PepsiCo Chief Growth Officer On E-Com, Tuning into Consumers and the Key to Future Business
The year 2020 could arguably be called the year of the e-commerce boom. In fact, recent Frito-Lay research shows that ecommerce and store delivery continue to grow as 53% of consumers are buying their snacks online. What’s more? The third largest consumer goods company anticipates ecommerce to double by 2025.
CGT recently caught up with Michael Lindsey, chief growth officer of PepsiCo Foods North America, to talk key trends in consumer shopping habits, including what the brand expects for the ecommerce platform coming out of the pandemic – despite restrictions being lifted.
CGT: What led Frito-Lay to develop the Snack Index? How has it helped make more informed decisions?
Lindsey: The Snack Index is one of many ways we keep a pulse on what consumers are saying when it comes to snacking overall. While the survey didn’t directly lead to the launch of Snacks.com, they are both centered around our focus on consumer insights, snacking trends, changing preferences and keeping up with all of these things to inform our innovation pipeline and ensure we're meeting consumer demand.
CGT: What technologies were used to launch the e-commerce site?
Lindsey: Snacks.com was our first foray into the direct-to-consumer business. This was one of our approaches to creating a closer connection with our consumers and establishing a platform to test and learn. Snacks.com complements our direct-store-delivery model and is part of our omnichannel strategy, which to us, is about being accessible and relevant.
We had been investing in related capabilities – drop ship and Snacks To You – so we were able to pivot and launch Snacks.com in just 30 days. But we certainly hadn't planned on launching it in 30 days in the middle of a pandemic. To be successful, we shifted to dedicated Frito-Lay North America e-commerce fulfillment sites, bringing six sites online that enabled more flexibility in our assortment and the capability for more customized fulfillment capabilities. We’ve also integrated more tightly in our organization to bring on innovation items, including both limited time offers and permanent innovation launches.
CGT: How was the implementation process? How was Frito-Lay able to stand up the e-commerce site so quickly?
Lindsey: We are continuing to learn and adapt the site to meet consumer demand. We started out with just 100 options, doubled that, and even launched our Make Your Own Variety Pack offering, where consumers can pick and choose snacks to go in their Frito-Lay Variety Pack. Snacks.com is the only place you can do this.
As we’ve expanded, we’ve adjusted our operations to better scale for higher volume. For example, during our 12-week test for Make Your Own Variety Pack in November 2020, we experienced such a large demand that we had to temporarily close orders from January 18 to March 24. The time was used to field consumer research and prepare for the national roll out of the Make Your Own Variety Pack offering based on key learnings from the regional pilot.
In the height of the pandemic, consumers needed an option to find their favorite snacks, which is where Snacks.com was born. We were fortunate that we already owned the URL snacks.com, so from there we just had to bring together all the pieces – from operational efficiencies, to sourcing product, to what SKU assortment we would offer and more – and challenged our team to do so in just 30 days.
CGT: Who owned the implementation process?
Lindsey: Snacks.com was a truly cross-functional project that required alignment from all areas of our organization – from the growth office where my team sits, to supply chain, to sales, to marketing and more.
The Growth Office (which I lead) is basically the function that helps coordinate strategic efforts (like this one) across our business. The Office aims to make our business’ vision a success: Be the Consumer’s Choice in Convenience Foods by Winning with Purpose. Always. Everywhere.
CGT: Are there any best practices or “gotchas” you can share with other CG companies that may be looking to launch an e-commerce strategy?
Lindsey: Overall, the biggest learning we’ve gained is how important it is to be tuned into consumer feedback. PepsiCo has always been a consumer-first company, and Snacks.com has given us a new avenue to see what consumers want and adapt our offering in real-time. For example:
This May, we rolled out Make Your Own Variety Pack nationally in the contiguous 48 states as up to eight in 10 orders (approx. 80%) on Snacks.com have been Make Your Own Variety Pack. We’ve also been able to adapt our Make Your Own Variety Pack offering based on what we heard back from consumers about wanting more variety in the boxes (expanding from 20 to 30 bags per box as well as using consumer feedback to inform flavors and brands offered).
Listening to consumer demand, we’ve stocked Fritos Bar-B-Q Flavored Corn Chips this summer as a limited-time offering – one of the only places consumers can directly order the product online, and the only place consumers can get the product through a pure play e-commerce platform.
Outside of snacks, we’ve also seen an interest in merchandise. We hosted a Holiday Shop on the site in Q4 2020, allowing consumers to purchase branded sweaters, hats, scarves, socks and onesies – and completely sold out of items like hats and socks. When the Holiday Shop merchandise was on the site, it outsold any one snack brand, and represented approximately 26% of our sales on the website. We’re using the key learnings found in Q4 2020 to feed into plans for the 2021 merchandise shop, expanding the availability and offering new, design-led items not available previously.
As a best practice I would share that (though it may sound obvious) it’s key to listen to your consumers and to be close to them; to better understand who they are and what they’re looking for: what is it that they trust and what is it that they don’t like. Having the right listening tools in place will allow your business to learn what others are expecting from you, and also by having a team represented by different generations, races, beliefs, will help you innovate and propose new flavors, products and ways of working.
CGT: What are some of the technologies being used in order to create more personalized experiences for example, through individualized variety packs?
Lindsey: We have been able to leverage data analytics (social listening tools) to respond in real-time to consumer insights. For example, customized Variety Packs have led to consumers adding more niche products to their orders. Funyuns Original, Smartfood White Cheddar, and Lay’s Salt & Vinegar were in the top-5 items (out of 40) added to a Make Your Own Variety Pack order during our original testing, despite being more niche flavor SKUs in general retail.
CGT: Can you talk about some of the benefits realized from standing up the e-commerce site? Are there any benefits realized that were originally not anticipated until after going live?
Lindsey: Overall, Snacks.com has been an important testing ground to pull through new insights into what consumers are looking for in snacks. With shifting consumer demands, we’re rethinking how we structure our business to become even more agile and get closer to the consumer.
Snacks.com proved early on to be a successful DTC platform for Frito-Lay and we recently expanded the offering to our Canadian consumers, further enabling us to continue to deliver on our vision is for every consumer to always have access to the exact snack they want, when and where they want it. Like Snacks.com, we used data to understand the specific shopping and snacking habits of our consumers who live in Canada to provide them an offering that suits their shopping habits and preferences.
Having strong presence in e-commerce is one of the many pieces that builds our omnichannel strategy and helps us strengthen our “Always, Everywhere” vision.
CGT: What’s next for Frito-Lay, or where do you go from here?
Lindsey: For Snacks.com, we’re excited about our Flavor Drop Shop platform that will be used to offer limited-time, exclusive products and merchandise that consumers won’t be able to get anywhere else. This platform will be used to test premium licensing and energize our most passionate fans with amazing design. We had a test run in December 2020 that demonstrated how much love there is for our brands and how excited consumers are to get design-led swag.
As a business we continue to drive innovation and to invest in further capabilities that we know will help us enable future success.
CGT: What’s next for consumers? What trends will stick with consumers going forward?
Lindsey: A trend we saw spike in the pandemic and one that will stick is the idea of convenience and consumers wanting accessibility to product, when and where they want it. Snacks.com was launched with this trend in mind, and we continue to see it being a mainstay.
One trend that has become more pervasive and one we see staying is the gravitation toward spicier flavors – in Gen Z and Millennials especially.
This is why innovation is key to our business. As we continue to be close to our consumers’ preferences and be attentive of how products will be available, we’ve developed new flavors including Lay’s Flamin’ Hot, Doritos Xxtra Flamin’ Hot Nacho and more.