Manufacturers of household and personal goods are searching for ways to use social media to target the growing number of consumers buying these products online.
Among the markets where internet shopping has developed fastest, 74% of nappy purchases in South Korea are made on the internet, according to Kantar, a research group.
In Germany, more than 34% of female razors are bought online, according to the GfK research group. But as companies look to social media to nurture sales, manufacturers, including Procter & Gamble (P&G) and Reckitt Benckiser, admit they are still searching for an effective way to use social media as a sales channel.
Alex Tosolini, vice-president of e-business at P&G, the world’s biggest consumer goods maker by sales, told the Financial Times: “More and more people are buying consumer products online.
“However, what nobody’s able to predict is how fast and how big by category the development will be.” He said P&G, which owns established brands, including Olay skin cream and Gillette razors, was putting considerable effort into selling its products through online retailers, including through Facebook, but that it still had a lot to learn. “We say it’s like building a car while driving it,” Tosolini said.
For household and personal products, e-commerce can offer the attractions of low prices and convenience, especially for bulky goods, and manufacturers are already spending a significant portion of their advertising budgets online.
Online sales of consumer products have grown 10%-15% a year since 2008, but in the US they rarely account for more than 5% of any single product category, according to Christophe Moerman, digital director at Kantar.
Tosolini said different forms of e-commerce were developing at different rates across the world, noting that in the grocery sector it was common for UK consumers to buy fresh food online but that such services were rare in the US.
As in other retail sectors, there are high hopes that consumers who socialise on Facebook will also begin to shop there, but such hopes have not yet been realised.
Reckitt Benckiser, the UK household products group, last week launched a product for the first time that will be available to buy only on Facebook — a Cillit Bang liquid soap called All in 1 Dish & Surface.
Stefan Gaa, Reckitt’s marketing director, said the initiative was a pilot that “allows us to interact intimately with our target market, getting almost instant feedback”.
Rakesh Kapoor, the CE of Reckitt Benckiser, told the Financial Times: “Our industry needs to figure out how technology could shape our industry in the future. I don’t think we have that brilliant an idea of how it’s going to happen.”
Procter & Gamble, which is often an industry standard-setter, is testing a variety of ways to sell via Facebook but stressed it was not seeking to become a retailer itself.
Rather than embedding a fully fledged store within Facebook, P&G’s initiatives so far have led consumers to e-commerce sites run by Amazon, Off The Wall and PFS Web. The latter operates an online store that sells only P&G brands, but it is independent of P&G, buys its inventory from it and sets its own prices.
Noting that Facebook enabled personal experiences and “one-to-one” relationships with consumers, Tosolini said: “The future is going back to the past. Our grandparents had a very personal experience with the local store, the butcher, the baker. The human need is the same.”
But he said: “We are still learning. We don’t have the solution. We are testing this with various brands. If you ask me, ‘Are the numbers significant?’, the answer is, ‘No’. The question is — ‘Is it a viable proposition?’ The consumer decides.”
Despite a reported 845-million users — 483-million of them daily users, papers filed for Facebook’s initial public offering showed that the company earned no money from online shopping and it has not disclosed any retail plans.
Source: Business Day
— Additional reporting by April Dembosky in San Francisco
© 2012 The Financial Times Limited