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The Consumer Packaged Goods Industry and eCommerce

It wasn’t very long ago when ordering beauty products or household goods online was considered strange. Now, according to a recent survey by the Grocery Manufacturers Association, 40% of member companies within the association are expected to sell direct-to-consumer online in the future, up from 24% last year. As eCommerce has evolved, so have the expectations of consumers to not only find but also order products online. As a result of this, more consumer packaged goods (CPG) companies are launching eCommerce initiatives, some for the very first time, to meet the expanding needs of their consumers. Here are a few ways CPG companies are evolving to meet these needs…

 

  • Digital ad spending in the CPG industry is trending upward – A reason for the shift in more CPG manufacturers selling direct-to-consumer through eCommerce sites is the increased digital ad budgets of major CPG brands. More consumers are clicking on digital ads, resulting in the need for a digital location for these ads to click through to. In fact, according to eMarketer, U.S. CPG companies are expected to spend $5.3 billion on digital ads by 2017, experiencing a double-digit growth percentage over the next 5 years.

 

  • Consumers have become more receptive to e-mails from CPG manufacturers – Even over the past 12 months, consumers have become more open to e-mail marketing around CPG brands and their products. According to Experian, the open rate for CPG-related e-mails has increased by 21% from 2012 and the amount of eCommerce revenue directly tied to CPG brand e-mails has increased by 15%. Additionally, both the bounce rate (down 31%) and unsubscribe rate (down 18%) have declined significantly for CPG brands over the past year.

 

  • CPG manufacturers are using mobile to reach younger consumers – With the evolution of mobile technology, more CPG brands are looking to utilize mobile to reach a younger audience. The average consumer who engages with CPG content on mobile devices is led by females (53%) and approximately half of consumers engaging with mobile CPG content are between the ages of 25 and 44. While traditional marketing methods continue to work well for older consumers, this “middle-age” demographic is becoming accustomed to acquiring information when and how they want to on their mobile devices. This demographic is also becoming more likely to engage in mobile commerce instead of using their mobile devices only for product information or showrooming.

 

  • Some CPG manufacturers still value product awareness over digital transactions – Some CPG manufacturers are unique from many traditional online retailers in the sense that most of their product sales come from third-party stores, both online and offline. Product awareness and communication has traditionally been vital to the success of CPG brands, which has resulted in some CPG brands launching “micro-sites” focused on eCommerce as a way to get more information and learn about their consumers. While these sites may not be a pillar of business for CPG manufacturers, it creates an opportunity for CPG companies to cater towards tech-savvy consumers and maximize their marketing efforts by expanding their audience (e-mail, social media, etc.) directly through information obtained via eCommerce transactions.

 

 

In conclusion, the CPG and eCommerce industries have a unique and evolving relationship. While it may be several years until some CPG brands see online sales as a major contributor to their bottom line, the information and experience gained from having an eCommerce site has the potential to become invaluable. As CPG manufacturers look at their analytics and towards the future, it’s becoming more and more apparent that expanding their digital footprint into the world of eCommerce could be vital to the success of some CPG brands moving forward.