How Reckitt Is Building its E-comm Muscle
Reckitt is beefing up both its internal and external digital competencies as it prepares for the next shifts in consumer behavior.
The No. 28 consumer goods company now has e-commerce capabilities, whether through online platforms or direct-to-consumer, in every market in which it operates. This revenue grew 17% in 2021 to represent 12% of total net revenue in 2021 — minus the infant formula and child nutrition business Reckitt sold last year in China — and the company aims to reach 25% of total by the mid-2020s as it builds its e-commerce muscle, said Reckitt CEO Laxman Narasimhan in a call with investors.
Successfully hitting this target will include partnering with Amazon, where the company is collaborating and sharing best practices. It’s also expanding into new spaces and working to maintain consumer relevancy for its brands on Amazon, which currently have an average 4.2-star rating, according to Narasimhan, as well as growing category share.
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Reckitt is furthermore investing in its capabilities to more rigorously measure the returns on media activities, said Jeff Carr, Reckitt CFO, and building in-house digital and media production capabilities.
Reckitt, which rebranded last year, will also invest in its technology platforms and supply, as well as scale up its digitally native brands. Enhancements are targeted toward improving the quality of its supply chain and products, which, as a result, are reducing costs associated with the time required to test and release finished goods from factories.
Reckitt’s total net revenue grew 3.3% year over year in the fourth quarter and increased 3.5% for the full year. As with other consumer goods companies, it raised prices to offset inflation: COGS inflation was 11% higher vs. 2020 — and up over the 8-9% initially anticipated. The company expects inflation to continue this year and will implement additional price increase, revenue growth management, and productivity measures in 2022.
[See also: Supply Chain Execution Report]
Looking toward the future of consumer behavior, the company anticipates many of the pandemic-prompted habits to stick. Eighty percent of consumers say they’ll maintain their new habits post COVID, according to Reckitt’s internal consumer research, which is down just slightly from the 83% who said the same two years ago during COVID’s initial peak.
What’s more, half of consumers are still disinfecting their homes more versus pre-COVID times, according to Reckitt.
“Rather than become complacent, once vaccinated, we actually find that vaccinated people are more likely to be more germ-sensitive and maintain this habit,” noted Narasimhan.
On the sustainability front, Reckitt has developed a sustainability calculator to determine its environmental footprint on each product made, as well as measuring the level of revenue made for more sustainable products.
