A decade ago, consumer packaged goods were an afterthought in the e-commerce marketplace – the last pick in gym class – and couldn’t care less.
Today, CPG is in the game. Although CPG sales in the e-commerce channel are still miniscule compared with brick-and-mortar store sales, the numbers are growing fast enough that marketers are scrambling to figure out what it takes not only to play but to win.
Drugstore.com, Peapod and Quidsi were among the e-commerce frontrunners in consumer packaged goods before Amazon.com grew active in the space.
By 2010, Amazon emerged as a dominant player whose aggressive activity finally forced Walmart and other traditional CPG retailers to make e-commerce a key initiative and fuel the recent surge in sales.
To further understand the evolution of e-commerce from a CPG marketing perspective, we assembled a virtual roundtable with some key players in the industry.
In 2014, Ad Age reported that packaged goods marketers had begun to “wade warily” into e-commerce. Who were the first to get their feet wet?
Danny Silverman: P&G and Unilever began investing heavily in the e-commerce channel around 2010. Over the next few years, most other manufacturers were debating whether the channel would become important enough to invest in, but only a few, like Johnson & Johnson, actually jumped in. It wasn’t until 2014 to 2015 that the industry universally acknowledged that e-commerce was where all future growth would come from. The shopper was already there and waiting for better online shopping experiences. Retailers are playing catch-up, too, with heavy investments from Walmart, Target, Home Depot and others.
Greg Stevens: CPGs realize this is a channel they need to get into and they’re doing it in a big way. One of the important trends that’s well underway at this point is that all the major CPGs are hiring e-commerce teams – VP of e-commerce, or, in the case of one beverage manufacturer, CEO of e-commerce. These are roles that didn’t exist two years ago. This is a significant investment on their part to gain human capital to jumpstart their digital presence.
Steve Kinsey: For most of (GSK’s) products and their categories – OTC healthcare medicines and related items – the percent purchased online is in the low single digits. Even so, it’s becoming less of a sideshow and increasingly something that can no longer be ignored.
E-commerce may not be a “sideshow,” but for CPG marketers it’s still a strange new space that blurs the distinction between consumer and shopper and requires them to assemble a new bag of tricks. The strategies they use to get attention in retail stores don’t work online.
What new concepts must CPG marketers wrap their heads around in order to succeed?
Kinsey: One of the key terms we’re focused on is the digital shelf. As a shopper, I hate not being able to pick up a product and read the label or not being able to step back and take a quick glance at the various brands and products next to each other on the shelf. So how can we recreate that experience online? Better yet, how can we deliver more?
Brian Cohen: Complicated user journeys where e-commerce plays multiple roles – ideas, product info, the transaction itself – is what drives true marketing relationships and conversions. Shoppers use e-commerce tools for more than just shopping in that environment. Ninety percent of Amazon visitors, for example, complete their purchase in an offline environment. But e-commerce tools are the ones providing the assistance and information needed to build their lists, be it recipe videos, product details or peer ratings and reviews. This is one of the reasons why the traditional path-to-purchase planning model is dying a slow death. That’s not how shoppers shop, so it’s not how we as an industry should plan.
Kinsey: And, increasingly, e-commerce channels are eliminating aspects of the path to purchase altogether. Auto-replenishment services and devices (like the Dash Button) are eliminating individual purchase decisions.
Along with what Kinsey calls “a gazillion new terms,” e-commerce presents shopper marketers with a host of new challenges, from organizational structure and attribution to concerns about short-dating and counterfeiting by third-party sellers. But one of their chief concerns is content creation and distribution. Coca-Cola’s “Content 2020” initiative recognizes the need to crank out low-risk, story-driven content frequently and consistently.
Where do other CPG companies stand?
Silverman: For now, retailers and manufacturers alike are mostly focused on just getting the fundamentals online, updated and accurate. Any one product can have thousands of points of content associated with it. And, on top of that, every retailer has its own format and process for uploading that content.
Jen Brevick: Every retailer has different requirements when it comes to the data and images they want to receive and how they would like to receive them. Our challenge as CPG manufacturers is to understand these requirements and create ways to meet them. In some cases, this means that we need to build internal processes and/or use third parties to help format and disseminate our information. Creating, maintaining and syndicating content requires a good deal of creative, process and strategy work.
Mike Lapchick: More third-party providers like (Shotfarm) will pop up to serve as translators for CPGs. (Shotfarm) just announced a new platform that allows any PIM (product information management), MDM (master data management) and DAM (digital asset management) system to publish content directly to Walmart. So you get a sense of scope: Walmart’s specifications include 150 different attributes for a product. Forty of those are mandatory fields, and 90% of the mandatory fields are categorically irrelevant. So, say you sell skis. One of the mandatory fields is, ‘Is it a choking hazard?’ But you still have to go through and fill them all out.
GSK’s team categorizes e-commerce content into four buckets: product attributes (weight, UPC, dimensions), basic product information (title, product type, features, packaging photos), enhanced product content (videos, descriptive copy, consumer reviews), and hidden or meta keywords (SEO tags). The fourth bucket is important because products that come up on the first page of search results are generally the ones people buy.
What opportunities and challenges does search-bar shopping present to CPG companies?
Cohen: A vast majority of trips start at the search bar, so being present after a search is paramount to success. You can’t do this without great content that feeds the search algorithms of Google, Amazon, etc.
Stevens: The market leaders don’t always come out on top, and they can’t leverage their scale and retailer relations for more visibility. So in some cases you have companies that come along and just crush it in e-commerce. For instance Tom’s of Maine toothpaste way over-indexes in terms of online sales and market share relative to Colgate because that product just lends itself to an e-commerce experience for various reasons. In e-commerce, someone like Tom’s of Maine can take market share from the incumbent guys more easily than they can in the offline world.
Brevick: SEO is important, but being strict to SEO may cause you to create product bullets that are wordier and exhaustively detailed, and we know consumers sometimes respond better to straightforward language and brevity. We try to balance both of those needs.
With e-commerce, CPG companies are learning to play a new game with new rules on an unfamiliar field. It’s a leveling field, where a CPG’s major-league status as a brand doesn’t matter as much.
With so much to learn, what are CPG marketers focused on, or what ought they to focus on? Is it true what they say that “Content is king?”
Cohen: I think this statement is a tad myopic. In my opinion, viewing content creation through the lens of a specific channel will diminish the effect that it can have. Instead, content should be developed hand in hand with media rather than as a result of it, and ultimately built and used across channels, of which e-commerce is just one.
Kinsey: Given the increasing importance of the online product detail page and the overall digital shelf, brand manufacturers should be spending a lot of time, money and resource ensuring the right information and images are showing up online. I often chuckle at how much some brands pay for their branded websites relative to the money they invest in their digital shelves at e-commerce sites, all the while knowing that consumers are relying on e-commerce sites, especially Amazon, far more often for their product research.
Ultimately, you have to prioritize and compromise. Consumers are using Amazon four to five times as often for their product research online relative to any other search engine, so you want to make sure you are prioritizing Amazon and providing content that meets its requirements and delivers any SEO goals you may have.
Lapchick: It is critical that online product information be correct and current from one retailer to the next. CPG companies need to work with third-party “translators” to meet retailers’ requirements because this process is not going to become standardized. Standardization is a policy-based solution and you can’t have a policy-based solution to a technical problem. Technology outpaces policy.