Food Suppliers and Retailers: The Difficult Game of Online Collaboration

Over its more than 130-year history, Del Monte Foods has mastered growing, packaging, and marketing everything from canned corn and green beans to plastic fruit cups filled with peaches and mandarin oranges. Yet the fruit and vegetable giant is now facing a new set of challenges that are harder to overcome: navigating the dizzying array of requirements retailers have set for consumer packaged goods (CPG) companies hoping to sell their products online.

Ensuring Del Monte complies with these rules, which cover everything from how products are described to the images used, has become so time-consuming that the company hired a full-time employee last year to handle it. The creation of this new role followed Del Monte Foods' move to establish an e-commerce team within its sales department to lead retailer-related efforts.

"The requests from all our different retailers are just so numerous—I mean, it really has become a full-time job," said Jen Reiner, senior director of omnichannel marketing and e-commerce at Del Monte Foods.

The pandemic-driven surge in online grocery shopping has deepened the rift between retailers and suppliers over digital business priorities and incentives. This is especially evident in online product listings, which require significant work from both sides to develop and publish. However, while retailers say they need to maintain strict control over approval processes and the flow of consumer data, suppliers complain that standards are inefficient and that grocers fail to update listings in a timely manner.

In many cases, CPGs manage product portfolios spanning thousands of SKUs and face a range of online sales requirements—rules that are complicated by the fact that different retailers' demands can vary widely. Images often must be displayed in specific formats; product descriptions, when driving traffic, may be subject to different requirements and word limits. Retailers like Kroger may define terms such as "vegan" or "organic" differently than Whole Foods. The way listings are ultimately published—whether uploaded directly or filled out across different platforms to ensure continuity—also varies.

CPGs must constantly monitor their listings to ensure information is fresh and up to date. But any changes they wish to make typically require retailer approval—a process that can take weeks or even months.

Sam Slover, co-founder and CEO of Pinto, a company that helps businesses manage their e-commerce product channels, said he is surprised by "how opaque and confusing the process of listing products online is." These processes are often complicated by incomplete or inaccurate information, such as ingredient changes or packaging updates, which can leave online information no longer current or accurate.

Meanwhile, while retailers have little difficulty collecting information such as product names, front-of-pack images, or product dimensions—data already used in traditional brick-and-mortar retail—Slover noted they may find it harder to collect what is known as "customer-facing data" needed for modern e-commerce or digital retail. Such information includes nutrition, allergens, the diets or lifestyles a product fits, flavors, and search terms it matches. These attributes play a key role in helping consumers search for and find specific items, such as keto snacks that are kosher or low-sugar vanilla yogurt. A growing number of third-party companies are being hired to help collect and organize this information.

"We'll get there eventually, but I do think this is just part of the transition from a more hands-on, physical way of selling products to an online system," Slover said of e-commerce in the food sector.

Seeking Solutions

The rules grocers impose on suppliers seeking to enter their e-commerce channels reflect retailers' efforts to control the online experience they present to shoppers. "We filter out a lot of redundant excess products and have a very rigorous onboarding process, so if you find anything on Westside, it's a proven product," said George Zoitas, CEO of Westside Market, a seven-store grocery chain in Manhattan. "Manufacturers need to help the retailers that support their products because, at the end of the day, we are the point of sale."

However, Zoitas said the wholesalers he works with have developed streamlined systems that make it easier for the chain to obtain the information needed to add products to its e-commerce platform, such as digital images, or better descriptions and attributes for filtering to enhance the customer experience. "It gets there much faster now. Things have stabilized, and people are much more integrated," he said. Zoitas added that up to 20% of the products in his stores ultimately do not appear on the company's e-commerce site, mainly because manufacturers do not provide the detailed information Westside requires, such as high-quality images, clear descriptions, or expected shelf life.

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"Manufacturers need to help the retailers that support their products because, at the end of the day, we are the point of sale."

George Zoitas

CEO, Westside Market

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John Ross, CEO of the Independent Grocers Alliance (IGA), said smaller grocers often face significant challenges in managing products on their websites and shelves because many CPGs use third parties to handle relationships with retailers. IGA is a network of food retailers with about 1,200 members in the United States. Ross said IGA has developed resources to help smaller grocers stay on the radar of product manufacturers. He added that IGA leverages the collective power of the retailers it represents to help suppliers or their representatives convince grocers to sell their products online and in stores, and has streamlined the process of collecting product images and other detailed information for online use.

Representatives for Kroger, Albertsons, and Ahold Delhaize—the largest U.S. grocery chains by store count—did not respond to requests for comment on their relationships with product manufacturers.

Elly Truesdell, who recently left her role as partner at Almanac Insights to found the investment fund New Fare, said the process of listing products on retailer websites has improved significantly over the past few years. But Truesdell, a former Whole Foods executive responsible for local brands and product innovation, noted that the biggest hurdle remains keeping product listings up to date, including new packaging, more relevant search terms, descriptions, or other details—a particularly burdensome process for retailers managing tens of thousands of SKUs. The logical solution would be to have CPGs take on these responsibilities, but she said doing so brings its own challenges, including the possibility that food manufacturers might try to give themselves an unfair advantage over competitors or struggle to comply with listing requirements. Retailers also risk ceding some control over their online stores to CPGs.

"That's the negotiation that's happening right now. How much do retailers trust, or how much control are they willing to give up?" Truesdell said. "At the end of the day, I think it really still comes down to the retailer rather than the platform itself, because onboarding and product categorization start there." Truesdell added that as retailers and CPGs try to figure out the best ways to build digital platforms to attract consumers, the game of how to sell products online is still evolving.

According to Jennifer Fitting, director of e-commerce at Tyson Foods, Tyson Foods is one supplier trying to make online listings more seamless and attractive for retailers. Unlike buying prepared foods like a bag of chicken nuggets, Fitting said consumers buying meat online want a shopping experience similar to a physical store, where they can choose products based on their appearance and perceived freshness. This experience is inherently difficult to replicate online. Fitting said Tyson uses artificial intelligence to determine which images best convey the information consumers need to make a purchase. The beef, pork, and chicken processor often tests multiple consumer-facing posts by adjusting images or adding or removing information such as nutritional content. Fitting said heat maps help Tyson determine what resonates most with shoppers. According to a survey by Midan Marketing cited by Tyson, 30% of consumers said their primary way of buying meat is online.

"The retailer ultimately has the final say. We don't want to push anything on them that they're not happy with, so it's a collaboration," Fitting said. "We can tell them what our best practices are and what we think is reasonable."

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"That's the negotiation that's happening right now. How much do retailers trust, or how much control are they willing to give up?"

Elly Truesdell

Founder, New Fare

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Fitting said the relatively early stage of the online marketplace naturally means that how CPGs and retailers collaborate on building online posts, and the processes they use to make them more appealing to consumers, will continue to evolve. "Every day there are new technologies, new ways of marketing," Fitting said. "Customers change, consumers change, so the worst thing we could do is stand still. We have to always be looking to the future and making sure we're out in front."

Brian Archey, senior director of data science and analytics at Conagra Brands, said the fact that CPGs control the channels through which people want to buy products gives them an advantage in managing relationships with grocers. "Retailers want better products. They want to make sure the shelves are stocked with what consumers want... However, we don't have direct access to the purchase data and consumer data that retailers have, because they control that data," Archey said. "But the partnership is fairly collaborative, and we're able to make products that sell better based on what consumers need and are actually looking for."

Del Monte Foods' Reiner said retailers are increasingly evaluating CPGs on their compliance with online guidelines. While food manufacturers are not currently subject to penalties or fines, their performance in the online marketplace has become just as important as supplying products on time or sales figures, she said. "You get scored, and like any business relationship, you certainly want to get an 'A' on that report. If your content card isn't an 'A,' it becomes a topic of discussion when you're in business meetings talking about other initiatives you want to push," Reiner said.