KNOWLEDGESTREAM AT-A-GLANCE
The Future of CPG in an Era of eCommerce and Friction-less Markets
ABSTRACT
The future of CPG in an era of frictionless, manufacturing, supply chain, and eCommerce
PARTICIPANTS
OBJECTIVES
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End Date: Jun 11, 2018
CONTRIBUTIONS
ACTIVITY
256 Days
18 Themes
24 Contributors
805 Posts
960 Comments
252 Followers
OUTPUTS
1 Slide Deck
2 Video
THEME #1
eCommerce Trends & Drivers
Business Models, Speed of Change, New Solutions - The eCommerce speed of change is much faster than CPG companies are accustomed to dealing with. ECommerce brings new business models and new solutions to consumers challenging the way CPG companies have operated in the past. Endless shelf space has led to an explosion of specialty products giving CPG companies the opportunity to use eCommerce to test new opportunities. Subscription and direct to consumer are offering new ways to sell. CPG companies must learn new skills beyond the traditional CPG brand model to thrive in eCommerce world. Acquisition of start-ups helps build skills and buys talent,.
The speed and dynamics of eCommerce are much higher than traditional cpg. eCommerce businesses constantly review metrics and refine go to market approaches, marketing strategies and messaging...sometimes on daily basis.
The plethora of consumer choice is amplified by the endless shelf available through eCommerce. How CPG companies manage the "long tail" of SKUs to meet the growing consumer demand for specialty products will be challenging. Utilizing eCommerce as an incubator for niche specialty products may be one way for companies to succeed.
One of the things....preventing companies from embracing and profiting from eCommerce is their unwillingness to add people because of the cost. eCommerce marketing is labor intensive and many firms have been loath to add people. They can stay in their comfort zone and increase traditional ad spend without adding people or ...move people from more traditional marketing roles to an eCommerce team, but do not provide them with the required training. So they end up with not enough trained manpower to drive eCommerce. Unlike many marketing roles, eCommerce positions that manage SEM, SEO, PPC, etc require a combination technical and marketing expertise. So job fit is very important.
CPGs traditional have evolved based on a traditional brand management model, becoming experts at driving B&M shelf space. eCommerce businesses requires a different set of skills and CPGs tend to lack these skills. Sometimes they buy companies such as Dollar Shave Club in an effort to at get such skills, although having such skills in one division does not imply that you can integrated them effectively into all brands or divisions
Brick & Mortar - eCommerce is growing and brick and mortar retails needs to keep up. CPG companies must be able to sell products in both worlds with a unified strategy. There will be a war for retail dominance with Walmart leading the charge for brick and mortar and Amazon leading the charge for eCommerce. Just as CPG moves through many brick and mortar channels, they will need to look beyond Amazon for other outlets including direct to consumer. The wholesale business model with warehousing will be replaced by drop shipping from the manufacturer.
CPG companies need a unified strategy for eCommerce and traditional retail but they are distinctly different channels requiring different skills. So to get the best results you
which side
The wholesale business model of ecommerce where the retailer takes title to the goods, warehouses the product for it's ecommerce business is going the way of the dinosaur. More push back from retailers for brands to implement drop ship programs which then begs the question that the margin structure should change as brands take on the higher costs of small parcel shipping and all the risk of retailer penalties for delayed shipments by 3PL providers.
Millennial Effect - Millennials will be driving the growth of eCommerce. They are tech savvy and appreciate the convenience benefits of online shopping. They are comfortable buying online and have been well trained by Amazon with Prime memberships.
Millennials will be driving spending growth across verticals. They are in the key spending years of their lives. Their online behaviors are transferring over to the CPG vertical. They are already navigating to services such as Blue Apron, Hello Fresh, etc. which impacts GPG food purchasing. ECommerce for pet food & supplies has steeply increased too. Amazon is training/driving the youth to buy online by offering college kids free Amazon Prime membership.
Time is a new currency and many people are time poor. The newer generation can get immediate gratification, price shop, not chase around and get quick delivery when they shop online. This distribution model is growing at a fast pace.
Technology Drivers - The internet has driven the growth of eCommerce and mobile will now take it to the next level. Smartphones will be increasingly important to CPG for search and location. How inventory and shipments are managed to meet 1-day and same day expectations will require advancements.
"Inventory Postponement" key driver for CPG eCommerce model. - Many challenges ahead for CPG...one being the current import model of shipping packaged product from China (potentially bad inventory, heavy freight and duty costs) and having to re-work the inventory in NA because the last minute PO change, etc. - Opportunities are vast for CPG's who quickly embrace eCommerce fulfillment in the form of sales and revenue growth through B-B and B-C channels...also savings associated with good inventory
Data, Data & More Data - eCommerce data is growing. Data ownership and ability to mine the data will differentiate winners from losers. Data provides insights on the buyer that will be used by marketing segmenting and targeting. CPG will need to be able to access the data as they have been able to do with traditional channels.
CPG companies talk about customer targeting but historically haven't had the tools, expertise and mindset to really segment and align strategies and tactics to discrete customer segments. Ecommerce/D2C brands are masters......segmenting, personalizing and managing the funnel is inherent part of their business model.
THEME #2
What Can We Learn From Amazon?
Amazon Data - Amazon is all about data and they know their customers very well. CPG firms know their consumers but understanding their purchase behavior is difficult across so many retail channels. They need to partner with Amazon to understand the eCommerce shopper though Amazon may be reluctant to share. Amazon data can be leverage beyond purchase or targeting to innovate in delivery or logistics. In the era or eCommerce, Google, Facebook, and Apple have even more consumer data than Amazon that goes beyond the purchase. CPG companies need to partner with multiple data sources to gather the most insight.
Amazon's differentiator is the data. They know the customer better than most retailers because it is in the customer's interest to share her data.
CPGs that fail to partner with Amazon will miss out on the data that is available and which will help them anticipate this tipping point. But Amazon already knows that the data is the source of its power and will likely be reluctant to share.
they still can (and no doubt, do) leverage data about supply chain, localization, optimized routes, etc. in a way that helps them anticipate market trends like few retailers can. They can easily see where to test ideas like drone delivery or how to deliver a Whole Amazon Foods experience or how to just deliver the product. This alone seems to trump personalization in its world.
There are businesses out there with MORE data and more customer understanding....... Facebook, Apple, Google...are all holding massive amounts of user/customer data and they are helping retailers and brands sell more. Amazon only has a select range of data and understanding ...but they only work inside the shop. Facebook knows what I need before I type into Google or Amazon, Apple knows where I have been and what I am likely to "need" before I type into Google or Amazon... CPG's who partner with Facebook, Apple, Google AND Amazon will be the winners
Amazon in CPG - Amazon is the clear leader in eCommerce and CPG must work with them. Consumers are moving to eCommerce for their CPG products and many categories are particularly well suited for subscription purchase which takes them out of brick and mortar for the long term. CPG offers the brands consumers want and Amazon has data to know if consumers want a brand or just a product (e.g., Alexa buy toilet paper). It will be important for CPG to leverage their brands in eCommerce preventing growth of Amazon private label.
The first advice I always give to any brand/CPG - Do not fight Amazon - work with them not against them. They will beat you - no matter how big you are...
CPGs can partner, I fear, by paying to play. Data is a differentiator and differentiators are not free. And as they are paying Amazon for data on how/where their products sell, they need to assume that Amazon is using that knowledge against them, just as the big retailers have. It may be paying for data and it may be paying for "shelf-space". But I believe the real success will come from demonstrating to Amazon that customers want the products CPGs sell.
Their subscribe and save will continue to grow and CPGs should leverage Amazon for DTC...I suspect the size of the market and brand power of CPG products suggests they will continue to leverage that momentum until purchase share has shifted even more.
It is important to note the role of brands. People care about CPG brands for the usage experience. I don’t think people rely on these brands for the purchase experience because of availability. If I have a bad experience at brand x retailer, I’m happy to get my shampoo from brand y retailer. Because of this, Amazon’s subscribe and save will reduce in store cpg purchases because they’ve removed what friction was left.
Amazon Private Label - Private label products are a threat to CPG brands especially when the consumer trusts the retailer. Amazon understands how product categories sell online and can find categories ripe for private label innovation. If they can offer high quality alternatives to the national brands, they will create a strong private label business. Amazon will develop their private label using algorithms and data mining to replace product developers and research.
Wonder if CPGs are being a bit naive about Amazon's desire to sell original branded CPGs products, will they use CPGs as gateway brands and gradually move consumers over to Amazon Branded/Private Label equivalents?
Private label is increasingly a threat for CPGs. Consumers of all age groups are more open particularly Millennials. Why? retailers have stepped up their commitment improving quality and the equity of their overall brand. Savvy retailers have gone a step beyond being a national brand equivalent to bring products that outperform CPGs and innovate.
Amazon (and traditional retailers) will have the best success offering private brands when they can offer better than just price.....be it higher quality, innovation and interesting positioning and a marketing focus. This is why Aldi has done well.
Amazon Brick & Mortar - Amazon's purchase of Whole Foods has been a disruption to brick and mortar retail as they become omnichannel. The acquisition gives them a footprint to better access high income consumers on the ground which can help with delivery and marketing. It's a great opportunity to bring their digital expertise to physical stores. It will be interesting to watch how they do this as brick and mortar retailers trying to do eCommerce have not really broken through.
Interesting to see how Amazon's greatest disruption won't be digital at all. When Amazon starts to more aggressively play in brick-and-mortar, that's where we're bound to see the future of CPG change dramatically. To apply their digital strengths to the physical experience is where the magic happens, and we've seen that traditional retailers have been scrambling to do this without the kind of success we'd expect to see from Amazon.
Amazon has bought Whole Foods for more reasons than they are broadcasting to the public... This acquisition provides Amazon with a footprint in the Brick & Mortar CPG space. This offers them: - Access to some of the most desirable consumer base. Whole Foods has access to the wealthiest of shoppers. Stores are in more affluent and well educated neighborhoods. - A brick & mortar distribution footprint and provides them with the opportunity to be an omni-channel. A place for Amazon Locker - which will drive more traffic to stores and offer a one-stop shop location. - A showroom for publicity, marketing and events. It is a venue to sell additional non-CPG products and services. Look-out, the way we shop for CPG products is going to change quickly! We will be able to pre-order items, pick up items from the Amazon Locker and carefully select the things that require more scrutiny such as meat and produce. Genius! One stop and we get to have it all. That business model is going to be tough for other retailers to quickly replicate.
As Amazon adds physical stores to its evolving omnichannel retail model in a growing number of product categories it is rapidly disrupting the store shelf space status quo, making the battle for shelf space a little less relevant. CPG brands and products are now having to deal with 3 new factors at retail: smart stores with their smart shelves; click-and-collect buying where you shop on-line; and collect your purchase at a pick-up spot in the parking lot, and direct-to-consumer on-line sales.
THEME #3
Frictionless?
Frictionless eCommerce - eCommerce has demonstrated it can deliver a seamless purchase experience through automation and innovative technology. Subscription model purchasing has made CPG replenishment frictionless.
Marketing automation involving the analysis of trends, buying behaviors, and future opportunities is a priority for retailers. New retail technologies will change the way they handle the research, buying process, and implementation of the products and services they carry.
Britain's biggest food and household goods brands have signed up to a new shopping service which claims it can slash grocery bills by 30 per cent by cutting out supermarkets. ...The grocery service, designed by tech company INS, is set to pilot in 2018 and is expected to be part of a new wave of shopping firms offering a radically different way for consumers to shop.
Ecommerce...is easier and simpler with subscription models - hence where Amazon will win. Other retailers will grow and develop better and stronger experiences online and offline to provide a seamless experience for all retailing needs
I think that for items that don't require much customer interaction and where they never want to run out of a product then the purchase and delivery of these items will become increasingly automated. Things like detergent, milk, bread, toilet roll where customers are likely to have fairly predictable behaviour i.e. they are very brand loyal or they always go for the product on offer.
Evolving Retail - The retail landscape is evolving as eCommerce grows. Technology will impact the physical store to help make the purchase process more frictionless. There will always be people who want to shop in physical stores as they offer a different experience. Brick & Mortar has the opportunity to jump on the counter-trend where consumers actually seek increased engagement and participation to create what might actually be a more frictionful experience.
While eCommerce is picking up the pace, not everyone wants to shop for everything online. Some people enjoy shopping, as a means of social interaction, stimulation and a way to gather knowledge about offerings. For some, they want touch and feel smell items... There will remain a need for consumers to seek want they want in a store. We still appreciate the immediate gratification that stores can provide.
If you're an in store shopper then
This is very hot topic for retail and especially for Millennials, they want to pick up the product and walk out of the store, automatically being billed, some technologies are needed to be enabled and facilitate this, an example is RFID.
I envision a counter-trend to frictionless... one in which business grows via increased engagement/participation. The benefit of going frictionless is that it can free up resources to increase the friction elsewhere in the model (ie: experiential shopping, co-development, personalization, DIY, etc.).
Frictionless CPG - CPG companies have done a great job understanding consumer needs and designing products offering frictionless usage experience. However, CPG companies are less knowledgeable when it comes to the pre/post usage journey. CPG needs to pay more attention to their consumer points of contact to ensure their content is helping the consumer. They need to ensure their packaging works in an eCommerce world. CPG needs to partner with retailers to create the seamless purchase experience.
"lets talk about what the consumer would do in this situation". and "what natural steps/functions etc. would a person think is intuitive". Sounds simple but the point is we lose touch with human things and as the world becomes more and more complex we value brands and experiences that just plain simple.
Content is key the interaction points – whether physical or digital, the content must reflect the brand, the product and help the customer on their journey to purchase.
It is essential that CPG's understand, embrace, master, and integrate with the technological changes their retail client's adopt in order to be more frictionless;
Technology Drivers - IoT cloud based technologies help make seamless experiences possible. New technologies like blockchain will further advance frictionless retailing.
Anything cloud based based (IoT) makes real-time reporting possible; just how the hardware, packaging in this case, and apps are configured. Real-time reporting opens all kinds of doors: friction-less shopping at POS by the consumer; friction-less inventory control between the vendor (CPG) and their merchants; friction-less shipping control for tracking to elevate consumer satisfaction; friction-less shopping at POS by the consumer; of course smart chips can be embedded into the CPG products to monitor any metric the CPG and merchant want to learn about by the end user(consumer).
Why can't CPG's get aggressive to develop and/or acquire new technologies
THEME #4
CPG eCommerce Case Studies - Success or Failure
Content is Key - eCommerce success and failure are often driven by content. Consumers are using the internet to find products and learn about choice. Online content provides an opportunity for CPG brands to educate their customers while offering information to drive sales. Durex was able to launch a direct to consumer approach by creating a website with strong (and interesting!) educational content. Dr. Scholl's on the other hand did not provide sufficient content to drive engagement.
new content/interaction focussed website which co-incided with the launch of their campaign "Love Sex". the improvement in the content, meant significantly more visits and with the addition of other durex products, meant there was a real opportunity to sell D2C.
Marketing Tools & Social Influences - Search Engine Optimization (SEO) is probably the most important tool for eCommerce business. Brands need to be effectively using Social Media and Influencers to attract consumers and good content to keep them engaged. Successful eCommerce businesses often use customer data well to provide a personal experience/product.
...and of course SEO which is the best long term marketing a brand can do. SEO is also a much better conversion CRM tool....In my experience the use of each channel varies wildly, per category and brand/retailer. SEO is the consistent - over time SEO works better ROI and conversion that the others. However, all are key at some point in the journey and all are needed to succeed
The winning formula resides in the level of personal info they capture, extreme personalization including an assigned stylist and the surprise of what you get along with easy returns
CPG Brands (need to be) posting on Instagram, utilizing influencers, and developing meaningful content.
Direct to Consumer Advantages - Direct to consumer eCommerce sales offers benefits to the consumer and the manufacturer. Subscription models are very effective because they are simple and automated. Dollar Shave Club is an excellent example of disrupting the men's grooming category with a simple subscription which drives brand loyalty. Graze is another subscription brand that is expanding into traditional retail space by using their subscription learning to find the best snack product offerings.
Simple concept, simple execution targeting the unhappy consumer with consistent usage looking for a direct, simple answer made simple for them.
Dollar Shave Club demonstrated that the subscription model is not dead. Their focus on perfecting their mobile app paid off with their target consumer and earned them a lucrative exit with Unilever's purchase.
Graze started selling direct to customers online (and) have started selling wholesale to the big supermarkets too. This has given them a lot of growth but what separates them from everyone else is the way they use data intelligently. They figure out what works and get feedback with their online customers (who are really engaged and rate everything) then they only put products they know are going to be really successful into stores at volume. The combination of data, subscriptions and customers alongside a more traditional cpg business seems to be paying off for them!
Strong Leadership - It is probably no coincidence that case studies of eCommerce success tend to come from small start-up brands who are using different business models. Large CPG companies struggle with eCommerce as it requires new skills and expertise. For CPG manufacturers to succeed in eCommerce they need to look at strategy, culture, organization, and capability.
what I find is that many (CPG companies) are so behind they are overwhelmed with where to start so thinking through what is the most important, where to start is key.
Having a high digital quotient (DQ) defined as following: Strategy - full integrated and not a bolt on. Culture - think big and dont be afraid to fail. Organization - non traditional structures, adding top digital talent, sufficient funding. Capabilities - investing in digital structure and data mastery.
key factors of success: dedicated account management, next gen category management, assortment - offering exclusive items...tailoring to specific sites, price and promotion coordinating activity across channels, merchandising and marketing - providing more info and content.
THEME #5
How To Compete With Amazon - What Would You Do?
SURVEYS
2027 eCommerce Leader - Board members voted on who would be the leader in 10 years. Half believe Walmart will prevail, a couple think Amazon will stay ahead. No one thinks another US company will advance, but a couple think either a global retailer or a new to the world company will be in the lead.
I voted for Walmart for many reasons: making all the right moves; existing worldwide scale; established vendor relationships; rebranding; strong management; true to its core customer; acquiring the necessary expertise and futuristic technology to effectively compete in the virtual retail space and specifically against Amazon...
I voted for "somebody else, a company that doesn't exist in 2017". The pace of change and innovation seems to be continuing to accelerate. Think Moore's Law. I don't need to list the companies that came out of nowhere and quickly prospered. I suspect there is another one that will come along with a radically new approach that will blow by Amazon and Walmart.
Sears and JC Penney go back what seems centuries but finally can longer learn how to adapt to new trends in retailing. Walmart and Target are relative newbie's; Amazon is just a baby in retail evolution terms. I think the likelihood of new retailers coming on the seen in the next 10 days and taking real market share from Walmart, Amazon, Macys, Target... is very very low; just takes more than a decade to spawn into something let along emerge into some sort of dominance.
Leverage Your Strengths - Brick & Mortar retailers will need to leverage their own strengths. There are advantages to having actual retail stores such as customer service. Retailers will need to understand their consumers and deliver a shopping experience they will value over the eCommerce experience.
Challenge Amazon's Weaknesses - Amazon is not perfect. Retailers can find ways deliver what Amazon does not like services or experiences that are better offered in Brick & Mortar. Having physical stores and local distribution can be an advantage for other retailers.
Amazons does a few things well and many badly or not at all...Services of all kinds, Variable monthly subs, Design and fashion curation, Product and brand experiences, Customer education, -Customer training on how to use the product.
“manage your expectations”....Amazon is here and not going away, but they aren’t everything to everyone. While they may limit the market potential they won’t take 100%. Focus on a differentiation you have and take your fair share.
...one of the main areas of defense against Amazon IMO is the physical presence and distribution networks that many of these retailers have.
Walmart/Mass Perspective - Walmart has already shown a desire to go head to head with Amazon with recent eCommerce acquisitions. Board members expect Walmart to grow significantly. Other mass or club retailers were not mentioned as being major eCommerce players in the future.
...of all legacy retailers, Walmart certainly has the reach and scale to compete with Amazon on its own terms.
Walmart is curating its strategy around acquisitions, verticalness, and expanding/refining its logical capabilities to go head-to-head with Amazon.
Whether Walmart is the leader or not I expect they will be significantly bigger in ecomm and look like a very different company. They continue to work the plan with focus and investment. Good for them....nice to see a traditional company evolve
Food and Drug Perspective - Brick & Mortar grocery and drug stores have their own customer relationships in physical locations. Food stores can use technology to offer local grocery delivery or pick-up and they can offer fresh foods. Drug stores can share their health care expertise.
match Amazon with local grocery delivery services and communicate with my local consumers in a personalized way via digital methods.
1) Drive hard against your strengths......is it fresh meat, deli, bakery? Leverage this aggressively and creatively to drive customers in store and start the basket 2) bundles......focus promotions around multiple purchases.....example building a meal. 3) Modernize your customer specific marketing capabilities. Grocers still lag in the technology...they should demand CPG suppliers leverage their databases to tell consumers when products are featured.
Use the Walgreens physical space for your customers needs - Amazon has no physical space...they need to 1) Update the brand image to be more advisory and helpful 2) Update the stores to be more "coffee shop" like, where customers want to visit and experience 3) Lots of staff training.
THEME #6
How High Is Up For CPG eCommerce?
SURVEYS
How High Is Up? - Everyone is expecting continued growth in eCommerce sales for CPG products. By 2027, there will be 10-50% of CPG products sold this way.
In the next 10 years, there is going to be huge growth in online sales of CPG products. There are many reasons as to why the growth will quickly climb. In my opinion, it may be 25% or more of the volume within 10 years.
It looks like CPG could grow their share of eCommerce sales from 10% in 2022 to 20% in 2024 and to as much as 40% by 2027.
Driving eCommerce Growth - Many factors are aligning to encourage continued growth. There is increased availability through e-tailers. Technology is offering benefits for even better shopping experience. And tech-savvy Millennials are having children and entering their high volume years.
CPG will continue to grow at an overall rate of 10-15% per year and will continue to benefit from the growth in beauty and personal care.
big volume buyers are the Millennials as they are starting to raise families, which means more money is spent by this group. The Millennials are comfortable with online tools and more apt to walk away from the traditions of in store shopping.
better access online for CPG products. There are many ways to quickly and easily buy products online.
Limiting eCommerce Growth - Some people will simply prefer to shop locally. Others will not be able to plan ahead and find faster service at local stores. Retailers will be improving the local shopping experience to keep shoppers coming to the store. It is also possible the sustainable issues of packing materials will create concerns.
When it comes to groceries while I see growth continuing there is a long way to go to get to 10%+. Limits include shopping behavior,,,that consumers still like the shop physically and that most consumers aren't planners.
"20 somethings" brag about how you can order from local grocery stores online and get same day delivery during a specified time period - at no charge. They really like ordering the heavy items, especially if they have to be carried upstairs to condo's or apartments. This timing beats ordering from Amazon Prime....There is complaining about Amazon trying to deliver when people are not home and then they need to pick up at a local Amazon locker (which may be 2 miles away or so). This is a real pain point for some, as city dwellers and college students don't always have a car. Hence, this provides a way for local grocery chains to beat out Amazon with setting same day delivery times.
I wonder what the impact will be regarding sustainability. the amount of shipping packaging is personally concerning to me.
THEME #7
eCommerce Packaging Implications
SURVEYS
likely a smaller up and comer...not a large cpg
Packaging to Ship - eCommerce requires shipping so the shipper itself is important. It must protect the product in transit from weather and handling. Size of the shipper will determine its ability to fit in the mailbox or sit by the door.
Packaging for Functionality - It is convenient to have products arrive at your home but they also have to be easy to access from the package. Frictionless packaging improves the consumer experience as the product arrives.
one of the things I really like that Amazon is doing in this space is their "frustration free packaging" - making products really easy to open and also easy to recycle. This usually means they are all cardboard and often quite utilitarian looking
Savvy CPG brands will optimize their packaging for the Consumer rather than just focusing on retail shelf... Now is the time to think less about the brick and mortar retail environment and more about the Consumer.
Packaging Sustainability - eCommerce packaging adds to the environmental burden of CPG products. As consumers increase their online shopping, the packaging materials build up. Retailers are trying to minimize materials, encourage reuse and recycling, and/or simplify disposal.
there are other challenges with packaging, including cost, environmental impact, convenience (ie: disposal), and other concerns. Some innovations in this space include reusable packaging (or at least shipping containers). This is the case for several online grocery stores
Amazon's packaging supplier's consider packaging sustainability to be a win-win-win and are working hard to share your standards and guidelines with product brand owners and the packaging industry as a whole, so they can drive those positive outcomes faster, together....Certified packaging designed for Amazon and online fulfillment is a win for customers due to right-sized packages being designed to prevent damages; it’s a win for brand partners with Amazon because it’s less material volume and often much lower cost; and it’s a win for the planet—the reduced amount of packaging is less wasteful, and lower damage rates mean less transportation of goods to and from the customer.
Package for Economy/Efficiency - limiting volume and weight are important to keep shipping cost low. Amazon is a leader in optimizing packaging.
Marketing Role of Package - In eCommerce, the communication requirements of the package are changing. No longer does it need to stand out on the shelf to sell itself though it still needs to provide regulated information. Package appearance needs to fit with the brand and some retailers are are making the packaging materials more special (think gift).
On consistency, I see companies miss the mark and sometimes shine with their packaging, and sometimes disappoint. Not good for their brand. Macy's is an example. I ordered a couple of things and some arrived in branded though lousy bags. Some arrived in just lousy bags. I was impressed by Walmart. the packaging was simple like Amazon, but their was some nice branding on the boxes. On the high end, Apple excels. Their packaging supports the higher price and expectation.
Molton Brown send through their Ecommerce orders in beautiful boxes, packaged securely and with a hand signed card for who packed the items - a great personal touch.
Marketing Opportunity - Now that the package doesn't need to be found in the store it may be able to innovate in other ways to enhance the brand. It could be more personalized or multisensory. It could provide more education/information.
Packaging is having to carry an even heavier burden in the world of eCommerce because it's having to act as a mini-store where shoppers can touch, smell, hear, taste the brand experience.
Can this be even better than a store? Well, perhaps if it's more personalized to the shopper (easier to personalize than an entire brick'n'mortar store), or more of a personal experience (harder to have a personal moment among dozens of other shoppers), etc...
THEME #8
Direct Manufacturer to Consumer - CPGD2C
SURVEYS
Direct to Consumer - Manufacturers like selling direct as they build a consumer relationship and build a data base understanding. Consumers are interested only if they find the relationship beneficial. Perhaps they can access unique products, specify customized products, or find meaningful information. Luxury brands/products and those with information/education needs may be more successful going direct. Offering new or niche products via CPGD2C is a natural fit for eCommerce channel.
CPG's will need to create value to enable a customer to shop direct - be that through exclusive products, more information and "being soon" to be dealing direct with a CPG. The price will have to be in line with the channel - or the channel will match it. CPG luxury are an obvious candidate for direct - building an exclusive relationship, giving lots of information and making it "trendy" to interact directly with them.
CPGD2C can give more flexibility to launch products that might not hit market because they can't initially hit retail benchmarks or gain distribution. The consumer will benefit from access, availability, and potentially products that otherwise wouldn't have made it to retail. Manufacturers will benefit from new revenue streams and consumers. Trial in d2c will drive core retail business as few consumers exclusively shop one channel.
CPG companies need to focus on the future. Any customer-centric brand strategy will involve plenty of upfront customer research and require precise market segmentation and targeting...Suppose CPG companies start selling directly to the aging Baby Boomer generation in a very different way from Amazon’s current method; certainly abundant in consumer benefits.
Drivers for CPGD2C - eCommerce is growing! Sales of CPG products online will continue to increase and D2C is one way to do that. Manufacturers will be driven toward D2C in order to build stronger consumer relationships and better understand their needs. Doing so will help them better target consumers and develop innovative new products.
E-commerce is here to stay, and it’s affecting every product category. We have now genuinely reached an era when multi-channel, multi-device marketing is a reality in all sectors of business
...Natural channel shift as consumers move to online shopping and home delivery. Similar to when mass, then club, then dollar channel benefited CPGs.
CPGD2C growth will be driven by the desire of manufacturers to forge a direct relationship with consumers (and hence acquire consumer data to better serve) and own the brand/shopping experience. The use of hyper-targeted advertising will enable manufacturers to do this easier than they have been able to in the past.
Limiters for CPGD2C - CPG companies are experts in traditional channels, so going D2C would require them to master new skills or rely on partnerships. Consumers may not be interested in building relationships with every CPG brand they buy. Margins may be challenged as well.
CPG strengths will be limitations...lacking expertise and mindset for D2C as well as margin expectation that has required CPG to be dominant manufactures.
It's not what you think It's not logical for all CPG companies to sell direct because that is incredibly inefficient for consumers, who would otherwise have the convenience benefit of a one-stop-shopping experience with an aggregator like Amazon.
CPGD2C growth will be limited by fulfillment challenges and margin captivity. For the foreseeable future, many large CPGs will be unwilling to accept lower margins by going D2C.
I think choice is one of the things that might limit the growth of this channel. It might work okay for big brands like Unilever or P&G who have depth in their portfolio and can simulate choice but for smaller companies I think it will be harder. Either that or they may need to introduce some more products to give tier choices.
THEME #9
Category Highs & Lows
SURVEYS
Future Growth Categories - Most categories will grow their eCommerce business in the future. Beauty and Pet Care are already big and expected to be bigger. Categories that are small today will find ways to grow like Fresh/Frozen Food and Health Care. Alcohol would be huge without regulatory hurdles. Small brands will grow their niches. Innovation will help solve the problems holding some categories back (e.g., delivery, packaging).
Beauty is growing the most online - especially with the millennials which makes sense. They watch youtube make up videos, instagram beauty posts, so they will expect a great online offer.
I expect to see Pet Care continue to grow due to increased focus on pet health, rising health care costs and need for more specialized solutions. This is for food, accessories, OTC and RX. Traditional retail can't carry the range of specialized offerings and even the Petcos and Petsmarts have to make choices.
Smalls can be big! There are so many really good brands out there that no longer have the mass appeal to secure national distribution. These may be old brands, regionals or new emerging brands. Or flavors/variety extensions that may be strong in some geographies but don't make national cut. Large CPGs are not good with "niche" brands (but eCommerce can help).
I expect to see fresh foods and frozen foods emerging in eCommerce in the future.brought on by new exponential technologies in packaging and logistics. Blockchain, the Internet 5G, machine learning, 3D printing, shelf-driving vehicles are some of the technologies that will create new ways to make fresh foods and frozen foods very viable for eCommerce.
Drivers of Category Growth - The ease of purchasing high consumption products will be a driver for categories like pet. Subscriptions will drive loyalty to eCommerce channel. Products that are easy to package and ship will naturally grow. Digital marketing will make research, information, and reviews easily accessible.
Products that fill an ongoing need, like pet care/food, health care products are perfect for ecommerce. Once a customer has settled on a brand the desire to go "shopping" in the traditional sense isn't there. They want convenience and ability to compare prices quickly on name brands.
The category needs to be in demand, easy and fast to ship. It needs to also be marketable online, and influencer and content marketing is king. The product should tell a story and be able to be told through simple, easy to understand ads and messaging.
I expect to see petcare continue to grow due to increased focus on pet health, rising health care costs and need for more specialized solutions. This is for food, accessories, OTC and RX. Tradition retail can't carry the range of specialized offerings and even the Petcos and Petsmarts have to make choices. I have to go to both of them to try to get products I need and even then I have to go on line. Meds are expensive and most local pharmacies don't/can't do specialized versions. Ultimately, ecomm offers maximum access, convenience and affordability
Limiters of Category Growth - Delivery times can be a problem if you need a product right away. Fresh/Frozen food has some packaging and delivery challenges. Regulatory hurdles will hold back alcohol and tobacco. Products with lower repurchase rates will grow slower than those with high consumption.
Having to wait in for a delivery of some things could be a limiting factor for direct to consumer items.
Products with low repurchase rates in traditional retail, even within the top 5 ecommerce categories, will fail fast online.
I think right now the most difficult Online Categories are Fresh and Frozen. So far, not even Amazon has been able to figure out this category. Yes you can deliver fresh and frozen to consumers around the US, but there are two big problems. 1. very expensive to send frozen especially if it needs to be express shipped. 2. tremendous packaging waste that can't be recycled.... not seen a nationwide solution, but the local delivery guys such as Peapod, Good Eggs and Fresh Direct are doing it for select cities. They deliver in totes with no packaging waste.
THEME #10
Moments of Truth in an eCommerce World
SURVEYS
More Moments - Now there seem to be more moments of interaction between the consumer and the brand. This includes the Third and Zero moments, but also moments in between. Or maybe we are just more aware of more moments than we used to be. Some moments are new, like when the eCommerce package arrives or when reviews are posted/read, or other moments enabled by the internet like social media.
The over arching theme of ecomm is it enables more interactions/exposures. That comes with good and bad. More opportunities for consumers to see and learn about a brand or product. But also more feedback which effects perception, interest and purchase.
Walmart's "you can ring my bell" TV ad....did a nice job of showing "the moment" the Walmart package arrives and the happiness associated with it.
New moments of truth emerge in an eCommerce world from customer feedback, for good and bad, that is totally transparent. Google's "Zero".... creates a market environment of perfect knowledge to a much larger degree in a virtual world. Sellers on-line that fail...are actively judged by their buyers...and new buyers can easily research a CPG company/brand. Consumer retention, loyalty, and acquisition can deteriorate if a CPG company/brand fails to execute well.
One could argue that there should be Moment 1.5 or 2.5 which could be when the customer "experiences the brand". Is there great customer service that leads to the purchase decision? Or even great customer service that drives the consumer to want to purchase the product a second time. The point of all of this is to say that in a viral world with instant news, ecomm moments can come and go in the blink of an eye.
Changed Moments - eCommerce has significantly changed the First and Second moments. The First moment now involves social media or online shopping and the Second new involves packaging and shipping. The Third moment is not only found in eCommerce sites but also via social media.
Shipping/packaging greatly impacts truth 2 (experiencing the product). If shipping is not as planned and packaging doesn't hold up to shipping, perception is impacted.
with on line shopping truth 1 and 0 often happen simultaneously as consumers search/research for a solution they gain information via websites and reviews...It's never been more important for a product/brand to "do what it says" delivering on promises - there is no where to hide in our virtual world.
Customer Reviews, Shipping, Packaging, and Social Media are all just additional touchpoints because the shopper experience is both extended (waiting for delivery, etc) and condensed (I dont have to be in-store and can purchase in one click).
The Third moment of truth has become a critical because feedback and reviews are so much more important now. Online reviews result in your placement in Amazon searches. Social media posts increase brand/product awareness with much greater reach. In other words the online world dramatically accelerates the positive feedback loop for great products.
What is in a Moment - As a model, the original First and Second moment can be thought of as before and after the purchase. In eCommerce world, that is a split second where a lot is happening. The moments themselves are more complex than they used to be and now we are more aware of this complexity in each interaction and over long periods of time.
The guiding principle of FMOT is all of the things that occur before a purchase that influences a person's perception of a product when they are in a shopping mindset. Second Moment of Truth is the experience after the purchase. At the end of the day, eCommerce doesn't change either of these two basic things... it just adds many more layers to each potential experience that can be both good or bad....I'm a believer than that two original moments of truth still hold true today.
...the real change is the time frame. Rather than a "moment" in time when an experience takes place or an impression is made, brands are increasingly shaped over collections of interaction ("truths"). eCommerce makes it easier to aggregate a collection of interactions in shorter time periods as well over longer relationships. This changes how marketers should think about crafting those interactions to fit the type of collection (new-to-brand, old pro, etc...).
Social Media Impact - Social media has magnified the impact of "word of mouth". It has impacted all moments through the consumer's journey. It can be for better or for worse....and it can even be fake.
Social media has ushered in an era when everyone has their own facts. But what if those facts are intended to do harm, not good?
If the experience is a positive one, there is a good possibility that those consumers will become your voice and ambassadors as testimony of how wonderful your products via social media. On the flip side, if the consumers have adverse experience, this can be damaging because all it takes sometimes is a few bad reviews online then the entire world will know and the effect can be everlasting in a negative way.
THEME #11
Social Media is Changing Everything
SURVEYS
Social Media Purpose - Companies use social media to engage with their customer, build relationships, and grow their brands. It may help to build awareness, gain trial, or nurture loyalty. It is also a low budget tool.
What are the CPG brand's primary goals for social media? Do they want to nurture leads, grow your referral traffic, foster customer loyalty, build brand awareness, or achieve something else entirely? Certain social channels will serve the CPG brand's goals better than others.
the purpose of social media which is to connect more directly with consumers and be part of on going conversations in an environment where the consumer is
On a small budget the biggest thing you can do is promote availability of your product... Find ways to entice consumers to share photos of them with your product in stores, in various places of use, etc. If you get others to share photos in order to be eligible for free product or giveaways the campaign turns into free promotion with authentic support.
Social Media Match - Brands should be focusing on the social media platform that best matches their target consumer and their brand. Platforms differ in their demographic draw and they differ in the way they tell the story. While brands need a presence across all platforms, they should be spending their efforts on those most aligned with their goals. The social media marketing team must stay close and continue to offer creative content.
Women strongly favor Instagram, Facebook, and Pinterest, but there are twice as many men on Reddit... Seniors show a strong preference for YouTube... On the other end of the spectrum, Snapchat, Instagram, and Reddit all have much younger viewers.
Storytelling is an effective way for CPG brands to connect with their customers and prospects rather than directly selling to them... The correct platform choice depends more on where the target audience hangs out rather than how the platform is particularly well suited to the CPG brand’s story telling approach.
Influencers are Important - Brands often use social media influencers (who are a good match) to promote their brands. Influencers serve as ambassadors for the brand and directly connect the brand to a targeted set of followers. But not all influencers are created equal as brands want more than views, they want to sell products. And influencers need to disclose their relationship to the brand. This has had consequences like with boxed mattresses.
brands build their community of influencers in Facebook, Youtube, Instagram, and other social media. The impact is quite significant, as usually they engage various level of social figures to be their spoke person, and the brands now tried to make it more and more soft selling to avoid commercialization draw backs
Influencers ... works to get eyeballs but does not always result in sales without a coupon code and the right brand-influencer fit. I did a program with ShopStyle for $25K. I sent the product to three bloggers/ influencers with a custom discount code. We netted over $80K in sales from that engagement which is 3x return. We also shared their posts on our social media channels.
Is Social Media Worth It? - While social media has grown rapidly, some CPG companies are not sure it delivers as well as other marketing tools. P&G and Unilever, two of the largest CPG marketers, are questioning the ROI of social media and digital marketing and they are beginning to pull back. In the era of fake news there is also concern about validity.
Wonder if CPGs have over invested in digital and social media spend with a lack of measurable ROI, P&G certain thinks so. The company is making dramatic adjustments to their digital and social media spend for 2018.
Technology is making it possible to measure the impact of social media. But it starts by having goals. Goals will usually drive action to learn how to measure. There's that old axiom, "you can't manage what you don't measure".
Unilever "Swamp" article headline"Unilever is threatening to pull its advertising from digital platforms that it says have become a "swamp" of fake news, racism, sexism and extremism."
Excellent Examples - There are some excellent examples of brands using social media. Creative is very important. Videos can showcase recipes and cooking process. Pictures can show product in context and share enticing visuals especially in food and beauty. Humor and edginess can be particularly important for some targets.
uzzfeed's Tasty showcases videos and recipes that you really want to try. They show quick preparation, with few ingredients in a speedy format. They do a great job for advertising CPG food ingredients...like Hidden Valley Ranch.
GoPuff...started as a delivery service for snacks, beer and ice cream on college campuses, is now one of the fastest growing commerce plays that is redefining convenience. Given their millennial consumer, the brand has a pretty edgy social media presence that definitively has fun at engaging with shoppers.
I really love what Simple Mills does to build engagement and to add use occasions for their products. They started by creating short 20 second videos showing how to create unique dishes with their products. From there, they invited some food bloggers to create unique recipes using Simple Mills products and then showcased them on their social media sites. Now virtually everyday they have a new unique use of their products from consumers that send them in...
What's important to not disregard is that little or big media budgets - they still need creative. Great creative - which can be expensive. But then great creative deserves more eyeballs which small budgets cannot buy...media investment covers both the content/creative AND the distribution. Dermablend, a smaller brand owned by L'Oreal, recently inked a deal with UpWorthy for a budget that was < $400K. The campaign had the video site create 3 original pieces of content with videos and shared through their social media. The videos also featured influencers and it took on a life of its own resulting in over 10M views and increased awareness for their brand.
THEME #12
Global eCommerce and Digital Marketing Lessons
THEME SUMMARY
ECommerce and Digital Marketing are both global and local. Strategies are global, execution most often local. Challenges to global are culture, currency, and shipping. US, China, and UK are leading.
- Global & Local - eCommerce is global but executed locally. Digital marketing has global strategy but local implementation. Future is with Individualization informed globally.
- Global Challenges - It is difficult for eCommerce to be truly global with currency/payment and shipping/logistics issues across borders. Digital Marketing has challenges resonating across cultures.
- Country Leaders - Globally, US, China, and UK are in the lead for eCommerce. US with Amazon, China with Alibaba, and UK with online grocery shopping. Lagging countries have opportunity to leapfrog.
- Successful Brands - Starbucks, Unilever, and Newell were cited as having global success.
eCommerce is generally considered a global channel with fulfillment being local. eCommerce is expected to help local or national brands become more global in the future.
Digital marketing is becoming more global. Branding can be global but implementation is a local effort.
Digital strategy is a global effort but marketing/ activation of it is absolutely a local effort and strategy.
...we can expect a blurring of national boarders when it comes to digital, a lowering of barriers to entry across markets, and a split between industry consolidation and local specialization.
Global challenges for eCommerce across borders include payment/currency and the shipping/logistics. Digital Marketing is challenged by cultural differences.
Alibaba has solved international revenue processing problems by connecting the Merchant (brand or retailer) with Chinese online payment systems. International companies can pre-ship their goods to bonded warehouses in China. In this way, customs clearance will be quick and consumers will receive their purchases in less than a week.
It is challenging to develop global campaigns that can resonate with everyone across regions and cultures.
The future is in global. Individualization will be informed by global data. Fewer barriers will exist between countries.
Individualisation is becoming global, but more focussed on mature digital markets. If we use big data from global sources (and AI/ML) we can use this global data to practice and implement locally - keeping a local and personal element, but benefitting from the vast amounts of data around the world
...we can expect a blurring of national boarders when it comes to digital, a lowering of barriers to entry across markets, and a split between industry consolidation and local specialization.
China's Alibaba is a global leader in eCommerce. They have learned from Amazon and innovated. WeChat is also a leader in digital.
Alibaba is taking from Amazon and other virtual innovators and improving on them or perfecting them for their markets....You see a lot more partnerships with Alibaba than Amazon tends to do; maybe also a byproduct of a state owned economic environment.
I believe eCommerce is China is something that we all can learn together, the success of Alibaba, Alipay, Aliexpress for example, is too huge to be ignored. They could potentially be the challenger for Amazon.
Countries behind in eCommerce can leapfrog ahead by learning from global leaders.
Canadian POV - our eCom market is much smaller, and slower at adoption as opposed to the U.S. That being said, Canada eCommerce is growing at a staggering rate, and there are a lot of opportunities for companies to grow their share and profit immensely if done correctly.
In a global context, it's often the development laggards (ie: emerging markets) that end up leap-frogging the leaders.
For CPG, UK is well developed in online grocery shopping with high penetration and nearly complete coverage. This type of service is quickly expanding globally, like in US with Amazon Prime and Fresh.
...UK has the highest adoption of ecommerce in the world. One area where it's particularly developed is online grocery shopping which contains most CPG volume here. To give you an idea of the market, there are 4 supermarkets who each provide almost complete coverage of the country (about 99% of population) and who can deliver to your house in a 1 hour long slot of your choosing.... Despite the fact it's so developed and growing in double digits it is still less than 10% of the grocery market. To run this operation we mainly fulfill from our store estate and operate a the largest fleet of vehicles in the country (more than the Royal Mail).
Starbucks was offered as a brand doing a great job globally by customizing locally. Unilever was offered as an example of developing global ecommerce/digital standards.
Starbucks is about the global brand (channel) but with local customizations, which appropriately fits for those market specific tastes. The company’s success to its long-term commitment to the market, well-executed collaborations with Chinese partners, superior supply chains, adopting local technologies, and offering local items on its menu....All global companies can learn from this: attention to and execution around Chinese culture is the root of a foreign brand’s success in China.
Unilever has done some strong thinking around developing ecommerce photo standards which is being adopted by others too.
THEME #13
Toys R Us RIP - What does this mean for Brick & Mortar?
THEME SUMMARY
Toys R Us demise was of their own making as their business did not keep up with the times. Brick & Mortar needs to focus on customer delight and an awesome in-store experience.
- Toys R Us went bankrupt in a perfect storm. Ultimately, debt killed them. They lost their business to Walmart, Target, and Amazon. To continue their hold on the toy market they needed to innovate.
- Brick & Mortar needs to leverage the advantages coming with physical space and have an eCommerce presence to stay relevant. In-store experiences and community activity will be important for the future
It's Their Own Fault - Toys R Us stayed still while the world moved on. They missed the opportunity to lead a vision for the future of Toy retail.
Toys R US experienced what I called a “Business Tsunami”, when you look at the timeline of what led to their ultimate bankruptcy, it is quite difficult to make an argument that they can survive. But looking deeply, if they’ve a strong management with good vision and execution I think the outcome could have been quite different today.
Toys R Us died due to lazy management - the first mover advantage of an out of town all in one toy shop was great until...the internet and more importantly Am
Would've, Could've, Should've - While they could've had a better eCommerce strategy, their failure was with not innovating in their physical stores.
The Toys R Us news is another example of a company failure that will be blamed on Amazon but the blame is 100% on Toys R Us. Toys R Us was one of the first major companies to partner with Amazon for eCommerce. However, they failed to capitalize on this relationship. Toys should have provided customers with options to order online and pick up in store, order in store and ship to home or ship to store. They could have decreased store inventory and eventually real estate footprints as they became more eCommerce. They could have even been a same day delivery option for Amazon in markets where they had B&M stores.
Toys R Us could have effectively competed along two fundamental dimensions: Rethinking how to use its store format to create experiences for customers and Creating seamless omni-channel experiences across mobile and e-commerce platforms (its own website, marketplaces, Facebook...), social media (Facebook, Instagram, Snapchat, Twitter, Pinterest....), and in-store (in ways that tie-in all other channels).
Advice to B&M - Leverage the strength of having physical space and engage your customer! Experiences like eating, playing, teaching, entertaining will attract/keep customers to the store environment.
Today’s physical retail environment is about customizations and experiences: Eat, play and shop……Feed the Customers with food, Create a Community with experiences, and Shop, shop and shop more. Ultimately, it is about the customers (adults and kids) having a pleasant experience so they’ll either stay longer or be attracted to come back for subsequent visits (thru the Eat, Play & Shop Strategy). It is proven that the longer the customers stay within the stores, the more potential purchases that they’ll make at least at the store level.
Here is what I think B&M retailers need to do to survive in the e-commerce age: Create an Experience - ...thriving B&M have a very unique customer experience that people keeps customers coming back. They create immersive environments where customers can often try products, learn skills, etc.... like Bass Pro Shops and Eately. Over the Top Customer Service - Retailers that make the customer experience one of a kind should also be survivors...like Apple Stores and Wegman. Create Community Around a Mission - best example is Patagonia who are genuinely committed to the environment and sustainabillity.
Companies to Watch - B&M retailers who reinvent themselves around customer experience (and omnichannel) will succeed. Bass Pro, IKEA, Costco are doing this, Macy's and Best Buy need to reinvent.
Retailers must evolve and re-invent - then we will visit, Restoration Hardware (RH) is a great example. They closed up their 6000 foot stores and opened 60,000 foot stores, which became mall anchors and key destinations to showcase luxury home furnishings. They sell with a 1/3 in store, 1/3 catalog, and 1/3 online strategy.
THEME #14
Frictionless eCommerce Opportunities
THEME SUMMARY
ECommerce can become more frictionless by addressing today's pain points and becoming even smarter. It must overcome advantages of physical shopping and leverage its own technical strengths.
- Brick & Mortar has advantages with their physical space. The consumer can touch/feel product/package, see new product introductions, and enjoy the shopping experience.
- ECommerce should be smarter! Online shopping has evolved, but technology should be able to take it to the next level.
- Next generation technical improvements in eCommerce will use Artificial Intelligence, Augmented Reality, IoT ordering, chat enabled shopping, and customization.
- Continuous improvements in eCommerce can make a big difference. Examples are better images/descriptions, faster/easier navigation/check-out, free/faster shipping, and free returns.
SURVEYS
There are many pain points with today's eCommerce. Some of these are due to non-physical shopping experience which means limited information, fewer sensory inputs, and less enjoyment.
Next generation eCommerce will take advantage of new technology to become more frictionless. Board members chose AI, AR, IoT, chat, and customization as impactful improvements.
utilize AI, eCommerce could come up with recommendation of products based on needs, or behavior of the consumers who "supposedly" log in to the eCommerce using their other social media account. Integrated social media channels could help AI to read what is the behavior of the respective consumers.
CES 2018 this year, fridge manufacturers showed a range of rapidly evolving IOT enabled Fridges ...many have inventory/food or liquid counting systems with min and max levels set by the user, when the milk is low, frictionless automatic ordered can be enabled and delivered to the home.
Board members also chose impactful ways for eCommerce to reduce friction that are more continual improvement. Examples are with photos/descriptions, navigation/check-out, shipping, returns.
I am amazed how many sites and products have limited or poor images. I suspect that many CPG companies create a library of product images with the traditional marketing tools in mind and pull from those for online shopping. Similarly, sometimes the descriptions are poor and don't even match what is on the package.
Ordering via eCommerce has become really easy. I feel like the next pain point in this cycle is the return.
Subscriptions were a big step toward frictionless shopping, but they can go further. Subscriptions need to be smarter and more customizable.
There is an opportunity for subscription to evolve to be even more customizable and better fit a consumer's needs...One idea is the company inquires via text or email "are you ready" and easy date option. This serves as a reminder for the brand and reinforces the company is really in tune with me and striving for personalized service.
Amazon already knows how often I need honey, so why am I still waiting for my honey? Subscribe and save has gotten me closer to this dream scenario, but I don't consume my products in a perfect 30-60-90 day pattern...In my frictionless future, ping me to let me know they have shipped 2 bottles of honey. I can ignore the message and receive my honey, or click it to cancel.
ECommerce trendsetters are improving the experience by focusing on niche markets, offering B&M showrooms, improving the mobile digital shelf, and using new technologies for customization like Nike.
...rise of niche, focused online retailers. WMT's strategy with growing their ecommerce focused on that: Moosejaw.com, modcloth.com, bonobos.com etc are all very niche retailers. I recently shopped on Thrivemarket.com - it is a dedicated online retailer for natural and organic goods. The Whole Foods of online world.
Majority of online research and even shopping increasingly is happening via mobile phones... Unilever is doing some very strong thinking on mobile-ready images for the Digital Shelf
Board members noted it's difficult for consumers to notice new products while shopping online. In B&M, new products are often featured. We'll be explore ways to increase awareness/trial in next theme.
THEME #15
CPG New Product Introduction Challenge in eCommerce
THEME SUMMARY
New product introductions can no longer rely on only traditional marketing tools. In today's world, CPG needs to leverage new tools using digital marketing and partnering with e-tailers.
- CPG and eCommerce both play roles in driving awareness and trial for new products.
- Data analytics are helping find new ways to improve consumer/market understanding, target the right consumer, and track metrics.
- Physical stores and traditional marketing techniques will still be important to drive awareness and trial for new CPG products.
CPG companies need to market their brands well using digital tools to increase awareness. Websites need to feature new products, tell a story, and make a great first impression.
One of the things about new products is the first impression they create....store this impression is very much dependent on how well the landing page is built, how much relevant info it contains (e.g. some images, videos with product in use, description, opportunity to try through AR etc). Including social sharing buttons can help to attract the wider audience. I think L’Oreal is doing quite a good job...once you enter their website you see the new products straight away (almost first thing that appears on the page).
Consumers are enamored with what is new, always looking for the something interesting and the next best find. Tap into that insight with prominent and compelling "what's new" featured sections on website. the web offers many ways to bring this new product to life....tell a story and create interest and intent.
E-tailers play an important role introducing new products. They have data to target/recommend products to the right consumers and can showcase what's new on their platform to driving awareness &trial.
I believe data analytics will drive the future of CPG product introductions via AI technology, etc in combination with physical retail location experiments. Amazon back-end algorithmic technology is some of the best I’ve seen. Let’s say if you browse something of interests, assuming they’ve collected enough data about the consumers browsing or actual transactions, they can make recommendations to you based on your history.
...the onus lies heavily on the retailer to introduce new user experience features and site experiences that encourage Discovery. Amazon has been known for being a great shopping destination for spear-fishing, not necessarily browsing. However, at the very top of the site, is a small strip called "New and Interesting Finds on Amazon." It must be helping AMZ customers with discovery and ultimately shopping as it has been there for over two years now. Can't think of any other reason why AMZ would still keep it!
Physical experience will always be important for new products. In store environment provides a full sensory experience and samples help drive trial.
selective retail locations will continue to be play an important role in a sense that this’ll give the potential consumers an opportunity to taste, sense, smell, touch & feel the CPG products.
The world is full of products old and new - the best way to create excitement around a new product is to create a buzz - online and offline. As others have mentioned, using social media is key, but also use the physical world
Data plays a key role in new product marketing helping both the retailers and manufacturers. CPGs use data to understand and target consumers. Retailers use it to sell brands and private label.
Consumer analytics are the secret sauce to demographic solution selling. Find your demographic and find what they like and then position your brand or promote alongside. Data, AI and technology make this concept easier than ever.
With enough data collected at Amazon websites and physical locations, the data collected is extremely valuable in a sense that they can either sell or partner with CPG companies in developing new products (not individual consumer’s data, rather as an aggregate of the population). This potentially might be the new way of doing consumer research.
Digital marketing will be an important tool to communicate new product offerings. Social media will help create the buzz that can really help a new product launch reach more consumers.
I think most new product discovery is going to come from developing vibrant social media followings. Growing and building community among a fervent base of consumers that are drawn to a company's mission.
I also think that advertising on Facebook, Amazon, Walmart.com, Instagram, Google and Twitter will continue to grow in important for new product discovery. This paid search advertising is already key for discovery but will grow in importance as brands try to stand out from the crowd.
THEME #16
Opportunity to Lead eCommerce
THEME SUMMARY
Our Board members see many exciting career opportunities in eCommerce. They can improve today's CPG eCommerce, build new capabilities, or help lagging companies begin to play online.
- CPG eCommerce has only started the eCommerce journey.
- There are many interesting challenges to take eCommerce to the next level both in CPG and other industries.
- There are many lagging companies who need help to succeed in the eCommerce era.
- Exciting roles require Leadership and span a variety of functions - Marketing, Operations/Logistics, and Technology.
There is plenty of room for growth in CPG eCommerce. Some people's dream jobs are helping to take CPG eCommerce to the next level.
Challenges present exciting opportunities like how to make eCommerce even more convenient how to solve refrigerated supply chain issues, or how to go direct to consumer.
...the space that would intrigue me would be that of Convenience Commerce.... I'm a firm believer that Convenience Commerce will be one of the next big waves around commerce.
the cold chain is still a mess and currently far from being solved. We need to figure out a way to get refrigerated and frozen products to consumers homes if we want in-home grocery to be a large part of the market.
There are opportunities to help companies who are behind on eCommerce and omni-channel marketing. This includes many small/mid-size companies or those with brands that have lost their way.
I would seek a company that is a multi-channel marketer that just doesn’t “get it”. By that I mean, they operate with marketing silos and have no appreciation of how the various channels work together.
the greatest potential for impact comes from an organization that is operating as a laggard instead of a challenger. Helping them make that flip in character, especially in eCommerce, can lead to extraordinary breakthroughs.
Applying skills learned in CPG eCommerce can be helpful to other industries like automotive or apparel.
Senior ecommerce/innovation role in Automotive retailing - existing dealer structure is definitely broken as more people research online and head to the physical location to do the transaction, not many companies are out ahead of this. Dealers don't even reply to emails, plenty of impact to be had!
Established world-class wholesale/retail fashion brands like Ralph Lauren, Michael Kors, Lululemon, Tapestry, or PVH......they have the most to work with but are the most vulnerable to become irrelevant.
A successful career in eCommerce requires a diverse, multifunctional skillset.
THEME #17
Amazon Insights
THEME SUMMARY
Many insights were explored from Amazon's 2018 and 1997 annual letters to their shareholders. Jeff Bezos' Amazon letter is the modern-day version of Warren Buffett's Berkshire-Hathaway letter.
- Amazon is a clear leader with lofty goals and impressive results.
- Amazon's 1997 letter was prophetic and much of it is true today.
Amazon is BIG....many sellers and many customers and many employees (560k).
Amazon Prime Memberships are a gold mine for any business as they are guaranteed revenue. The $11.9 billion per year from Prime Memberships is hard to comprehend.... the cost of membership went up 20% (or $20 to $119) since inception and most members did not even bat an eye at the gradual increase.
Creating marketplace opportunities not just for themselves - half of their units are from 3rd party sellers. WOW. What a major impact they have made on the livelihood of so many. 300,000 sellers. Bigger impact than many government driven jobs programs that cost a lot and deliver little.
Amazon relies on metrics....achieving high standards and tracking strong performance. Customer satisfaction is a key priority.
Jeff Bezos shares an interesting perspective on high standards which are absolutely necessary to meet customers' increasing expectations. Worth a read.
its not enough to just set high standards and expect they will permeate the organization....that they are area specific and have to be defined...that is a good leader....humble and open to share what he learned the hard way and cognizant that you have to "help with the how"
We can't all be great everything, we can't all have high standards for everything in life. Something has to give. Unless you're Amazon who consistently "hits it out of the park". Customer satisfaction ratings and ability to innovate really are strong suits and they don't have alot of weak suits.
Also important is what Amazon does not say. Like what is the future of shipping services, what about antitrust concerns, or what's the facial recognition story in the news since the letter.
Many of the points made in 1997 are still true today! Jeff shares it annually as a guiding light and reminder - customer focus, long term focus, bold decisions, analytic metrics, etc.
Amazon is changing the way companies go to market with new products. The old way dictated by big retailers like Walmart and big CPG companies will likely change as consumers increase their expectation
CPG marketers need to take two things away about innovation rate. First, they have to realize that customer expectations are being set by other industries and they need to change as well. Second, realize this is the Amazon mindset and when they enter new categories, this is how they will do it.
impact of planograms on innovation cycles...going first to Amazon has negative retailer repercussions & most CPGs can't manage a small innovation startup, their systems are designed for long runs/large volume. Old approach just isn't going to cut it meaning CPG needs to innovate how they innovate.
Amazon has evolved from an online bookstore to leadership in eCommerce. It will continue to strategically diversify for future growth.
They have found ways to diversify their services beyond what anyone could have predicted. And I am sure they are not done yet. What started as an eCommerce site now offers: streaming video, digital music, eBooks, grocery, textbook rental, video games, photo storage, and more
Amazon future growth will likely rely on continued diversification. Buying successful retailers would help them scale quickly to better compete with WalMart. Costco has high profile customers who spend on big ticket items. Target is a strong brand that does well with trendy items and private label.
THEME #18
Time to Say Good-Bye - Parting Thoughts?