Commentary

Online CPG On A Roll

According to the 1010data, Inc., Online Consumer Packaged Goods (CPG) Industry Report, by Julia Millot, market research analyst, for the first time since 1010data began tracking the market, online CPG sales surpassed $10 billion. Many of the largest product categories within CPG, including health supplements, pet care and cosmetics, each generated more than $1 billion in sales.

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Total CPG revenue in 2016 was $10.4 billion, up from $7.6 billion in 2015, says the report. The 2016 data showed a nearly even split in revenue between the first and second halves of the year, implying that consumers are more frequently buying CPG products online year-round.

The report shows that CPG companies that invested in low-priced, natural products had big payoffs in 2016. Other key findings from 1010data’s report include:

  • With $2.6 billion in sales, health supplements were 25% of total key CPG category sales and exceeded the size of the next biggest category by $1 billion.
  • As one of the biggest CPG categories online, pet care is the fastest-growing category among categories with at least $500 million in sales. Specialty pet care sites focusing on “natural” products are experiencing the most growth
  • Of categories with less than $500M in sales, laundry & dish cleansers experienced the most growth, because subscription options have enabled customers to conveniently order and re-order products, notes the report

The report also notes that online CPG sales have grown twice as fast as total ecommerce sales, which had a 16% year over year growth rate in 2016. Accelerated sales growth include the fact that more online retailers offer free two-day shipping and subscription options

Sandy Steier, CEO and Co-Founder of 1010data, says “… 1010data estimated that CPG online sales… in key categories would reach $10 billion in 2016… (and) indications are that there is no sign of slowing in the online CPG market… “

1010data’s report also points to emerging trends for 2017, including:

  • The expansion of private label products in the CPG sector. As evidenced by Amazon and Walmart, brands will need to balance the dynamics of online retail partners which also have private labels
  • Market fragmentation will emerge in the form of unexpected competition for established brands, as the online market has lower barriers to entry than brick-and-mortar retailers
  • Subscription models will continue to gain online consumers, with retailers that successfully execute fast, free shipping, combined with low prices and wide product assortments. Frictionless online shopping will continue to drive growth for the CPG category, concludes the report

For additional information from 1010Data, please visit here, or for the complete report, here

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