Consumer packaged goods, everything from laundry detergent to snack bars and pet food, have long been a dark spot in the eCommerce world. However, this is starting to change, as CPG players are at an eCommerce tipping point.
According to McKinsey, in 2013 online accounted for less than 1 percent of total sales in packed food and about 3 percent in non-food areas. However, with the rise of digital, those days appear to be over. In the past year alone, Amazon launched ‘Amazon Pantry,’ which let its users fill a box with a selection of more than 2000 products. However, it’s not just Amazon jumping on the bandwagon, thousands of grocery stores are experimenting with ‘click and collect’ and ‘home delivery’, to help cater for the changing needs of the market in aligning to busy consumer lifestyles.
D2C retailing has gone full circle, from the milkman delivering to our doors, we moved on to love supermarkets and are shifting back to direct to the door models once again.
So what is driving the sudden move in CPG to eCommerce?
Technology has infiltrated many aspects of life, especially how fast goods are being bought and sold online. The rise of smart phones is allowing purchases to be completed at the click of a button.
Technologies such as chatbots are allowing consumers to quickly find products in their online search, AI is creating a more personalised consumer experiences, beacon technology is allowing current deals and offers to be promoted directly to the consumers phone, alongside many more.
Some interesting stats around the rise of CPG in eCommerce are:
- eCommerce could account for as much as 10% of total CPG sales by 2019
- Online sales within the CPG industry represents a market share between $15-$50 billion
- Petcare is ranked as the fastest growing CPG category online
It’s clear the CPG industry is incredibly well-positioned for eCommerce and brands who fail to offer more to the digital consumer, risk falling behind.
How can CPG brands initiate growth in this incredibly complex and competitive market?
1. Perfect your eCommerce Marketing
Just like traditional media, eCommerce requires great effort to help consumers find and compare products in an effort to influence their purchasing decision. So, how can brands do this?
Leverage social media
Social media can help drive discoverability. Through targeted ads, to engaging content,to influencers, it is not a medium that should be avoided. Social media allows CPG brands to create a unique story about their products and drive brand recognition.
Using influencer campaigns can work exceptionally well, especially when it comes to CPG brands. DIY content has a huge appeal for millennials and with simple things like creating videos tutorials and encouraging customers to share product imagery online, brands can enter a new segment of advertising.
For example, Uncle Ben’s used this approach with influencer Gina Homolka of Skinny Taste, who designed a recipe for Korean lettuce wraps incorporating the company’s rice. This campaign earned more than 1.4 million views and 12,000 shares on Facebook, expanding a huge reach for the brand.
Similarly, many CPG brands in the makeup and beauty space have turned to influencer campaigns by using huge household name ‘vloggers’ to include their product in how-to videos on topics like hair removal and fake tan.
According to a study by GE Capital, more than 80% of people research online before buying in a physical store, underscoring how important the power of reviews can be. Many consumers are using online channels to search for product reviews. Retailer sites like Amazon make it easy to compare one CPG product from another.
For some of the most successful brands product reviews and product ratings play key roles in their sales strategy. For example, San Francisco Bay Coffee was the second best-selling grocery brand at Amazon between Jan-May 2016 with a staggering 23,696 reviews on average.
2. Leveraging Website Traffic
The traffic received on website product pages is highly relevant, especially when purchase intent is high.
Having a comprehensive website with clear imagery and site hierarchy is essential for eCommerce stores to succeed but taking this one step further and linking brand websites with trusted retailers is essential for brands in the CPG market to provide a seamless consumer path to purchase.
A great example of a brand leveraging website traffic is Mentos, who found a great opportunity to utilise the potential of their online channels and provide consumers with an easier path to purchase. Their website has clear images, key information on the product and easy navigation. Mentos do not have a D2C store but instead offer consumers quick and easy options to purchase or add Mentos products to baskets on retailer sites. Mentos are not only capturing consumers when purchase intent is high but driving higher converting traffic to partner retailers.
3. Strengthen Retailer Relationships
Thriving in the age of digital, CPG purchases will require that brands and retailers work together to harness consumer purchase intent.
With a 30% share of US nonstore grocery revenues, Amazon and its sales of grocery items has been growing at about 30% year-on-year in recent years. And, there is no sign of the eCommerce giants slowing down. As discussed in our blog ‘How Brands Can Compete With Amazon Private Label Products’, it’s essential to partner with these retailers to provide a seamless customer experience.
With low-cost CPG products rarely ordered alone, due to their impulse nature and low value, it makes it essential to join forces with as many retailers as possible, to close the gap between online marketing and sales. ‘Veet’ knew that connecting consumers to purchase options was important for their consumer experience and to help drive up conversion rates. On their ‘Sensitive Precision’ product page they now offer consumers 7 retailer options to make their final purchase.
Why drive consumers to retailers?
Because consumers are quicker to add a low-risk impulse purchase to their shopping cart on a retailer site along with many other products rather than just buying one small item direct on a DTC store. Offering more choice of where to purchase ensures brands can convert those consumers who prefer to purchase your product elsewhere.
4. Make The Most Of Big Data
Driving eCommerce growth in CPG brands is a relatively new concept, so trial and error is inevitable. Companies must constantly monitor their products performance, test new variations of product offerings and keep a close eye on competitor tactics.
By partnering with retailers, and a Buy Now solution provider, it enables rich performance insights to be drawn right down to basket and product level data. For example, Tassimo, a leading coffee brand, were aware that customers may still prefer to purchase from their preferred retailer, rather than their own eCommere store, and not offering this option risked losing a sale.
Tassimo needed a way to redirect high value leads to retailers while still facilitating DTC sales. By promoting partner retailers through Buy Now technology, they were able to offer a better online consumer experience but also gain valuable insight into the level of incremental value of traffic they were driving to retailers.
Brands in the CPG landscape need to ask what their current data looks like. Are they using the right channels? Can they see an end to end view of their customer’s journey? Can they link brand interaction and a final sale? Are they adding value?
So, what next?
As a CPG provider, you need to begin adapting to the changing climate of the industry sooner rather than later to gain market share or, at the very least, keep in line with the competition. Why not book a demo today to see how ChannelSight can help your CPG brand optimise your eCommerce strategy and grow online.
Digital Marketing Manager