There is no doubt that the pandemic has changed consumption habits. One major change is the acceleration of e-commerce sales for food and ice cream in particular. When thinking about e-commerce and online delivery products, ice cream would likely not have been top of mind for any of us given the difficulties of setting up a frozen supply chain that goes all the way to the final consumer.
Regardless, in 2020, UNILEVER saw an increase in online ice cream sales in the US market by 177%. It is true that they have been pioneers in the field with a dedicated division called ICNOW (which stands for ‘Ice Cream Now’ in case you were wondering) to identify new ways of reaching their end consumers (including the experimentation of drone delivery!).
And, they are not alone: another example is LACREM (the owner of the FARGI and LA MENORQUINA brands) who have also been quick to turnaround and propose direct delivery options to consumers in Spain, by partially redirecting a supply chain that had mostly been targeting foodservice up until 2020.
While the pandemic negatively affected the away from home distribution channels for ice cream, the industry experienced a sudden increase in at-home ice cream consumption as consumers began to turn back to traditional comfort foods during lockdown. This change from out-of-home to at-home consumption drove brands to quickly consider new distribution channels for getting their ice cream to consumers and so the e-commerce ice cream industry was on the rise.
Why Might You Want to Sell Ice Cream Online?
1. To ACCELERATE your DISTRIBUTION: For a young brand, or a newcomer into the market, getting distributed or listed by retailers takes months (keep in mind that for ice cream there is generally only one, sometimes two, launch windows during the year) and it is costly (listing fees), not to mention the fact that ice cream shelves tend to be overcrowded and your chances of obtaining a listing are slim if you do not stand out from the crowd!
Building your brand online, through online distribution, is one way to make yourself known and build a loyal consumer base without national retail listings. It can also be great start in helping you achieve listings in areas with a low retail distribution. If your online method works, it allows you to gather valuable data which can support your negotiations with retailers. NICK’s, the low calorie and keto-friendly ice cream brand, is a good example. The Swedish brand entered the US during the pandemic with a strong online sales strategy and are now the top ice cream brand in the US in terms of DTC (direct-to-consumers) sales, overtaking Ben & Jerry’s!
2. To CONTROL the CUSTOMER EXPERIENCE and BUILD LOYALTY. Another benefit of selling ice cream online directly to your customers is that you have more control over the customer experience. This can help you involve the customer more and develop closer relationships with those who purchase from your online store, for example through customer service offerings, or loyalty programs. Take JENI’s as an example, a premium US ice cream brand, who is building a distinctive experience through its direct delivery service with its iconic orange box. It also provides exclusive offers, with flavours and combinations such as Jeni’s collection box that are only available online. As for brand loyalty, Nick’s created a subscription service, which already represents 25% of its online sales, with the consumer receiving their choice of Nick’s ice cream straight to their home every 4 weeks. The subscription model results in a 20% discount for the consumer vs the standard online price. Win/Win!
3. To GATHER MORE INFORMATION ABOUT your CONSUMERS. No more intermediaries (read retailers or distributors) blocking the collection of consumer data! When implementing e-commerce strategies, you will be able to collect customer behaviour data and demographics that you can use to reach similar customers in the future as well as create more targeted advertisements and marketing strategies, and better products based on what your customers want.
4. To LEVERAGE your FOODSERVICE SUPPLY CHAIN. If you are already making direct deliveries to a wide number of foodservice clients, why not use these supply chain capabilities to deliver directly to consumers? As mentioned in the introduction, this is the exact strategy LACREM used in Spain during the pandemic – they redirected their fleet of small trucks that had been delivering to restaurants or small shops to a direct delivery service to consumers who ordered online. And now that the foodservice sector is picking up again, they have gained a new source of growth to capitalise on.
How to move to an E-Commerce Model?
The above benefits aside, selling ice cream online is no easy feat. For ice cream brands just starting out in the market, it can be costly due to the often large expense of frozen storage and fulfilment options. It is not necessarily easier if you are an existing brand on the market either, as moving from a primarily offline selling model to an e-commerce business model is not without its challenges.
There are many areas of consideration to account for across the supply chain, from storage and transportation to adapted marketing strategies. Let’s take a look at some of these in more detail below so you can figure out whether selling ice cream online is a good option for your ice cream business.
You Need to Help Your Customers Find You Online
The bulk of ice cream sales continue to take place in the supermarket and while brands won't be moving away from this channel anytime soon, it will likely be slightly decreasing in importance as online distribution channels become more prevalent.
If you make the decision to start or move to an e-commerce strategy, you must consider how customers will find you online. They will no longer be able to be guided or influenced by the frozen aisle in the supermarket so it will be up to you to make yourself be seen and stand out online. For example, exciting imagery that entices the consumer to taste your product is even more important now as in-store tastings are no longer an option, at least not for another while. You may also need to adapt your website to add e-commerce capabilities. In addition, you will likely need to readjust your marketing and online advertising strategies, or introduce an organic and paid marketing strategy to reinforce your new online channel so customers can find you quickly and purchase from you seamlessly.
A simple way to test the online market for your ice cream is to partner with local delivery companies in your market, e.g. Uber Eats, Deliveroo etc. We discovered that brands like Magnum were adopting this strategy over the summer with their Beach Towel campaign where customers could scan a QR code on their limited-edition Magnum beach towel and receive a Magnum ice cream delivered to their location. Read more about that here.
Finding Ways to Make Fulfilment Work
Order fulfilment is often one of the most difficult and stressful elements of running an online business, especially in the ice cream industry where time is of the essence. There is very little room for mistakes when the product you are shipping has a melting point and a cold chain that must not be interrupted. Consumers don’t want to be waiting patiently at home for a pint of their favourite ice cream, only for it to arrive at their door half-melted.
The last mile delivery is always the primary pain point in frozen logistics solutions. Currently, DTC (direct to consumers) sales of ice cream are carried out via 3 options:
Via the RETAILER’s HOME DELIVERY services (Walmart, Carrefour…) with most brick-and-mortar retailers now delivering direct to consumers. This does not require any specific supply chain capabilities. Orders are made via the retailer’s website.
Via third party LAST-MILE DELIVERY PARTNERS (UberEats, Amazon Fresh, Deliveroo, Getir…). This does require you to be distributed (or listed) regionally in the area where the consumers make the order. Orders are made via the third-party website or alternatively via the brand’s website, which then redirects the order to their third-party partners.
DIRECT from the MANUFACTURER, which means direct deliveries to all potential consumers. Order is made via the brand’s website, and generally delivered by mail / courriers.
In the latter, when selling ice cream online direct to consumer, brands need to consider the melting point of not only the ice cream, but also dry ice, if used in the transportation process. The melting point along with the time your product will be in transit will determine the quantity of dry ice you will need. As an example, DREAM POP recommends using 5 pounds of dry ice per day of shipment.
This process becomes slightly even more complex if you have a non-traditional ice cream recipe, like many brands out there today who offer sugar-free ice creams, non-dairy frozen desserts, or ‘clean labels’ made without preservatives or stabilizers. Changes to a recipe can result in changes required in the packaging, storage or delivery. And obviously, the costs of shipping are significant and not always fully paid for by the consumer. LACREM, for example, charges 10 EUR per order in Spain but waves the shipping cost for purchases of 79 EUR or over. NICK’s also offers free shipping for orders above 75 USD. However, this translates in online pricing for the product being generally higher than your local supermarket, which limits the development of DTC growth and reserves it for the more loyal and frequent consumers.
Your geography will also determine your opportunities in e-commerce. The American market, for example, is fairly well developed in terms of deliveries and fulfilment possibilities but European markets are not quite as developed yet and deliveries can take longer, which is not ideal for ice cream delivery.
In summary, selling ice cream online is the way forward post-pandemic and will help brands not only expand their customer reach, but also grow their revenue and discover new areas for innovation. It’s simply a matter of figuring out what methods and strategies work best for your brand.
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Founded by former executives in the Ice Cream industry, INNODELICE aims to create a worldwide ecosystem of solutions within the frozen dessert industry. Thanks to the relationships fostered by INNODELICE, manufacturers, brands, importers, distributors and suppliers can discover, buy and sell solutions to GROW their business. These solutions include co-manufactured and branded products as well as innovative and competitive ingredients, packaging and services. Our collaboration model generates lower costs and fewer risks for our participating partners while optimising their time to market. To learn more about INNODELICE, contact Nicolas MARIE (firstname.lastname@example.org), Andrea MONTREUIL (email@example.com) or visit www.innodelice.com.