 cents per sample, including the fee for reserving space in a store and filling it. She said the cost of including a sample in a roadside pick-up order or a pouch bag varies by retailer, but is typically between 10 and 30 cents each.

"It's much more economical to get into people's hands in other ways," she said.

Picasso said the company is retesting demo stations in some Whole Foods stores with a pandemic. Each pack is individually wrapped and users can pick up a powder stick and branded bottled water so they can safely try the product at home.

For other foods and beverages, however, she said the "ick" factor could outlast the pandemic as shoppers remain germ-conscious and don't want to eat a chopped up granola bar.

Additionally, retailers are becoming increasingly sophisticated, allowing companies to add samples to some roadside pick-up orders, rather than others, based on a customer's purchase history – a more focused approach than relying on the right strangers to come over and pick up a sample.

General Mills will continue to pay for shop displays, Picconatto said. However, he said the pandemic has changed "how we think about the balance between in-store levers and online levers" – especially as e-commerce accounts for a higher percentage of total sales.

"Ultimately, what is really important to us is getting on that shopping list," he said.

Related Articles