Why read this? : We explore how e-Commerce category management improves the way you work with online retailers. Learn the different skills it covers, and how to create a shared goal and approach. Read this for tips on mastering the challenges of e-Commerce category management.
Selling to retailers used to be a simple process. Your salesperson met with the buyer. They negotiated a deal on quantity and price. Transaction done, a handshake and maybe a celebratory drink afterwards.
It’s not so simple these days. The way suppliers and retailers interact has become more complex. More challenging. There are higher expectations on both sides about planning, negotiations, and relationships.
Managing the Category
The conversation topic has changed from buying and selling to growing the category.
The idea of Category Management dates back to the 1980s (first coined by Aussie business professor Brian Harris). It’s part of a push by retailers to find better ways to grow their business.
Retailers who use it break up their portfolio into categories. Each category has a team who work with suppliers to find ways to grow that category.
They expect suppliers to be business partners who’ll help grow the whole category, not just the supplier’s products. So supplier sales teams are now usually made up of 2 roles :-
- National Account Manager – manages negotiations and the smooth running of the business.
- Category Manager – leads all category management activities. This includes data and analysis, planning, and recommending how to grow the category.
They’ll also likely have Field Sales teams who visit individual stores and manage stock and displays.
The retailer still has a buying team. But they’re rarely just called buyers these days. Their title usually references their seniority (e.g. Senior Buyer, Assistant Buyer) and / or the category they buy for. (e.g. Wine Buyer, Fashion Buyer or Accessories Buyer). They’ll also have access to their own experts in space planning, insights, data analysis and operations.
E-Commerce Category Management
The rapid growth in e-Commerce has made category management even more complex.
Selling online has to fit into the supplier-retailer relationship. And that’s a challenge because selling online isn’t the same as selling in-store.
Yes, they’re both “selling”, and have some elements in common. But there’s a whole bunch of new factors to consider to successfully sell online.
So, you’ve a choice.
You get salespeople, category managers and buyers who know how to sell in-store to learn e-Commerce. Or, you find e-Commerce experts to do your online category management.
Your choice depends on the category context and the skills and motivations of the people involved.
Category Management leads e-Commerce approach
If your sales are mainly in-store, you’ll likely see e-Commerce as an extra to your category management plan.
You’d treat online as an extension of the retailer’s core offer. Similar to how you’d adjust your approach to them having different size store formats or different customer segments.
Strategic-thinking category managers step back and look at the big picture. They take a long-term view of how e-Commerce fits in each retailer’s plan.
They recognise e-Commerce is growing fast. And that customers see it as a convenient way to shop.
Pros of this approach
There are clear benefits to your category management team leading e-Commerce.
First, it means you have one overall business approach with the retailer. That keeps your strategy and story simpler. Simpler plans are easier to action.
It also means your offline and online activities with that retailer are more integrated. What the shopper sees in-store and on the retailer’s website match. This reinforces your messages and positioning.
Cons of this approach
The challenge is that category management and e-Commerce are different skills.
So, unless your category management team have e-Commerce training, they won’t have the capabilities to optimise your online sales.
For example, they may not know what online shoppers want.
They may not be clear on the e-Commerce customer journey, and the role of skills like digital media, SEO and product page set-up. Plus, they may not understand how back-end technology systems like order to delivery work.
Of course, they can learn all this. But they then need to integrate that with all their traditional category management skills. That’s not always easy. Most category managers get by with some e-Commerce knowledge, but few become experts.
Plus, unless the retailer is a Pure Player (see our online retailers guide for more on this), in-store sales will usually be more than online. So, Category Managers always focus on in-store sales if they see it as a bigger opportunity. That can mean you miss out on online opportunities.
Often when this happens, e-Commerce just becomes an advertising and promotion channel for the category management team. The online equivalent of retailer catalogues. Not somewhere they build great customer experiences and launch breakthrough ideas.
E-Commerce leads category management approach
The other option is to have e-Commerce experts lead your e-Commerce planning first. Then, you build that into your category plan.
This can work better if the retailer is a Pure Player, or most of its sales are online.
You build your e-Commerce category management plan using expert knowledge of relevant areas. For example, store websites, online shopper insights about the customer journey, and optimising your marketing technology.
Pros of this approach
The obvious benefit here is you maximise the online selling opportunity.
It also means you have better quality conversations about specialist digital areas. SEO and CRM, for example. Everyone has the right knowledge level to talk about those areas. They speak the same e-Commerce language.
There’s no need to explain terms as you sometimes have to with traditional Category Managers. E-Commerce runs at a faster pace than category management. For example, the retailer can update category listings and product information in real time. Compare that to shelf range reviews in-store which are usually planned 6+ months in advance.
You use your brand’s digital activities to enhance the retailer’s online customer experience. This drives more traffic and conversions for your products on their site.
Cons of this approach
The downside comes when this approach clashes with non-digital work you do with the retailer.
Very few categories are purely online. Most will use some sort of offline activity to drive awareness and consideration. It can be harder for e-Commerce focussed teams to see this bigger category management approach.
You also miss all the benefits you get when you do category management first, and then plug e-Commerce in. The simple integrated story, and the consistency in execution, for example.
Building an e-Commerce category management plan
Whichever approach you choose (and it’s often a mix of both), the next step is to plan your e-Commerce category management strategy.
This usually means defining a category vision and category growth drivers. You pull in e-Commerce experts to share their expertise to optimise these.
The category vision is usually (but not always) done using a category management agency. They guide you through a specific process.
It usually starts with gathering insights about shoppers, the retailer and other societal and cultural trends. They provide a category framework they know works with retailers and a process to help you fill it in.
The vision is normally summed up in a vision statement. This short sentence paints a picture of what the category will look like in 3-5 years time. It’ll be something along the lines of :-
Our vision is to grow (name of category) by (doing headline activity) delivering (result) by (deadline).
It can be more crafted, snappy and memorable than this. But to be honest that’s the structure of most category vision statements we’ve seen.
Category growth drivers
Underneath that vision statement, the main activities are then split into category growth drivers. (sometimes also called category pillars). These cover the big activities the category plan recommends to deliver the vision and drive growth.
There are usually around 5 of them. They’re given easy-to-remember names which describe the goal or general area of activity. For example, “build my confidence” for education-type activities. Or “tailored solutions” for when you offer more personalised products.
These growth pillars can cover new product areas, bringing in new customers or changing the way the category works. The Ansoff matrix is sometimes used to help generate ideas on where to find these sources of growth.
E-Commerce is sometimes classed as a growth driver. This happens if the retailer isn’t advanced at e-Commerce, and you have good e-Commerce capabilities you can share with them.
Making it a separate pillar helps it stand out. It makes sure e-Commerce doesn’t get overlooked.
However, sometimes e-Commerce is seen as an enabler for all the other pillars. So e-Commerce and all it implies (websites, order to delivery, online selling techniques), becomes a support for the other growth drivers. This is a better option if the retailer is already advanced in e-Commerce. It’s already part of their normal operations and doesn’t need to stand out separately.
How to make e-Commerce category management work better
We’ve seen both category management led, and e-Commerce led approaches work well. However, there are always challenges when you try to pull together teams with different goals and skill sets.
To close this article, here are 3 thought-starters when trying to work out the best approach for e-Commerce category management :-
- Establish a common goal.
- Define roles and responsibilities.
- Continuous learning is key.
Establish a common goal
It’s easy for category management or e-Commerce teams to think the goal is to drive “their” part of the business. That’s because their personal goals are usually geared towards delivering in that area.
But the overall goal has to be to do what’s best to grow the business and get the most out of the retailer relationship. So both teams should get together first, and agree what this goal looks like. Only once you have a common agreed goal can you define what’s needed from each team. That way you’re more likely to get teams working together to achieve bigger business goals.
Define roles and responsibilities
From those goals, you can then define team roles and responsibilities. You nominate an overall leader, (usually the National Account Manager), who works with the team to define who does what with the retailer.
The aim is to use the right areas of expertise at the right times. You want to present a united and compelling story. Remember, you’re usually going up against competitors for the retailer’s attention and support. To give yourself the best shot at getting the retailer to buy into your category plan, you want to come across as credible, consistent, and collaborative.
The team leader gets the final call on key decisions as they’re ultimately accountable for the results. But they work with the team to make sure those decisions are based on the right facts, insights and expertise.
Continuous learning is key
In terms of how businesses work, e-Commerce and category management are both still relatively new selling skills. After all, people have been selling for thousands of years. These skills which emerged in the 1990s are still “young” in terms of sales expertise.
That means they’re continuing to evolve, so there’s always more to learn about them. E-Commerce teams have lots to learn from how category management works, and vice versa. You should ask teams to share their expertise to get everyone to the same level of knowledge.
You could even go as far as moving people into different roles. Move Category Managers into an e-Commerce role for 6-12 months, for example. Help them learn the intricacies of online selling. Move E-Commerce managers into Category Manager roles. Help them understand the challenges of working with retailers and being more commercial.
Continuous learning is key here. Try out different approaches. Do more of what works and less of what doesn’t. The details of how you do it might feel complex, but the overall approach shouldn’t be. When e-Commerce and category management work well together, you drive more online sales. And that’s what everyone wants, right?
Conclusion - e-Commerce category management
E-Commerce category management brings together 2 different skills to help manage your online sales with retailers.
For suppliers, category management is about working with the retailer to grow the category. It’s usually led by a specialist team that plans and recommends how to grow the category.
E-Commerce can be its own growth driver within that plan, or act as an enabler to support the other growth drivers.
However you bring e-Commerce and category management together, it’s important everyone agrees on the overall goal. This makes sure everyone pulls in the same direction and makes decision-making clearer. Everyone should be clear on their roles, so they know what they’re expected to deliver.
Both e-Commerce and category management are relatively new skills. They’re continuing to evolve, so both teams should see this as an opportunity to learn from each other. The best e-Commerce category management plans combine the best parts from each skill.