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To grow e-commerce, CPG companies must align digital with brick-and-mortar in an ‘omni-channel’ approach that maximizes consumer brand experience.
Growing market share through e-commerce requires an ‘omni-channel’ approach. Consumers increasingly regard digital and conventional channels as inter-changeable. In order to thrive in this disruptive context, companies must offer consumers a consistent, seamless message, content, and shopping experience across channels.
Although consolidator e-Retailers (e.g. Amazon.com) constitute the principal source of CPG e-commerce, companies have been slow to provide them with the necessary digital support and collaboration. There is an immediate and long-term cost to such inaction. Companies that fail to become digitally pro-active are likely to lose market share to more aggressive competitors.
To win in digital, which is driven by demand ‘pull’ driven rather than product ‘push,’ companies must make the desires of the consumer a true top priority. They may even want to think about their business differently. For instance:
Strategy must become attuned to offering ‘anytime/anywhere’ shopping.
Processes must be sufficiently agile to serve much more narrowly defined market segmentations whose taste and preferences can quickly change.
Traditional supply chains and logistics, which evolved to serve big box stores, will have to adjust to service individual consumers making single buys of highly personalized products.
On-line purchasing is projected to constitute 25 percent of the total CPG spend within five to ten years as emerging markets become more important and consumer preferences in mature markets change. The business case for CPG companies going directly to consumers is challenging because of the nature of the goods sold.
A better alternative is to sell through e-Retail consolidator sites. In order to leverage their digital opportunity, however, CPG companies must develop unique strategies for e-Retail sites, something few are currently doing. In addition, they must gear-up digital operations without jeopardizing relationships with traditional channel partners.
Digital channels impose additional requirements on an enterprise as the courting of consumers is highly customized. The value propositions for the digital consumer are time optimization, flexibility, and a personalized experience. To deliver on these propositions, the scope of the business requires integration from branding to customer acquisition through to the leveraging of automated ‘big data’ to capture customer insights and correspondingly re-calibrate supply chains.
To compete digitally, CPG companies will have to reappraise product category mix, strengthen product content management to become more robust, adjust merchandising capabilities to offer maximum, real-time flexibility, and segment markets according to variables significantly different from those that are typically used.
On the supply chain side, technology platforms and back-end processes must be more scalable to handle cross-channel marketing. Distributed Order Management must correspondingly become more responsive in prioritizing and directing orders across available distribution channels. Physical transport networks will have to be reconfigured to deliver hand-picked, fast moving goods directly to consumers.
May 1, 2014
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