Is CPG Dead?

For years, we took it for granted that customers would flock to stores for consumer package goods (CPG), particularly fresh food. There weren’t many people who foresaw a tsunami of delivery services zipping along and the popularity of home-delivered goods soar.

For years, we took it for granted that online shopping for nonperishable products would survive and perhaps prosper, but fresh produce and meat? While sales at food and beverage stores rose more than 3% last year, online CPG sales in the U.S. rose more than 35% over 2017 and topped $58 billion.

All indicators point to a steady increase in online sales. Much of this can be attributed to the Z and Alpha generations who tend to shop more online.

What it Means for Wholesalers

In response to this transition, some manufacturers have put up their own websites to market directly to consumers, somewhat in competition with their major client retailers. Most, however, sell items one can’t find in the stores.

If your company supplies retailers, there are some things you can do beforehand to avoid any misunderstandings with your clients, many of whom have probably been your customer for years.

Meet with them before making any decisions, explain the situation and that you’re also thinking of selling merchandise online as well. Be open and transparent. Get their feedback, particularly in discovering what you might do to alleviate any fears that you’ll be competing and drawing customers away from them. Is there a “win” you can give them by selling online?

What If We Don’t Sell Online?

Many manufacturers have chosen not to sell online largely out of fear of damaging the long relationship they’ve had with their retailers. However, many have also enhanced and leveraged their websites to direct visitors to their retailers and ecommerce merchants. That’s something to seriously consider if your company chooses not to sell online. This helps to not only further strengthen the relationship you have with existing clients but might also result in overall increased sales.

What About The Gorilla In The Room?

When it comes to online shopping, Amazon is by far the leader with a 2018 market share of slightly more than 40%, twice what it amassed six years earlier. Consumer packaged goods were predictably the most popular items. And with 101 million members in its prime program alone, Amazon is a force for manufacturers to consider partnering with.

One study reported that 55% of online shoppers begin their search on Amazon. The percentage that actually buy is unknown but with an average 20.6 million visitors per month, being listed on Amazon is also a strong marketing tool.

On the other hand, a different study reported that manufacturing executives saw Amazon as a potential threat because they believed the company raisies customer expectations. Some 68% of the 500 polled also felt customers were more loyal to the ecommerce giant than to their brand.

As recommended in earlier articles, learn as much as you can about your customers, particularly if you’re contemplating a major decision like this. This is where focus groups of your loyal customers can be invaluable.