Finding Growth: Baby Category Spend is Shifting Online
In 2016, women in their early 30s had more babies than women in their late 20s for the first time ever, according to CDC data. More women are putting off starting a family to complete their education or focus on their career. In fact, women with college degrees have children an average of seven years later than women without degrees.
Overall, new parents are more educated and have higher incomes. They crave convenience. They don’t want to lug around heavy boxes of diapers and wipes from store shelves to the minivan to the nursery. They want to be able to find the best value on baby products without leaving the house.
Online shopping channels have responded to these needs, offering subscription options and a level of convenience that didn’t exist for new parents 10 years ago and, in some cases, just five years ago.
These are just a few reasons why baby category dollars are shifting online so quickly. Unfortunately, legacy panels aren’t able to track this shift. Brands that rely on this data to inform their growth strategies are making decisions in a continuously growing blind spot.
Baby Skipped “Crawl” and “Walk.” Baby Is Running Online.
According to Numerator OmniPanel data, over one third of Baby dollars have already moved online as of October 2018.
A more diverse assortment in online channels is also driving a higher average item price. In the Baby category, the average price is $21.11 online compared to $6.31 offline.
Brands that perform well in brick-and-mortar shouldn’t assume their customers will continue to buy the same brands when they begin shopping online. For example, Pampers has a 45% higher market share online than offline, while the market share for Huggies is 37% lower online.
Baby has proven to be a “gateway” category. Having a baby is a major life event, and it causes parents to change their shopping behavior and spend significantly more online. Then the dominos start to fall and they start to buy more categories online.
Brands need to win gateways like Baby and Pet if they expect to increase online market share in other categories. If you don’t win these customers today, brands will face an uphill climb to win them tomorrow.
Baby Loves Subscribe & Save
Amazon drove 80% of all online growth for CPG brands between 2016 and 2017. More specifically, Amazon Subscribe & Save is a hit in the Baby category.
Amazon Subscribe & Save allows consumers to set up regularly scheduled deliveries of everyday products. The more products you subscribe to, the more you save. This can be a lifesaver for new parents. InfoScout OmniPanel data tell us that convenience and savings are the biggest drivers behind Amazon Subscribe & Save adoption.
Not surprisingly, baby products are among the top categories purchased by Subscribe & Save users, with diapers at number three (12%) behind bath tissue and dog food. In fact, 40% of Amazon diaper buyers made a purchase using Subscribe & Save.
This is having a big impact on share of wallet for Mass channels. According to Numerator Insight data, Subscribe & Save shoppers who joined within the past six months and purchased diapers and wipes are spending 7% less across all categories in Mass channels.
As mentioned previously, Baby is a gateway category that leads to more online purchases. But Subscribe & Save users are also very loyal. 78.6% of users buy only one brand per category. Brands should consider getting on board with Subscribe & Save and look for innovative ways to win Baby dollars now and benefit from long-term loyalty.
A Growing Blind Spot
According to InfoScout OmniPanel data, 40.7% of basket sales are happening outside the POS “observable universe,” up from 26.1% just three years earlier. Non-traditional channel sales dollars have increased 11.7% since last year, compared with 2.1% growth in traditional channels. This is being driven in large part by more frequent shopping trips.
Digging deeper, one-fifth of spend in the diaper and infant nutrition categories has shifted to non-traditional channels that aren’t being captured by legacy panel data. This shift is also having an impact on buy rate. For example, the percentage of urgent need trips (one or two items) for these categories is much higher in non-traditional channels, while the percentage of pantry stocking trips (21 or more items) is much lower.
Every point in the total market is worth $4.6 million. Brands need to make sure they can see what’s happening in the full omnichannel market so they can capitalize on current trends and grow market share.
The Bottom Line
Shoppers are quickly shifting their spend on Baby categories online with no signs of slowing down. If you’re using legacy panel data that don’t show the shift online, you won’t be able to see the entire market. If you can’t see the entire market, you can’t make sound decisions to support an effective growth strategy. If you can’t make sound decisions, you risk losing customers – possibly for good.