By Victoria Gustafson

When was the last time you or someone you know bought milk online? What about diapers? While milk may not (yet) be a popular e-commerce item, we know that diapers and some other shelf stable CPG products are steadily growing sales online.

Online sales for CPG products are still a small portion of overall CPG sales, just one percent¹, but it won’t be this way for long. In fact, e-commerce growth is outpacing brick and mortar in some categories and, within the next five years, online will account for five percent of CPG sales and a substantial part of CPG growth².

Currently, over one-third of online CPG sales are for health and beauty products³ as they’re higher value and easy to ship. But, manufacturers and retailers have a huge opportunity to increase the sales of edible items (both shelf stable and refrigerated/frozen) typically found in the grocery store. If you are a manufacturer or retailer, it’s time to start shifting some of your business online – if you haven’t already.  

Of course, grocery and household items need superfast turnaround with fulfillment, but a different delivery model than other products. This means that manufacturers and retailers looking to sell these types of products online need to adopt a hyperlocal approach.

Whether you’re a brand or retailer, if you want to grow in online grocery, you’ll need a localized service model that’s based on what customers do in that market. Shoppers decide what to buy and where to buy it based on what’s available to them and their personal preferences, so no two markets or segments will be exactly the same.

Here are four ways that both CPG manufacturers and retailers can navigate the quickly-changing world of e-commerce to capture grocery sales growth online:

 

• Define the e-commerce landscape and how it will impact your categories. Certain categories, particularly food with its ability to now be shipped quickly and with cold packs, are ripe for e-commerce development. Online shoppers tend to buy on deal and/or to stock up, so consider the items that fit these shopping behaviors. 
• Develop brand management strategies that are specific to e-commerce. Shoppers have come to expect personalization online as well as transparent pricing. They also need to be able to easily find what they’re looking for, so make sure that your product can be found quickly on your site as well as via search and category rankings.
• Define retailer priorities and develop e-commerce account plans. Online and offline strategies for the same product can differ substantially based on a variety of factors, including the category and the shopper’s path to purchase. Create detailed online plans for your brand/s based on retailer priorities and expectations.  
• Adapt the four Ps – and an additional one, Partnership – to the digital shelf. The P’s are expressed differently online versus offline. For example, place becomes not just the “store” where a product is sold but positioning in Google/how shoppers find your product online. Also, for manufacturers and retailers to truly succeed online, they must incorporate the 5th “P” – Partnership. When both parties engage in joint business planning as part of their e-commerce strategy, they can better bridge the gap between their needs so that everyone wins.

Being successful online with grocery products requires a different set of insights, analytics and data sources than your brick and mortar strategy. Work closely with your research and data partners to determine how you can fill the unmet needs of local shoppers and leverage the unique opportunities that e-commerce provides.


To learn more winning strategies for online grocery, email me at victoria.gustafson@iriworldwide.com. I spoke at a recent webinar with Keith Anderson from Profitero and we’d happy to share our info with you.