Executive Briefings

With Amazon Looming, Oreo Maker Dives Deeper Into Online Retail

Mondelez International Inc., trying to adapt as more shoppers buy food outside of traditional grocery stores, is diving deeper into online retail with a holiday-season website that is selling tins of Oreos directly to consumers.

Big food companies, which have dominated the shelves at brick-and-mortar stores for decades, have had mixed results selling products directly in recent years as online retail slowly takes hold in the grocery industry. The holiday Oreo website marks the first time Mondelez will directly handle the supply chain and shipping logistics, without going through a store or online retailer like Amazon.com.

Mondelez created a dedicated e-commerce team last year with a goal of generating $1bn in revenue by 2020. Most of that money will come from customers shifting their purchases online — buying snacks like Triscuits and Toblerone chocolate on Amazon or Wal-Mart’s website, rather that visiting a store. Yet, Mondelez says it can also increase sales with limited-time and seasonal offers directly through its website, selling unique products that customers won’t find elsewhere.

“There’s definitely value in scarcity,” said Arthur Sevilla, global director of e-commerce strategy at the Deerfield, Illinois-based company. “As social media becomes the predominant market value, scarcity drives buzz.”

Mondelez had a holiday website in the U.S. in 2015, and did a direct-to-consumer test in China with Alibaba earlier this year. But in both cases, the company outsourced the logistics, cutting down on profit margins. In the past 18 months, the Mondelez e-commerce team, which includes Amazon veterans, has grown to more than 60 employees from four when it started.

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Big food companies, which have dominated the shelves at brick-and-mortar stores for decades, have had mixed results selling products directly in recent years as online retail slowly takes hold in the grocery industry. The holiday Oreo website marks the first time Mondelez will directly handle the supply chain and shipping logistics, without going through a store or online retailer like Amazon.com.

Mondelez created a dedicated e-commerce team last year with a goal of generating $1bn in revenue by 2020. Most of that money will come from customers shifting their purchases online — buying snacks like Triscuits and Toblerone chocolate on Amazon or Wal-Mart’s website, rather that visiting a store. Yet, Mondelez says it can also increase sales with limited-time and seasonal offers directly through its website, selling unique products that customers won’t find elsewhere.

“There’s definitely value in scarcity,” said Arthur Sevilla, global director of e-commerce strategy at the Deerfield, Illinois-based company. “As social media becomes the predominant market value, scarcity drives buzz.”

Mondelez had a holiday website in the U.S. in 2015, and did a direct-to-consumer test in China with Alibaba earlier this year. But in both cases, the company outsourced the logistics, cutting down on profit margins. In the past 18 months, the Mondelez e-commerce team, which includes Amazon veterans, has grown to more than 60 employees from four when it started.

Read Full Article