While shopping online for consumer packaged goods (CPG) may have come late to the e-commerce party, it is a fast-growing sales channel. In 2010, U.S. online CPG sales reached $12 billion, representing about two percent of all CPG sales. That sales rate is expected to double in four years to $25 billion by 2014. Several market factors and forces are at play making CPG ripe for e-commerce opportunity.
From a demand standpoint, the first generation of ‘digital natives’ are forming households. To these tech-savvy media mavens, online is a way of life for convenient, on-demand and personalized attention. Plus, broadband penetration and mobile adoption rates continue to increase. The “what I want, when I want it and where I want it” trifecta will be complete for the majority.
On the supply side, the economies of scale for retailers are building as the online channel provides a greater awareness and availability of distribution opportunities. For manufacturers, online enables a deeper, more personalized relationship with the shopper – delivering on the full promise of category management.
Five things to know about online grocery shopping:
- Consumers love online grocery shopping, but it takes time getting used to. You can simply the process by improving the online experience with navigation, search, online help and porting over shopping lists. Deliver a better time-saving experience and consumers will hang on.
- Online baskets are different than offline baskets. The average transaction size is much larger for food and beverages ($80 online / $30 offline) and health and beauty purchase ($30 online / $10 offline). And online shopping offers a greater mix of pack sizes and categories.
- Consumer perceptions and purchase behaviors are affected in important ways. The interactions with the online ‘store’ environment are fundamentally different than an in-store experience. The online experience is fueled by a needs-driven experience as a greater variety of options are made available on screen.
- Online shopping “levels the playing field”. Big brand ‘physical’ advantages do not translate online. With universal distribution and search functionality an inherent bias toward niche players is created. Ultimately, price transparency, connectivity and open content favor a purely ‘rational’ market.
- Large and small brands can win online by combining marketing savvy with digital capabilities to add value. With interactive websites, smartphone applications and social media connections, expanding your brands in new and innovative directions is virtually limitless.
Online grocery shopping is no longer coming – it has arrived. Now is the time to get in the game and determine how your brand can add value in new ways across consumer touch points. It is not only a shopper’s market, but a marketer’s market. The rate of change is accelerating and so it the rate of opportunity for creative marketers who embrace the digital revolution.
These and other insights were highlighted in a Nielsen webinar held May 24. Click here to download the webinar, Balancing Act: Aligning E-Commerce with Today’s CPG Shopper.