How CPG Giants Can Grow Market Share Online

By Michael Kruszynski

By 2021, CPG digital commerce will exceed $100 billion in annual sales. More remarkable, ecommerce sales are only 11 percent of total CPG sales. Narrowing into a couple of key categories and food and beverage are smaller with 3 percent of sales transacting digitally.

The opportunity for online growth and brand building is massive. CPG brands need an ironclad strategy for sustainable growth in the coming years. Those who continue to de-prioritize ecommerce initiates, understaff and underfund the business will be left in the dust.

Digital Native Vertical Brands (DNVBs) are scrappy and highly motivated to infiltrate a category and capitalize on consumer changes. This threat is real and already big business. There are over 16,000 different companies comprising $5 billion worth of sales in non-food CPG. Further, digitally native brands are growing three times faster than total ecommerce.

What are the secrets to digital native brands digital growth? Look no further than the cosmetics vertical. In traditional brick-and-mortar outlets, the top 20 manufacturers have 90 percent of in-store sales. Those same manufacturers only have a 14 percent dollar share online. Why? They have more money, more people and more data, yet are flailing online.

DNVBs are focused on three core areas:

Mobile and Social First: Consumers are far more loyal to their favorite social media medium than they are their favorite grocery store. In fact, 72 percent of consumers have bought a fashion, beauty, or style item after seeing it on Instagram. The largest DNVB disruptors sell everyday items such as cosmetics, razor blades, shoes and toothbrushes via social media.

DNVBs leverage brand influencers in an authentic and relatable “I need to have this now” way. For example, beauty startup Glossier uses reviews from loyal customers front and center on its site. The brand understands that consumers trust and value feedback from their peers. Putting this information for all to see drives trust and, in turn, sales.

Relentless Focus on Customer Experience: For DNVBs, product detail page is what gets consumers to take a chance on a new brand. Winning pages feature simple imagery and copy that shows product benefit and features. DNVBs leverage images from social campaigns as their enhanced content. Consider sustainable-footwear company Allbirds, for example. The brand’s product pages feature images from Instagram users of their shoes. Allbirds then educates the buyer on the material used, types of soles, and other product benefits.

DNVBs are also keenly focused on site time (engagement) and conversion (is the shopper executing an intended action?). They excel at getting shoppers to add items to their cart quickly and execute the order easily. They offer suggestions on subscription timing, adjacent items and/or ask for some quick feedback. Everything about the buying experience is fast and simple.

Test and Learn Lifeblood: At many large companies, big teams are constantly trying to build the elusive perfect experience. Digitally native brands test and learn, first to build their business and then to grow market share. They take feedback from the user experience and incorporate those learnings into their messaging, product development and conversion strategy. Rather than have everything be perfect, it is exceptionally relevant. Speed wins on the digital shelf, not perfection. Fix what fails today, tomorrow.

The threat to global CPG companies is bigger than ever. DNVBs continue to launch. The winners expand their presence beyond digital channels to brick-and-mortar stores. Where will CPGs find themselves in 5 years?

Only brands that meet consumers expectations for personalized, relevant product experiences will find success on the digital shelf. Their peers will get left behind. Longstanding CPG brands must look to these digital upstarts as examples to emulate. Consider what makes this business model so successful. Meet customers on devices and channels of their preference. Put customers at the center of your product experience. Leverage your data to test new experiences and learn more about customers’ preferences.

Michael Kruszynski leads all vertical based product marketing at Salisfy, a product experience management platform. Before joining Salsify, he worked on Procter & Gamble’s Amazon Retail Team.

                                                                        July 2019
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