Retailers across the U.S. are rejoicing after consumer spending during the 2017 holiday season brought them the best year they’ve seen since 2011. For some, it was a much-needed lifeline after a challenging year; for others, it was the natural continuation of sales that have been accelerating quarter after quarter. One of those categories is consumer packaged goods (CPGs), which has seen strong growth through online channels.
Holiday sales figures show Amazon accounted for four percent of all U.S. retail sales last year. While that may not be surprising in and of itself, two of its fastest-growing product groups were pantry items (up 38 percent) and grocery (up 33 percent). It is estimated that Amazon sold $2 billion worth of goods in these categories.
Now that the winter holidays are over, CPG retailers have turned their attention to Valentine’s Day. After that will be Easter, then the Fourth of July, and the cycle continues. These holidays provide excellent entry points for CPG brands to entice consumers to buy their products online. Once users fall in love with buying household items on the internet, they continue at a steady clip.
Holidays can be a lever to jumpstarting the process and getting consumers onboard e-commerce. Smart CPG brands and retailers are working together to make the process seamless for shoppers by giving them experiences similar to the “impulse buy moments” they are used to in stores. It takes a perfect blend of marketing and fulfillment.
Special online challenges for CPG impulse purchases
The challenge for CPG manufacturers is that many of the standard e-commerce marketing tools don’t work for them—at least, not in the same way. Low-consideration CPG sales depend on converting impulse purchase intent quickly, before it wanes. Online, time and effort have been barriers to conversion, particularly for CPG.
Consumers may spend hours researching television models and comparing prices … and when the perfect model is found, it doesn’t seem like that big of a deal to fill out name, address, and enter a credit card number. However, most consumers won’t invest that kind of time or effort for CPG items because they are low-involvement, low-risk products. That’s why in-store merchandising has been so key for these brands—the short distance from shelf to the cart made it easy for consumers to drop one more item in the cart on impulse.
The online model for CPG products works only if it mirrors brick-and-mortar: toss it into your existing online shopping cart and move on with life. For this, partnerships between brands and retailers are critical, either directly, or through tools that facilitate digital impulse actions.
Convenience is the new dollar off
Convenience is key for optimizing CPG sales, and smart brands are capitalizing on this by bundling products to create a unified conversion of multiple products or ingredients—think of a “virtual endcap.” If you use recipes to help drive sales of your ingredient, why not let consumers cart all of the ingredients at once at their preferred retailer? Let consumers buy occasion-based product combos (plastic cups and paper plates?) or any naturally complementary products (cleaning supplies and paper towels) to the benefit of both the consumer and the brand.
These partnerships can extend beyond CPG companies and involve multiple marketing channels. One brand created a candy jar craft project on Pinterest that consumers can easily make at home. The hardest part is gathering the supplies, so the company built a “virtual bundle.” With one click, consumers can load the jar, ribbon and candy from the CPG brand into a cart. Facebook is also a natural platform for discovering and carting products, as long as the interaction is fast enough that the shopper doesn’t have to choose between interacting with friends and interacting with the brand!
Working together helps build the category
Smart CPG brands that develop partnerships among retailers and one another, can help drive growth of their piece of the e-commerce pie – at the same time that the pie is growing. That’s a gift to the entire digital shopping world that will continue giving all year long, regardless of which holiday sparked it.
SmartCommerce provides technology to consumer goods brands that enable consumers to click to add items they find online to retailer shopping carts.