Comment: Deploying eCategory management to improve eCommerce

Published: 10:53:24 on the 21st Aug 2017

Author: Brian Elliott


Brian Elliott, managing partner at Periscope By McKinsey Brian Elliott, managing partner at Periscope® By McKinsey looks at how eCategory management is helping consumer goods companies get serious about online channel management.

Consumer goods companies are learning from traditional eCommerce retailers when it comes to their use of online customer and competitor insights. There is a wealth of ways to mine for value with better understanding of buying patterns, price sensitivity, new competitive product offerings and ways to improve category management for eCommerce channels – in short to improve revenue growth management and online marketing. Having previously lagged behind other sectors with rocketing online sales, consumer goods companies now appear to have reached an eCommerce tipping point.

This summarises some key insights gleaned from a new survey conducted by Periscope® By McKinsey in conjunction with the Consumer Goods Sales & Marketing Summit 2017.

The time is now

eCommerce is now a strategic priority for 91% of companies and a key senior management priority for nearly half. But senior managers beware this gap – interviews confirmed middle management sees it as a higher priority because either their senior management has the priority already or they see that their leading competitors are already making progress – thus 91% vs. 48% gap. The survey also found that for the overwhelming majority of respondents (75%), the journey towards using advanced eCategory management capabilities to inform product assortment, pricing and promotional decision making in online channels is only just beginning – only 22% were already up and running with their initiatives. But in the next year 57% are investing in eCategory management to support fast-paced growth in online market share. So the race is on, but it is just beginning.

Why not before now? When it comes to pursuing their eCategory management ambitions, consumer goods companies face a raft of operational and technical challenges. Getting the right system architecture in place was proving a problem for 50% of those surveyed, while the lack of a fully functioning eCommerce platform and/or the scarcity of reliable data on online shoppers were a barrier for 46%.

Follow the consumer - why eCategory management matters

Digital technology is dramatically changing shopping behaviours and forces consumer goods companies to reinvent their approach to channel management. Evolving consumer needs and expectations was the top reason for 81% of respondents to improve their eCommerce offerings. This was followed by the desire to build a channel for direct customer interaction (45%) and the ability to leverage digital to raise brand awareness or control online representation (42%).

Companies need to rapidly build eCategory management capabilities, that utilise insights from online customers’ behaviours and preferences to drive revenue growth (via pricing, promotions and category innovations) and longer-term brand building (brand awareness, presence, online brand presentation for comparison shopping/online shopper education). Advanced and prescriptive analytics solutions are key technology components for companies to understand and attract the millennial buyer.

Ways to make sure your eCategory management outcomes are measurable

By following the tips outlined below, consumer goods companies will be well positioned to experiment with new models – testing and understanding their impact so they can move fast and continuously improve.  We suggest action in two areas for maximum impact:

  1. Establish a marketing insight foundation
  1. Monetise via revenue growth management

For more details on the research findings, visit Consumer Goods Goes Digital: The Journey to eCategory Management.

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