Here’s How Coca-Cola Is Being Affected By The e-Commerce Trend

+7.77%
Upside
60.13
Market
64.80
Trefis
KO: The Coca-Cola Company logo
KO
The Coca-Cola Company

In a recent interview to Bloomberg, The Coca-Cola Company‘s (NYSE:KO) Chief Executive Officer (CEO) mentioned that the slowdown in mall traffic is affecting the company’s sales. Retail stores, supermarkets, and vending machines at mall food courts are important distribution channels for Coca-Cola and as consumers move away from shopping at brick and mortar stores, preferring the convenience of online shopping, these channels are being impacted adversely. Further, as an increasing number of consumers order groceries online, picking up a bottle of Coca-Cola is often “forgotten.”  The company is already struggling to grow sales as consumers shift preferences towards healthier beverages. The lack of traffic in obvious locations where consumers might pick up a can of soda without much thought is impacting the company’s sales further.

Adapting To The Digital Disruption

One of the key priorities of James Quincey, Coca-Cola’s new CEO, is to adapt to the changing retail landscape and use technology in its favor. The company recently started using Google technologies in U.S. grocery stores to deliver personalized advertisements on customers’ smartphones. The beverage giant is also looking to reduce the number of vending machines installed at various locations, as traffic in these areas declines. However, the key for revenue growth would be to find newer distribution channels in line with the changing landscape. This might involve introduction of new packages which are easier to deliver, as customers look for online shopping and home delivery. In India, the company runs a website Coke2Home which delivers its products to 15 locations across the country.  Coca-Cola has also created a new function called Franchise Capability & Business Transformation which is aimed towards improving the supply chain technology and processes at the franchise bottlers to make them ready for digital selling. While a digital selling platform can help Coca-Cola grow its sales, management of logistics to deliver its products might not be a straightforward task. The company is also using social media platforms actively for promotion of its products. Coca-Cola can potentially explore these platforms for selling its products which are increasingly becoming the “virtual hangout” destination for the younger population.

Relevant Articles
  1. Should You Pick Coca-Cola Stock At $60 After Q4 Beat?
  2. Down 10% This Year Is Coca-Cola Stock A Better Pick Over AbbVie?
  3. What’s Next For Coca-Cola Stock After 4% Gains In A Week Amid Q3 Beat?
  4. Down 15% This Year Will Coca-Cola Stock Rebound After Its Q3?
  5. Which Is A Better Beverage Pick – Coca-Cola Stock Or Monster Beverage
  6. Pricing Actions To Bolster Coca-Cola’s Q2?

The preference of millennials towards healthier beverages and the convenience of e-commerce have impacted Coca-Cola negatively. The company needs to adapt itself towards the changing retail landscape, and to innovate in terms of both product and distribution channels to drive sales in the long term.

View Interactive Institutional Research (Powered by Trefis):

Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap
More Trefis Research