Hungry For Online Sales, Oreo taps Zulily

Mondelez Says Direct-to-Consumer Approach Shows How Giant Can Operate Like Startup

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Personalized packs of Oreos
Personalized packs of Oreos Credit: Mondelez International

Will people pay a premium for Oreos if they get to help decorate the packaging? That's the question Mondelez International is asking this holiday season and so far it seems pleased how many people are answering "yes."

Marketing executives at Mondelez International often refer to "fearless marketing," or trying new things and taking some risks. The maker of established snack brands such as Cadbury, Oreo and Ritz is trying to operate more like a startup with the backing of a big organization. The latest example of the "fearless" effort has Cindy Chen, global head of ecommerce, leading what she calls a "fearless business model."

The way Ms. Chen sees it, setting up a direct-to-consumer shop with a customized offer is the kind of project that could take two years, but she said pulling together the Oreo Colorfilled site took just two months. It helped that Mondelez had already been tinkering with customization efforts, such as 2014's 3D printed Oreos.

The online Oreo shop popped up in early November, giving people the chance to customize packaging online for $10 or get a black-and-white pack with markers for $12. It recently got a promotional boost when Zulily, the daily deals site focused on women and children's apparel and accessories, offered free shipping for the online Oreo shop (usually $5, but waives the fee on orders of $20 or more). Linking up with Zulily happened within a matter of days after a conversation with Exact Media led to the companies' collaboration, Ms. Chen said.

She called Zulily's customer base "a perfect match for Oreo," and said the site was "a fantastic testing ground for us to figure out is this a place for us to potentially help us solve the kind of impulsive nature, or the challenge, of our categories."

Kevin Saliba, VP-strategic partnerships and business development at Zulily, said Oreo was his company's first exclusive, direct partnership with a cookie brand, though it has previously collaborated with brands such as Plum Organics, which was one of its first food and beverage tie-ins back in the first quarter of 2013. The site more recently highlighted a Coca-Cola Share A Coke Sweepstakes. "Food and beverage events are something that Mom wants when she shops; therefore, we'll continue developing our offerings in partnerships with those brands," Mr. Saliba said.

Even before the Zulily partnership, Ms. Chen said conversion rates for the Oreo Colorfilled site were two to three times the online industry standard, with basket sizes "a few times more" than in stores. She declined to share specific sales figures, but the online customized cookies sell for at least $10 per pack, while a traditional package of 36 Oreos costs about $2.99 or so in stores.

Mondelez currently sells about $100 million worth of snacks online, and aims to hit $1 billion in e-commerce by 2020. While it seems like a lofty goal, it's worth noting that its sales last year totaled $34.2 billion, including more than $2.5 billion in sales of Oreos.

It is not clear when Mondelez could roll out another online store, though the U.S. site appears to have sparked interest among Mondelez's international teams.

The work on the Oreo direct-to-consumer site is also helping Mondelez's work an on-demand supply chain and building e-commerce "muscle memory" to help it succeed as a consumer-packaged goods company over the next few years, said Chief Media and E-Commerce Officer Bonin Bough.

Ms. Chen said she has seen people write messages on their packs to announce proposals and pregnancies, but don't expect to see those images in advertising, as those people wanted to remain anonymous. Oreo has found various ways to get the word out, such as sending cookies to Khloe Kardashian, who told her 17.6 million Twitter followers about them.

Agencies that have done work on Oreo Colorfilled include the brand's creative agency the Martin Agency; 360i on elements such as Facebook, Twitter and Instagram; design consultancy Maya Design on creating the site; HP on the printing of the specialty packaging; and Weber Shandwick on public relations.

Mondelez spent about $22.7 million on Oreo advertising in the first nine months of 2015, down from roughly $23 million in the same period of 2014, according to U.S. measured-media spending from Kantar Media.

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