Personalized Promotions in the Direct to Consumer FMCG Sector
What are FMCG products?
Fast-moving consumer goods (FMCG) are products that are sold quickly and at a relatively low cost. These include, for example:
- Packaged foods and beverages.
- OTC drugs.
- Fast fashion.
FMCG industry is going direct to consumer
FMCG brands were traditionally big manufacturers, selling via brick-and-mortar retailers. Nowadays, customers are purchasing more FMCG products online than before and the COVID-19 pandemic has accelerated this shift. Ecommerce is estimated to make up 10% to 12% of global FMCG sales by 2022, according to Nielsen.
Customers tend to turn to DTC brands as they search for products online. 44% of consumers say they plan to do more of their grocery shopping online in 2021 and 2022. Overall, in 2020, the DTC market size saw a 24.3% increase year over year. Research suggests that DTC sales will grow further by 27.5% for the food and drinks industry between 2020 and 2023.
DTC brands are stealing the market share from big, established FMCG companies, forcing them to innovate and open their own direct-to-consumer channels (or acquire the DTC brands). For example, Gillette used to own 70% of the US market in 2010. Recently, their market shares shrunk to 50%, mainly due to two DTC competitors who entered the market – Harry’s and Dollar Shave Club.
Some of the big, FMCG companies that opened direct to consumer channels include, among others, MARS, Clorox, PepsiCo, Procter & Gamble, Nestle, Mondelez, Unilever and Heinz.
There are plenty of benefits for manufacturers from moving their sales DTC. You can read on why and how to move to DTC sales as a manufacturer in our article.
Why are promotions important for FMCG brands selling directly to customers?
First of all, customers are very price-sensitive when it comes to consumer packaged goods, as FMCG products make up a major part of their monthly spendings. FMCG brands have always competed aggressively on prices. Every fifth FMCG product was sold with a discount in 2020.
Second of all, with plenty of new DTC FMCG brands popping up and FMCG brands moving to DTC models, the digital competition is growing fierce, to say the least. For customers, it is way easier to compare prices online, therefore FMCG DTC ecommerce stores have to offer great deals to stay competitive and keep the customers loyal. Last but not least, customers expect personalized treatment. 80% of consumers are more likely to make a purchase from a brand that provides personalized experience. One way of providing personalized experience is by offering personalized promotions.
20 FMCG sales promotions inspirations
Here are 20 real-life examples of FMCG promotions in DTC channels, both from purely DTC brands and from regular FMCG brands who have opened a DTC channel additionally to their usual channels (retailers). I have split them by the promotion type to make the list more readable. I hope they will serve you as a source of inspiration.
Discount coupons are promotions that require customers to insert a discount code at the checkout to have the promotion applied to their order. Such promotions can be either public code promotions (where everyone uses the same discount code) or unique codes promotions (where each customer has a unique coupon code assigned to them). Unique coupon codes allow for narrow targeting of promotions as well as for detailed tracking. Here are a couple of examples of discount coupon promotions used in the FMCG:
Clif Bar & Company is an American company that produces energy foods and drinks. They have a DTC store selling Clif Bars, Luna Bars, and other products.They run promotional offers in their store, for example, a 20% sitewide with a public, standalone coupon code CBCFF2021 during November through December (10/11-31/12/2021). The promotional code can be used once per customer, cannot be used on wholesale or subscription orders, cannot be combined with other promotions and offers.
Bombas is a DTC, comfort-focused sock and apparel brand. They launched an acquisition-focused campaign offering 20% off the first purchase for new clients.
Drunk Elephant is a DTC skincare brand. They offered a 15% off unique discount for the first order for the first-time newsletter subscribers, valid 30 days since the issue date.
Glossier is a DTC cosmetics and personal care brand. They launched a couple of promotions, for example automatically applied promotions (like 20% off sitewide or 25% off sitewide, excluding gift card purchases) or personalized coupons (like a $5 off with a unique coupon code, usable once).
Nespresso, a brand of Nestle, is the world leader in coffee machines, capsules, and coffee accessories. They often offer a standalone discount code WELCOMEBACK for $10 off for orders of above $45 value. They send it through various thematic newsletters throughout the year to inactive customers.
M&M’s is a chocolate candy brand, owned by Mars. M&M’s has recently started selling directly to consumers via My M&M’s online store. They have offered a couple of sales promotions, for example, a 25% off sitewide and free shipping for orders above $49 (and below $500) valid with a unique coupon code distributed via email in a reactivation campaign.
Another promotion they launched was a 15% off bulk candy and party favors (excluding personalized products) valid with a standalone code PARTYFAVORS.
They also launched a sitewide 20% off discount (excluding personalized products) with a standalone code CHOCODAY21.
Cracker Barrel Old Country Store, Inc. is an American chain of restaurant and gift stores with a Southern country theme. They have an online DTC store. They run various promotions, for example free shipping for orders above $100 and a sales category on their page where they have all the discounted products listed.
On occasion, they offer time-limited promotions like the Veterans’ Day promotion when they offered a discount only for veterans on 11/11/2021 with a VETSDAY21 standalone code. Offer was limited to once per person and only with a proof of military service. Another example is a Thanksgiving promotion where between 20-27/11/2021 customers who pre-order a pick-up Thanksgiving meal at Cracker Barrel (via the website) get a gift card valid 01/01-13/02/22.
Automatically applied promotions
Automatically applied discounts are promotions which are applied automatically to the eligible customer carts, no promotional code required. Such promotions are great for site-wide or publicly available promotions and may drastically increase the use of the promotion. FMCG brands that used such promotion type include:
Hubble Contacts is a DTC, subscription-based contact lenses brand. Their offer focuses on their proprietary lenses but they also offer other brands’ lenses and glasses frames as well. They offer a promotion for new customers – the first shipment with 15 pairs of Hubble Lenses for $1.
Candy Club is a DTC premium candy brand that offers both one-time purchases and candy subscriptions. They launched an acquisition-focused campaign for new customers offering 40% off for the first ordered box.
Burt’s Bees, a brand of Clorox, is an American, personal care brand. They launched a one-week-long promotion starting August 23rd, 2021 offering a dollar-off discount. The promotion was tiered, offering $5 off for orders above $30 and $10 off for orders above $50.
Product bundles are sets of products (for example, 2 pieces of the same product or 3 complimentary products) that carry a discount if bought together. The discount types can be different, it can be a dollar-off discount (buy two, get $2 off the set), percentage off discount (buy two, get 10% off the bundle) or a fixed price discount (buy two, get them for $10 each). They can feature two or more products together, for example BOGO (buy one get the second one free of charge), 9+1 (buy 9, get one free) or 3 for 2 (buy 2 get the third one free of charge). Bundles can contain various products, for example “buy a shampoo and conditioner and get a 10% off discount on the set”. FMCG brands that use bundling in their promotional strategy include:
Jelly Belly is a candy brand owned by the Jelly Belly Candy Company. They launched various discounts mostly focusing on promoting a particular product or a product line, for example, BOGO (buy one, get one for free) sale on one particular product – Sour Jelly or a 50% off Candy Corn on a National Candy Corn Day (no maximum limit per order).
Harry’s is a DTC shaving equipment and men's personal care products brand that has started off as a razor subscription brand. They do not offer many promotions but they do offer product bundles that help them upsell their constantly growing product line. They also occasionally offer free shipping for large value orders.
Dollar Shave Club
Dollar Shave Club is a competitor of Harry’s, a DTC brand offering razors and personal grooming products on a subscription basis. As a low-margin DTC brand, their struggle is to increase average order size and upsell more to the existing customers. This is why they mostly focus on offering product bundles, discounts on product bundles, and discounts on multiples. Even their Black Friday promotion last year was mostly focused on promoting bundles.
Nuts.com is an online retailer of every kind of nut, from peanuts to cashews, in salted, unsalted, and organic varieties. They run various types of sales promotions, ranging from BOGO offers, percentage or dollar-off discounts. They also offered a product bundle – buy one package of dried strawberries, get another one 50% off (one bundle per customer limit).
Free shipping is a great way to encourage customers to place orders with you instead of the competition or to choose shopping online as opposed to in-store shopping. Especially if (for the basic, FMCG products) it comes with the convenience of a regular, subscription-based delivery service.
Kraft Heinz Company is a major manufacturer of processed foods and beverages in the USA. Heinz has a DTC online store Heinz to Home. They offer singular products as well as fairly priced bundles. They offer free delivery on subscription boxes (there is an option to subscribe after adding a product mix of above 15 pounds value to the basket). They also offer special offers and promotions but only to their newsletter subscribers. This way they offer promotions discreetly and reduce the risk of starting a price war with their own retailers.
PepsiCo, Inc. is an American multinational food, snack, and beverage corporation. PepsiCo opened Pantry Shop, a DTC online store where customers can order product bundles. PepsiCo does not offer discounts but they offer the convenience of free home delivery as well as product bundles that help them upsell their offer. The bundles are built for different customers and use cases, mixing together products from the same or different categories. The bundles have a new, fixed price. It is not possible to purchase the products separately (not in a bundle) on their website.
Old Spice is an American brand of male grooming products encompassing aftershaves, deodorants and antiperspirants, shampoos, body washes, and soaps. Old Spice has a DTC store. They offer free shipping for orders above $10 and product bundles with a better fixed price.
Offering a loyalty program as a FMCG DTC brand is helpful with customer retention but can also be an acquisition tactic. If the loyalty program offers additional promotions or discounts for participants, it can be a way to acquire new customers. An example of a big FMCG brand that uses a loyalty program in their direct to consumer store is Gerber.
Gerber Products Company is an American purveyor of baby food and baby products owned by Nestle. They have a DTC online store where they offer a loyalty program called MyGerber Baby. Participants can get special offers, for example, a free gift with over $150 purchases.
Referral programs are programs where the referrers (and, in some cases, referred friends too) get an incentive for successfully referring their friends. This is a great acquisition tactic especially when entering new markets or new sales channels in the case of DTC brands. An example of a FMCG brand that uses referral programs to make their DTC brand better known in a new market is ABInBev.
ABInBev – Cerveza Siempre
Anheuser-Busch InBev SA/NV, commonly known as AB InBev, is a multinational drink and brewing company based in Leuven, Belgium. They have launched a DTC brand in Mexico – Cerveza Siempre. Cerveza Siempre sells subscription-based boxes of beer and other beverages, mainly those produced by ABInBev. They are using Voucherify as their promotion engine.
Cerveza Siempre’s primary use of the Voucherify platform is to run its referral program. Here are the referral program rules (as of April 2021) that Cerveza Siempre set in Voucherify:
- A referral is considered successful if the referee (invited friend) places an order for at least 180 pesos.
- The referee (invited friend) gets a 150 pesos discount for the first two orders.
- The referrer (advocate) gets 60 pesos for each successful referral, with no limit on referrals.
- You can become a referrer if you have placed at least one order with Cerveza Siempre.
You can read more in our case study.
Gift cards can be used as a product (selling gift cards) or as an incentive in a campaign (for example, sending out $5 gift cards for Christmas to loyal customers, expiring in 30 days). Gift cards are a great way to increase liquidity and to give hesitant customers a push to purchase from you (they will be afraid of losing the credits given to them on the gift card and may complete a purchase just to use them up). An example of a FMCG DTC brand that uses gift cards in their marketing strategy is Quip.
Quip is a purely DTC FMCG brand that sells oral care products like electric toothbrushes, flossers, and mouthwash, and offers a clear-aligner service too. Besides offering various price off promotions, they also have gift cards for sale.
Best practices for FMCG DTC promotions
As you can see, FMCG DTC brands and manufacturers selling DTC offer various types of sales promotions. There are, however, some universal tips I can give you when it comes to running promotions as an FMCG brand:
1. Keep the RRPs (recommended retail prices)
If you sell through retailers, do not lower your prices on your own channel below RRPs unless you want to start a price war with your own retailers and worsen your relationship with them (or even lose them). Instead, offer slightly higher prices and if you want to make an appealing offer to your customers (to make them slowly shift to your own channel), offer a loyalty program, personalized coupon codes, or bulk discounts, which will give them better prices than at the retailers’. You can also offer special, limited edition products not available at retailers or special product bundles so that your pricing cannot be compared directly with the retailers’.
2. Offer subscription-based products
Customers like getting their products delivered regularly to their doors, setting up the subscription, and forgetting about it, especially for FMCG products which they use regularly and know when they will run out of them. You can then offer a discount on the subscription boxes to incentivize customers to subscribe to your service. You get a loyal customer and a steady stream of income, they get a better deal and convenience.
3. Offer gift cards
Gift cards bring liquidity and can help you to get new customers (if the gifted person has not bought from you before).
4. Offer acquisition incentives
Customers rarely switch the online store they are used to purchasing from and if you want to bring them to your newly opened DTC store, you should offer some welcome discount for first-time customers or for newsletter subscribers.
5. Launch a loyalty program
One of the main benefits of DTC stores is that they build personal relationships with customers. A loyalty program can help you collect the data needed for personalization as well as to connect with your customers and build a long-lasting relationship with them. This is something retailers will never do instead of you.
6. Launch a referral program
This can be helpful especially if you are new in the DTC business and want to acquire new customers quickly.
7. Personalize your offers
What can differentiate you from the competition and from your own retailers is building seamless, omnichannel personalized experiences. Collect the data about your customer preferences and surprise them with personalized offers. If you would like to learn more tips and tricks, I have written a guide on DTC promotional strategies for manufacturers.
How to launch personalized promotions quickly and easily as an FMCG brand?
Initially relying on retailers to sell their products, most brands in the FMCG industry lack the infrastructure (e-commerce platform) to sell online and to personalize customer experiences. They need software to capture customer data and turn that data into actionable insights. On top of that, they need a promotion management platform that would enable them to use that data to run personalized promotions.
Putting up an e-commerce platform and running complex, personalized promotions omnichannel and at scale can cost plenty of time and money. Developing your own promotion engine to run, manage and track your personalized promotions on top of your custom or outsourced e-commerce platform takes months if not years. The maintenance tasks can eat up your developers’ time that could be spent elsewhere.
However, there is a faster and cheaper way to launch an e-commerce website with personalized promotions – using SaaS, API-first platforms.
Many FMCG brands use API-first, SaaS e-commerce platforms to sell their products directly to customers. One example is the BigCommerce platform. BigCommerce is a leading SaaS ecommerce platform that empowers merchants of all sizes to build, innovate and grow their businesses online. As a leading open SaaS solution, BigCommerce provides merchants with sophisticated enterprise-grade functionality, customization, and performance alongside simplicity and ease of use.
If you are using the BigCommerce platform, you do not need to develop or integrate a separate tool to run personalized promotions. BigCommerce has ready integration with Voucherify, our promotion management software that lets you build personalized promotional campaigns to engage customers every time they log in to your store. Your customers can redeem the promotions right in your BigCommerce store checkout.
With BigCommerce and Voucherify integration you can create flexible promotions for every stage of your customer lifecycle, using a variety of sales promotions:
- Personalized coupons
- Public coupons
- Gift card vouchers
- Referral codes
All of them are natively available in your BigCommerce store.
BigCommerce and Voucherify empower you to reach:
- Increased conversion rates thanks to personalized incentives.
- Fast time-to-market of promotional campaigns thanks to native BigCommerce integration. You can launch your campaigns right after copying and pasting the API keys between the platforms.
- Campaign budget optimization with fine-grained validation rules and anti-fraud features protecting your budget offered by Voucherify.
- Real-time data synchronization – synchronize promotions, customers, orders, products, and SKUs. All updates from your BigCommerce dashboard are sent to your Voucherify database in real-time.
- Advanced redemption rules – create tiers based on any attribute, reaching outside default dimensions such as purchase history, customer location, or order volume.
- Specific discount activity timeframes – extend BigCommerce discounting capabilities with extremely granular activity timeframes to run fun flash sales and happy hour campaigns.
Voucherify now offers a free subscription plan so you can discover its capabilities and test the integration with BigCommerce at your own pace.
Build personalized promotions at light-speed