The Hotel, Restaurant, and Cafe segment still has a tiny share in the eCommerce business due to the industry specifics. But even with this fact in mind, the pandemic forced the HoReCa companies to go online in order to keep head above waters. Now, the demand for HoReCa marketplaces and online stores is very high due to the unstable geopolitical environment. Both HoReCa product manufacturers and distributors realized that new trend and are ready to fit the changed consumer behavior. Here, we’ll tell you more about HoReCa eCommerce specifics and share some ways on how you can scale your online presence.
HoReCa: What is it? How is it different from Food Retail?
Are you operating a HoReCa business? Or just wanting to jump into this niche? Let’s start with the basics.
HoReCa definition
HoReCa is a B2B sector combining companies that provide services in the field of receiving guests or selling products in the hospitality industry. The abbreviation consists of three syllables:
- Ho – Hotel;
- Re – Restaurant;
- Ca – Catering / Cafe.
The term can be considered in two parallel planes – sales and trade. In the first aspect, this is a type of product distribution channel, in the second, it is a segment of the housing and entertainment services sector, as well as catering. Thus, under the general name, almost any establishment of the service industry can be hidden – from meals to overnight stays. In addition, the clients of this sales segment are the organizers of show programs, outdoor and seasonal events.
HoReCa specifics, features and role in business
The HoReCa distribution channel is a special sales direction called “B2B”, when one business provides items to another, and there is always an intermediate link between the seller and the consumer. It can be a cafe, hotel, hotel or restaurant complex, etc. HoReCa means to present a product under a beautiful package of quality service and modern hospitality. At the same time, the more stages a product goes through on its long way to its final consumer, the higher its final price.
The main difference between HoReCa industry and retail is that its main goal is not to maximize profits, but to constantly work on brand recognition, increasing customer loyalty. That is why the segment’s products are included in the ‘On trade’ category – they can be purchased at a given place at a given time. These can be, for example, light snacks and alcoholic drinks, elite alcohol and tobacco products, street food (chewing gum, sweets, semi-finished products, snacks, mineral water, soda, etc.). In addition to the product category, the business area includes such groups of specific goods, such as utensils and equipment for cafes, cleaning accessories for catering service etc.
The main features of the HoReCa segment are as follows:
- Sellers buy only what they consider necessary;
- The consumer does not see the real brand and packaging;
- Need for high-quality product and low cost
- Product assortment and suppliers change rarely;
- Small volumes of deliveries, allowing to make the product status and unique;
- Sale of a ready-to-eat product directly on site;
- Consumers pay not only for the product, but also for the service, the atmosphere and environment that accompany it.
Types of companies included in the HoReCa segment
The main companies in this area include:
- Restaurant or hotel cafe.
- Any catering service that is located on the territory of the hotel.
- Food court owned by the hotel.
- Night clubs, discos and other entertainment venues.
- Cafes and bistros in cinemas.
- Covered pavilion with products at the reception, etc.
HoReCa in Ecommerce
Euromonitor states that eCommerce representation of the HoReCa business is less than 5%. This small amount can be explained by a number of reasons:
- Tangible product
- Consumers prefer buying perishable products offline
- Snacks and alike food are often bought compulsory
However, pandemic accelerated the HoReCa penetration in the food retail business forcing them to differentiate their business and gain their share in the eGrocery market. The online shopping global growth was 54% in 2020 and according to experts this trend will remain the following years. Isn’t it a good time to increase your online presence?
Essential things for HoReCa business to succeed in the online food retail business
- Focus on mobile use together with traditional website channels
Eurominitor shares that in 2022, 50% of consumers purchased food and drinks using a mobile app. At this, Millennials are the most active group of mobile users.
- Think over your brand positioning and assortment amid online channels
You should ensure adequate pricing and product assortment. Try to brand your packaging to make it more recognizable. Communicate your brand message to shoppers using branded packages. Customers can’t speak with you directly, so the packaging gains a crucial role in the company perception.
- Offer fast delivery where it is appropriate
Same-day delivery is the trend for young generation shopping for food online in large cities.
Proximity is essential for fast delivery meaning that introducing local micro-fulfilment is required.
- Introduce direct-to-consumer or subscription model
To retain and engage customers, you can take advantage of the new trends: D2C and subscription models. Offer meal kits or prepared meals delivered to the customers’ doorsteps. Subscriptions can meet the requirements for personalized nutrition which is perfectly combined with the HoReCa possibilities.
Use the power of social media
The usual ways of communicating between customers and companies have changed. Consumers search for information and products on the Internet, participate in contests, use loyalty programs and connect with brands online. In order for companies to remain interesting to users, direct communications in the digital space need to be strengthened. To do this, you need to analyze other companies in your field and use successful tools for your business.
To connect more with HoReCa customers, try social commerce offering shopping experience on a social media platform. This tactic is especially relevant in China and India.
Ways to scale a HoReCa business in the online environment
The lockdown dealt a serious blow to HoReCa market. Consumption in restaurants has plummeted, and distributors have begun refocusing on online retail. To stay afloat, urgent diversification is needed, meaning changed approaches to packaging, logistics, and output volumes. Below are five scaling rules that will help HoReCa sector successfully integrate into marketplaces, dark food stores, and food delivery services.
- Rely on distributors. If you work with distributors, go to marketplaces through them. This will save time and speed up the appearance of your products in retail.
- Adapt the product for B2C. Both packaging design and volume matter. Demonstrating the value of the product through packaging, make the product easy to use by non-professionals, show its prestige, usefulness (environmental friendliness), and come up with a catchy name.
- Take care of positioning and marketing in general. Promote a product or brand in B2C. Work with food bloggers. Participate in offline festivals to increase the loyalty of potential consumers and the recognition of your brand.
- Don’t miss the moment to differentiate your B2B business with a B2C direction. If the situation on the market predisposes to the introduction of products in online retail, there is no time to waste. Prepare production reserves to meet rapidly growing demand. Consumption has dropped dramatically in HoReCa, especially during the lockdown period. At the same time, it has disproportionately increased in online food retail. This naturally required a change in output volumes. Considering such factors, it is better to think over the possibility of producing large volumes of products in advance, since the Internet can increase sales of a particular product by two, and sometimes even three times, which will inevitably require a reaction from production.
Once your strategy is ready, business needs are defined, feel free to contact us for technical implementation of all the required functionality. We have vast experience in designing eCommerce sites for the HoReCa segment. You can leave all the technical staff like architecture and design development to our experts and analysts. Focus on business, we’ll do the rest.