Editor's note: Michael Carlon is director of strategy at marketing services firm DCG ONE.Â
The COVID-19 pandemic has significantly impacted the ways U.S. consumers are shopping for fast-moving consumer goods (or FMCGs as they are known in industry-speak). We’ve heard from many of our clients that, while store trips are down, basket sizes are up as shoppers are spreading out trips to reduce the risk of exposure to the virus. Additionally, as more meals are being made at home our food and beverage clients are experiencing unprecedented year-over-year growth. This dynamic is a double-edged sword; while sales are strong, evaluating performance at the same time next year versus the previous year may tell a somber story that growth rates couldn’t be maintained. As a result, FMCGs are scrambling to find ways of making growth sustainable. Our firm believes one way of doing this is to invest in a retail channel driving growth: e-commerce.
While e-commerce has historically represented only a small percentage of a CPG brand’s sales, there is no denying that it is a growth channel. Online U.S. CPG sales rose 35.4% in 2018, according to a report released in early 2019 by research firm IRI. That’s a lot faster than the 3.4% growth in sales at food and beverage stores, including the supermarkets that sell most CPG products, according to the U.S. Department of Commerce. Of course, these statistics are all prior to the COVID-19 era. A poll from Inmar, a provider of data analytics solutions to retailers and manufacturers, found that nearly 80% of U.S. consumers reported shopping online for groceries after the COVID-19 outbreak.
Having explored e-commerce channels for leading manufacturers including Unilever, PepsiCo and Mondelez, we know that the biggest barrier of switching from traditional retail channels to digital ones is the fact that, oftentimes, when a consumer realizes they are out of a product – say, toothpa...