Remember when e-commerce was exclusively reserved for purchasing electronics? Well, thanks to mobile phones and tablets, consumers have quickly come to rely on the internet for everything from apparel to jewelry to personalized gifts.
In fact, until recently, the only thing consumers did not seem interested in purchasing online were CPG products, but now even that has changed. Although current online sales of CPGs are nominal, Sanford C. Bernstein estimates a quarter of CPG sales in the next five to 10 years will take place online. Despite the expected category growth online, brands are wholly unprepared to meet consumer demand for e-commerce. Online sales are growing substantially across all categories and many in-store shoppers are browsing online before actually buying in-store. Companies will need to invest in teams that are dedicated to growing the e-commerce channel. And it’s not just brands or manufacturers; many retailers who have been traditionally brick and mortar will need to develop e-commerce teams staffed with digital-savvy executives and not just hand-picked executives from the brick and mortar businesses.
While it’s unlikely that e-commerce will drive traditional brick and mortar into obsolescence anytime soon, the lines between the two are becoming increasingly blurred. Amazon, the world’s largest etailer, just announced the opening of its first brick-and-mortar store in midtown Manhattan while other stores like Walmart and BestBuy have also introduced a “site-to-store” option that allows shoppers to order online and pick up in-store. The “site-to-store” option is just one way to bridge the gap between online and in-store. For CPG companies to achieve the same kind of omni-channel success as these brands, they will need to activate brand demand online to convert brand awareness into sales, while managing a cohesive experience between both on and offline channels.
Activating Brand Demand Online
By taking the time to identify how and where to speak to shoppers, brands will see the need for unique tactics that activate brand demand and ones that raise brand awareness. If you think about it in terms of traditional brand advertising and shopper marketing, you would never see a traditional print ad used at the point of purchase – the brand would present a special offer to entice the consumer to buy. The same goes for digital. A branded video on YouTube might be used to engage early on in a consumer’s journey, but different tactics will be needed to convert shoppers as they move closer to making a purchase online.
The emerging possibilities that let consumers act on a desire to purchase are unbelievably exciting. Twitter is testing a “buy” button embedded in tweets. Amazon allows users to scan SKUs of products and add them to their cart. It’s clear the path consumers take to purchase is different online and offline, but it’s crucial the two work together. Target does a fantastic job of letting consumers shop for groceries online and then pick them up in store. On the other end of the spectrum, Kroger’s online experience doesn’t allow for any online purchasing and gives only a few hints to what you should expect in-store. Integrating Kroger’s existing mobile app with their website would help keep shoppers engaged with and shopping at Kroger.
New Ways of Marketing
The online dynamic has provided infinite ways for consumers to compare prices. This has changed the way many retailers and brands market their items. While sales are still very much alive, consumers are savvier than ever and are able to pinpoint where and when they can get products at the best price. Amazon for example, offers aggressive everyday low prices, while retailers like Walmart and Target offer price matching. Companies that sell products in-store and online have had to invest in managing channel conflict. Meaning they have to offer different products to different retailers so it is more difficult to make exact comparisons on some items (mattresses are a great example!). No matter how you look at it, e-commerce has changed the retail dynamic for all involved. It’s critical that all CPG companies understand the new retail dynamic and how to best navigate the waters.
While still in its infancy, the e-commerce arena is already showing signs of being led by three major players: Amazon Fresh, Google Express, and Fresh Direct. The entrepreneurial and innovative nature of these companies makes them the perfect partner for CPG brands. The nature of these retailers allows for brands to experiment with new ways to sell their product and deliver dynamic, personalized offers. However, it’s just as important to make transitioning from traditional retailer websites to brick-and-mortar stores as fluid as possible. Many mass retailers succeed at having engaging and useful websites, but there’s an opportunity to create a cohesive bridge when it comes to moving from website to store.
Agencies that specialize in brand demand activation are the ideal partner to help CPG companies implement a successful omni-channel strategy. These agencies are familiar with the needs of shopper, brand, and retailer, and can marry the three in an integrated way. As shoppers continue to evolve, CPG companies need to be ready to react. They need to experiment. Learn what works, and more importantly, what doesn’t.