Online Baby Products: #1 Gateway to eCommerce Success

December 3, 2015
Keith Anderson
Written By
Keith Anderson

The birth of a baby can also be the birth of a new way of shopping. When new parents have a child, they often find themselves turning to the eCommerce channel for baby food and baby care products, even if they’ve never been online shoppers before.

That comes through loud and clear in a dunnhumby report released earlier this year that shows baby milk is the #1 product that over-indexes in the grocery baskets of first-time online shoppers1. Here’s the report’s breakdown of the top 10 bestsellers (note that baby food indexes seventh and diapers/nappies comes in 10th)2.

Top 10 Entry Level Categories for New Online Shoppers

BABY MILK 277
Water 140
Spirits 124
Cider 123
Champagne & Sparkling Wine 122
Frozen Dietary Needs 122
BABY FOOD 120
Frozen Pizza 119
Lager 117
DIAPERS/NAPPIES 117
Source: Dunnhumby, The Multichannel Movement: How the Rise of Multichannel Shopping is Changing the Way Consumers Buy (2015)

And that’s just for starters. The dunnhumby research also found that baby food/baby care was the second most popular grocery category for ALL multichannel shoppers3.

The gateway effect

I spoke to Julian Highley, dunnhumby’s Global Director of Customer Knowledge, about the behaviors uncovered by the research. He put it in simple terms: “Across the 14 countries in our Multichannel study, having a baby is a key trigger for people to start shopping online for their groceries. The dominant reason is convenience. Caring for a baby places high demands on parent, and babies operate on their own schedule.

“Given the choice of hauling a baby into the car, travelling to the supermarket, trying to find a parking space that has the width for you to easily get the child out, going round the store and then doing all this in reverse (all the while the child can be awake, asleep or screaming at the top of their lungs) or logging on and doing a shop in 20 minutes while they are asleep in your own home… which would you choose?”

Highley’s conclusion: “Baby food and baby care products not only appear in the top categories, but are clearly important gateway products for new online shoppers.”

Parents are time-challenged and information-starved

There’s an additional consideration when discussing the time savings of buying baby products online. It’s that baby consumables like formula and diapers are highly replenishable. But, rather than making return trips to the market every week, or even ordering the same items online regularly, parents can enroll in subscription programs like Amazon’s Subscribe & Save that let them “set it and forget it” (perfect for baby food and diapers, for example) and move on to the next parenting challenge or adventure.

The effect is powerful and prolonged: subscription programs lock a household into a given retailer and brand, sometimes for many months—effectively taking them out of the rough-and-tumble of transaction-by-transaction competition within the category. These programs have been so successful that some brick-and-mortar retailers are beginning to emulate them.

Additionally, parents may be information-starved…until they venture online. They find the digital shelf to be a rich source of product information, with sought-after details on ingredients, benefits, safety features and more—all presented on fact-filled (one hopes) product pages. They can also generally access a wide array of ratings and reviews, which allow them to learn from a trusted, like-minded customer group—namely, other parents.

Given the importance of households with children, some retailers have invested in strategic programs targeting them directly. Amazon Family (Amazon Mom in the US), for example, offers additional incentives for parents to buy online, such as 20% discounts on diaper subscriptions.

A remedy to shifting customer loyalties

The subscription programs come at an opportune time, as brand loyalty in the online baby product marketplace has been hard-to-come-by. A recent Nielsen survey showed that 70% of global shoppers say they have switched baby food brands and diaper brands when ordering online4. There are many reasons for the changing preferences of these consumers, a few of which are cited below:

Top 5 Reasons for switching baby food5

  • 40%: Feedback/advice from family and friends
  • 34%: Recommendation of a health expert
  • 23%: Medical reason
  • 21%: Promotion
  • 19%: Internet/blog information

Top 5 Reasons for switching diapers6:

  • 35%: Feedback/advice from family and friends
  • 27%: Lower cost
  • 27%: Promotion
  • 21%: Recommendation of a health expert
  • 21%: Out of stock

The survey also found that shoppers are switching to organic baby food brands. The food value sales of organic brands increased 26% over the past two years in 16 select markets, while non-organic products declined 6%7.

Naturally, some of these reasons for switching are beyond the brands’ control. But others, such as promotions and lower cost, are directly related to how brands and retailers are positioning themselves to consumers and against the competition.

To succeed, these brands and retailers need to be able to monitor competitor pricing and promotions on a continuous basis, and gain actionable insights from this intelligence. It’s one of the levers they can use to maintain their competitive edge in an ever-changing environment.

Successful brands and “new arrivals for the new arrivals”… 

According to Profitero’s Amazon FastMover reports for September, 2015, the following brands led the baby products category:

U.S.8

Brand # of Products in Top 100
Munchkin 12
Medela   7
Dr. Brown’s   4
Graco   4
Philips Avent   4

 

U.K. 9

Brand # of Products in Top 100
Tommee Tippee 20
Fisher-Price   9
First Steps   5
Angelcare   3
Dr. Brown’s Natural Flow   3
Lansinoh   3
The Gro Company   3
VTech Baby   3

 

Still, even with the success of these brands, there is plenty of room for “new arrival” products. In September, there were 13 new arrivals in the top 100 baby products on Amazon in U.S. 10, and 23 in the U.K.11  It points to the vibrancy of the baby products category, and to the fact that as long as savings and convenience can be found online, there will be plenty of room for global growth.

Keith Anderson is the VP of Strategy & Insights at Profitero. He leads the continuous innovation and development of Profitero’s online insights solution for retailers and brands, helping global companies gain a deeper understanding of their online presence to optimize both online and in-store sales.

For more eCommerce insights on the baby category, visit our microsite: The Online Baby Category – A Gateway to eCommerce

 

1https://www.dunnhumby.com/new-research-rise-multichannel-grocery-shopping
2 Ibid
3 Ibid
4 http://www.nielsen.com/us/en/insights/news/2015/baby-bounce-respondents-likely-to-switch-baby-food-and-diaper-brands.html
5 Ibid
6 Ibid
7 Ibid
8 Profitero Amazon FastMovers US Baby, September 2015: http://insights.profitero.com/amazon-fastmovers-reports.html
9 Profitero Amazon FastMovers UK Baby, September 2015: http://insights.profitero.com/amazon-fastmovers-reports.html
10 Profitero Amazon FastMovers US Baby, September 2015: http://insights.profitero.com/amazon-fastmovers-reports.html
11 Profitero Amazon FastMovers UK Baby, September 2015: http://insights.profitero.com/amazon-fastmovers-reports.html
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