Category: CPG

The CPG ecommerce trends shaping the 2018 consumer packaged goods landscape

Posted on by shopkick

The CPG ecommerce trends shaping the 2018 consumer packaged goods landscape

Get In Touch

Now is a very important time for the consumer packaged goods industry, as the CPG ecommerce trends taking shape in 2018 will impact the entire market for years to come. These trends have already altered the customer’s path to purchase and have made room for new market entrants. Now, challenger brands are better able to compete with big household names, as they’re capable of connecting with the growing market of online-focused consumers. The current climate of change in the CPG industry means that brands must be prepared to use ecommerce to gain online sales and drive brick-and-mortar business.

CPG brands used to be heavily invested in brand recognition, but as consumer loyalty shifts, recognition alone is no longer as powerful as it once was. Instead, consumers are seeking  alternatives to popular brands, and big name brand recognition is becoming less of a deciding factor in the path to purchase. Tech also increasingly plays a role. To reach consumers who have the option to choose between myriad options, and who demand the convenience of ecommerce purchasing, brands should also deliver high tech experiences as part of their CPG marketing.

Ecommerce is Essential to CPG Brands

Fast moving consumer goods (FMCG) is a growing market for ecommerce sales. Online sales in this category jumped to $74 billion last fiscal year due to both new market entrants and increased global access. While online sales makes up only a fraction of the $771 billion market, it also represents high growth in the segment. Online sales were responsible for 90% of the CPG market’s overall growth.

What we can understand from such data is:

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Ecommerce has the highest growth potential:

Since the majority of growth in the CPG industry occurred via online channels, it is clearly where brands can focus when looking to reach new markets. Ecommerce also makes it possible for consumers in remote global regions to connect with brands, a huge area of opportunities for CPGs.

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

New markets begin online:

Many new markets are emerging in CPG ecommerce, including offerings like meal prep kits and online groceries, both of which are major contributors to the increases seen in fast moving consumer goods. Ecommerce has opened up a wealth of services and products that many consumers had never considered purchasing online before.

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Online CPG ordering is moving toward the mainstream:

The rapid growth of purchases of small, inexpensive items online indicates that consumers are growing more comfortable with paying for shipping and waiting on delivery.

These three factors are significant for the CPG industry as a whole. In the past, consumers were less enthusiastic about making small purchases online, due to shipping costs. At the same time, it was a lose-lose scenario for retailers, as offering ecommerce for small, low-cost items was an expense that outweighed the benefit. As shipping costs decreased and online purchases increased, this market became a prime place for ecommerce growth. Much of this can be attributed to how ecommerce changed the consumer’s path to purchase.

A Revision of the Consumer’s Path to Purchase

In the past, the path to purchase was very straightforward: Demand for a product led to brand discovery; brand discovery led to interest, which was followed by purchase. However, this process has become increasingly complex in the digital marketplace. Essentially, the entire course has become cyclical.

The new steps that have become very prominent throughout it are:

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Roundabout to word-of-mouth:

Consumers often discover their need for a brand or product as a result of an online discussion. Consider the case of a forum for new mothers, where one mother asks for advice on diaper rash. Another mother may recommend a specific cream or ointment, which could drive a discussion of the brand.

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

In-store evaluations:

Based on a Nielsen study, 75% of grocery shoppers have used a physical store to evaluate a product before purchasing it online. Consumers may be increasing their online purchasing, but that doesn’t change their desire to physically interact with products.

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Plan:

Whether they’re shopping online or shopping in a store, consumers purchasing CPG items tend to plan their shopping trips in advance, which means brands must optimize their ecommerce experience to ensure it works equally well in connecting with consumers in the shopping aisle as it does in connecting with them online.

Another thing about these steps is that they can occur at different points in the path to purchase. A consumer may plan to purchase a product, then discuss it online, then evaluate it, then discuss it again before making a purchase. This change in the path to purchase is largely due to technology, but also a reflection on growing shopper demographics.

Changing Demographic Desires in the Marketplace

In the broadest of terms, different generations are motivated to make CPG purchases for different reasons. While not all members of one demographic will behave the same, studies have shown that certain behaviors can be anticipated based on overall generational preferences. For instance, grocery sales are often driven by CPG sales, and trends in the grocery market reveal both which generations spend the most on CPG, and how they make purchase decisions:

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Silents:

These individuals, age 72 and up, are often motivated by value. They are also less likely than any of the other groups to embrace technology in shopping. Ironically, they’d be the most likely to benefit from this technology, due to issues with physical mobility and travel.

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Baby Boomers and Generation X:

Together, these generations spend the most on groceries. Both are also considered proficient in technology as they’re likely to use it in their jobs. These groups are likely to look to ecommerce when seeking information on CPG products, although for the most part will continue to make CPG purchases at brick-and-mortar locations.

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Millennials:

While they don’t spend as much on groceries as Generation X and Boomers, they are highly motivated to use technology while shopping. That makes ecommerce an area of high potential in this demographic. In addition, millennials often use their mobile phones while in brick-and-mortar locations to assist them in making purchase decisions. A shopping app, like Shopkick, can be used to connect with these tech-driven consumers, both online and off.

Data around grocery sales are important as they tell us who is doing the shopping in the household and where they’re buying. These statistics show us whether CPG consumers prefer ecommerce or in-store purchasing and, specifically, what they demand from brands. Challenger brands commonly leverage consumer demand to gain market CPG share.

Online Access Drives the Rise of Challenger Brands

Challenger brands are unique. While they may not be market leaders, challenger brands are able to connect with consumers to gain market share. Part of the reason these brands are emerging as competition to larger brands is because growth of ecommerce has given them access to new markets. These brands may not offer a new product, but they may offer it in a new way, which gives them the ability to challenge even the largest names in the market.

Because the Internet evens the playing field between challengers and big brands, CPG challenger brands thrive on ecommerce platforms. They may not have the funding of big brands, but challengers can get by on a grassroots campaign by using the digital space to share their message. They can also take a direct-to-consumer approach, allowing them to provide customers the personalized shopping experience they crave, and earning the brand consumer loyalty.

Consider Lavazza Coffee, a high-end Italian coffee brand that was able to gain attention in the U.S. market by connecting directly with consumers. While the brand had a significant following in its home country of Italy, it struggled to gain a foothold in the crowded U.S. market.

The brand took a direct-to-consumer approach and connected with their target demographics at events and in privileged settings. Lavazza partnered with both the U.S. Open and the Guggenheim Museum in New York to “create an aura of eliteness.” At the events, the company offered branded packaging, like cups and napkins, which could be used to direct consumers to its website to make direct sales. The brand left the digital space to connect with their consumers in their places.

Lavazza is able to compete in the highly competitive U.S. coffee market strategies such as:

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Focus on the consumer:

The brand connects directly with consumers by sponsoring high-end events and then uses them to drive sales both at online stores and through retailers like Target and the Seattle Coffee Company.

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Position brand as elite:

Lavazza has a higher price point than other coffees and uses its Italian background to set itself apart from other high-end coffee brands.

[siteorigin_widget class=”SiteOrigin_Widget_Features_Widget”][/siteorigin_widget]

Educating consumers:

On the brand’s ecommerce site, consumers can review the blends and learn about things like coffee profiles, roasting styles, and intensity ratings. Consumers don’t go to the site only to buy coffee, but also to learn about coffee from industry experts.

Lavazza doesn’t ignore brick-and-mortar locations in favor of ecommerce, but connects with the right audience in the right place. As a result, it is able to challenge big U.S. based coffee companies even when Lavazza’s product is at a higher price point.

How CPG Ecommerce Trends Impact Brick-And-Mortar Shoppers

Brick-and-mortar can act as a pathway to ecommerce—and vice versa. For example, a consumer may discover a product in an ecommerce site and then decide they want to see it in the store before they make a purchase. Or, they may seek out an ecommerce product and not want to wait for shipping, so they go to the store instead. There’s also a hybrid of this where a consumer will order an item online and pick it up in store.

All of these methods show us that ecommerce isn’t just an access point for product purchase but is a route to product discovery. Brands can gain consumer attention by delivering experiences that work equally well in the digital world as they do in the physical one and thereby make the most of both markets.

One way to deliver experiences that work in both the real world and the digital world is through the use of retail shopping apps, like Shopkick. A good shopping app can allow a brand to incentivize purchases both at online stores and in brick-and-mortar locations. Shopkick uses this multi-channel strategy by allowing consumers to gain rewards, known as kicks, for interacting with brands in-store or for viewing specific content, like advertisements, online. This hybrid approach works well for addressing consumers in the CPG market, whose purchase avenues have grown extensively in the past few years.

CPG brands are often challenged by the direct-to-consumer approach as these brands have primarily focused on selling through retailers. However, the things that attract consumers in a store are the same things that attract them to ecommerce. They also enjoy being rewarded for interacting with brands.

These emerging CPG ecommerce trends do not have to act as industry disruptors. Instead, they allow CPG brands to enhance their relationships with customers and create true brand affinity, whether that consumer is ordering directly from a brand or through an online retailer. The largest potential for market growth in CPG is based on marketing to tech-savvy consumers who buy these products many different ways. Using shopping apps to assist consumers through the new, more complex path to purchase is the best way to leverage these CPG ecommerce trends.

Shopkick helps our partners in the CPG industry stand out in the crowded ecommerce space. To gain consumer attention on our platform, contact us.

Rewarding consumer experiences anytime, anywhere

Posted on by shopkick

Bill Demas, Chief Executive Officer

Our vision as a company is to create rewarding consumer experiences for our users anytime, anywhere. We are taking another step in fulfilling that vision today by releasing a web version of Shopkick. This gives users more ways to earn kicks and discover new products, brands and services.

For our partners, the expansion to desktop completes our omnichannel solution, offering deeper insight into consumer behavior across channels and throughout the fragmented shopping journey. Brands and retailers now have the opportunity to reward our users for shopping across desktop, mobile and brick and mortar.

Launch partners include Walmart, Macy’s, Groupon, JCPenney, Sephora, Sam’s Club, Payless, the Body Shop, Stride Rite, Ann Taylor, Loft, Nordstrom, Francesca’s, Lane Bryant, Foot Locker, Sur La Table, and See’s Candies. In addition, we continue to expand our online merchants in the Shopkick app. Most recently we have added Asos, eBags, Etsy, Fandango, the Home Shopping Network, Hulu, Lane Bryant, and Living Social.

Stay tuned for more announcements coming soon on our exciting product roadmap! To learn more about our new e-commerce offering, get in touch at partners@shopkick.com.

If you have any feedback on this new initiative or any other Shopkick omnichannel solution, send me your thoughts at ceo@shopkick.com.

Is CPG advertising ready for the digital age of shopping?

Posted on by shopkick

In CPG advertising in the past, much of the marketing was done through retailers via in-store advertisements and shelf placement. Retailers acted as middlemen that passed the CPG products to the masses. Direct to consumer sales was not an area most CPG brands spent time on. That all changed with the arrival of the digital age of shopping, where CPG brands are able to reach consumers directly. Massive platforms like Amazon now allow companies to place their products but, for the most part, don’t take responsibility for the advertising of those products. Here then, many CPG brands are unprepared to compete because they’re unaware of how to gain the most advantageous digital shelf space.

CPG advertising tipsWhether customers purchase a product from an online market, buy it direct, or just learn about it online, most CPG brands are going to experience some level of online interaction with a product prior to a sale. Many CPG brands are struggling to get past the days when advertising was one-sided and did not require engagement with consumers. However, some of the most traditional CPG brands have found ways to stay relevant and develop rapport with consumers by advertising as much as major retailers. By taking a consumer-first approach to CPG advertising, brands will be better able to adjust to the market as consumer behaviors change.

The CPG Industry’s Slow Progress to Digital Sales

Many industries made the transition to the Internet so quickly that certain positions became obsolete. Think of the travel industry, where travel agents quickly found themselves displaced by online flight scheduling websites. This was because the Internet changed who the gatekeepers were—an impact felt in just about every industry. One category of goods, however—the CPG category—remained primarily offline until the early 2000s for several reasons, including:

  • Market segmentation: The CPG market is unique because of how many products it encompasses. The companies behind those products are as diverse as the products they represent. Small challenger brands that provide niche products are competing with large global conglomerates with thousands of items in their portfolios.
  • Retail limitations: CPG products were traditionally viewed as items to be sold through a retailer. In the early days of the Internet, there was little point in CPG brands attempting to garner direct sales specifically because of the product distribution models that existed for brands at the time.
  • Shipping costs: CPG products tend to have low price points, many times so low that the cost of shipping would actually exceed the cost of the product. As such, purchasing a single CPG product online then having it shipped made little fiscal sense to either consumers or brands.

Advances in technology helped CPG brands overcome these barriers to entry. E-commerce websites made it easy to browse and buy products while consolidating shipping costs. Stores began relying on mobile to help consumers browse their shelves and order items for pickup. Geotracking and digital marketing now offer opportunities for brands to target consumers more specifically. It’s clear the digital market has adjusted itself for the entry of CPG brands. Now, CPG brands need to reevaluate their advertising to determine if their company is ready to take advantage of those adjustments.

CPG Advertising Success With Direct to Consumer Strategies

One nearly iconic detergent company was able to stand out in its category by shifting its focus from advertising at consumers to engaging with them. About two years ago, the Clorox Company chose to focus heavily on digital commerce and increased business in that channel by 50%. They used mobile advertising and social media campaigns and worked with digital platforms directly to increase sales in this category.

This CPG marketing strategy was done in anticipation of the digital sales route growing. The company is now connecting with the consumers directly on the same level as retailers like Walmart, Target, and CVS. By shifting advertising strategies to engage directly with consumers, rather than going through a retailer, brands can create a lasting connection with the consumer, regardless of where they do their shopping. Often, these advertising strategies center around:

  • Being tech forward: One of the key people in the Clorox story was their chief marketing officer, who was intensely focused on the future of ordering. He was heavily invested in emerging technology and solutions like voice-based ordering and smart speaker advertising. His focus was not because these programs are big now, but rather due to a belief that they would be major avenues of purchase 10 years in the future. Delivering a new consumer experience, before the consumer even knows they want it, is an essential step for brands that want to stand out.
  • Engaging consumers in-store: Many CPG brands are using shopping apps to engage with the consumer as they’re in the shopping aisle. Using incentives like rewards points delivered via a mobile app is a strategy that works for CPG brands, who get even more of a return than a discount might offer, without the same margin impact the discount would have. This is because consumers often perceive rewards points as having greater value than their actual dollar amount. That’s in part a result of the emotional return they provide. Shopkick, for example, offers a gamified app that consumers can use to scan and purchase items in-store and online and gain kicks that can be exchanged for gift cards. This engages the consumer twice: at the time of purchase and when they’re trading in those points for the gift card.
  • Going direct to consumer: This is one of the biggest shifts in today’s CPG marketing trends. In the past, consumers had to go to the CPG brand, seeking out a favorite brand’s product in the store. This created a challenge because the first time the consumer saw the brand’s product was when it was on the shelf, next to competitors, many of which were lower cost or more visibly prominent. Today, CPG brands can proactively engage these consumers before they reach the store, which helps the product stand out. For example, brands can connect with consumers directly on social media channels and via mobile apps.

CPG advertising strategies need to be designed to work both in brick-and-mortar locations and through digital platforms in order to capitalize on an increasing direct sales market. Advertising should travel to the consumer rather than wait for the consumer to come to the brand. By connecting with consumers via mobile apps, social media, and other digital avenues, brands can proactively reach their target market.

CPG brands need to be prepared to move faster in developing their marketing strategies than they did in the past, in part because consumers’ physical and digital worlds are starting to merge. Using mobile app-based marketing as part of a consumer engagement campaign can help position CPG advertising to meet the demands of shoppers in the digital age.

Shopkick offers our partners the ability to travel with consumers through an engaging app designed to drive sales in the store and online. For more information, contact us.  

Image courtesy of Rawpixel.com

Grocery retail apps: Why they attract millennials to CPG brands

Posted on by shopkick

Gaining millennial interest for a CPG brand is a common challenge marketers face. Grocery retail apps could be the answer. Millennial purchase behaviors are often erratic, not due to the fact that millennials themselves are erratic, but because of their reliance on technology.

retail apps for grocery storesCurrently, millennials make up one of the largest buying groups in existence. Understanding their behavior is the key for CPG brands to maintain their relevance and their market share in today’s crowded marketplace. Millennials are the first generation to grow up with access to the internet. They use it as a tool to influence their everyday purchase decisions. Because of that fact, the internet has a profound impact on their buying behaviors.

CPG brands that want to attract their attention must be willing to do so through technology—specifically, through retail in-store apps. Grocery retail apps can help a brand connect with a millennial audience, often simply by being conveniently available to consult as they make their purchase decisions.

How Millennials Shifted the Marketing Paradigm

Chances are, you’ve noticed how important the smartphone is to millennials. The average  millennial touches their phone 150 times a day. This behavior doesn’t mean they’re addicted to their cell phones, per se; instead, it’s due to the fact that the smartphone is this generation’s television. It doesn’t just provide entertainment, it connects them to the world.  

Millennial-focused marketing is a major paradigm shift for many marketing and advertising professionals because social media and digital marketing have created a more transparent and direct connection between brands and these consumers. Millennial shoppers also have more access to information period, whether that information is about international politics, financial matters, or new trends and products. Because of the major role the internet has played in their lives, millennials typically are:

  • Socially responsible: The first Earth Day was held in 1970 but it didn’t gain widespread popularity until the early 80s, which is when the first millennials were born. Millennials grew up with an environmental conscientiousness that wasn’t seen in generations that came before them. As a result, brands that focus on digital marketing, which does not unnecessarily waste resources, tend to resonate well with them.
  • Fiscally savvy: About one-third of millennials have a financial or savings plan in place. That far exceeds the planning of older generations, including Generation X and even baby boomers. Millennials seem to have learned from the mistakes of those who came before them, planning for retirement early and keeping unnecessary spending down.
  • Highly sensitive to scarcity: Because of their easy ability to access up-to-the-minute information on just about everything, millennials are more easily impacted by scarcity, otherwise known as the “fear of missing out,” or FOMO.

Millennials depend on technology to help them make informed decisions. They are open about sharing their signals of purchase intent if it makes their brand experience better. In the past, the internet may have been used as a resource for researching high-ticket items. However, because millennials live in an age flush with accessible data, even their small dollar purchase decisions are likely to be impacted by the abundance of information they can conveniently access. This is why grocery apps act as such a major persuader to the millennial market.

Using Grocery Retail Apps to Impact Millennial Purchase Decisions

Millennials don’t just want to buy from a brand; they want to create a relationship with that brand. They are attracted by brand awareness campaigns that create a real and genuine relationship. This is why mobile marketing is such a powerful purchase influencer for them as it:

  • Offers Rewards: Apps like Shopkick, a retail shopping rewards app, provide recognition for making smart purchase decisions in the form of reward points that users can later redeem for gift cards. This acts as an efficient purchase driver as, often, the perceived value of these kicks is even higher than the dollar amount they cost marketers.
  • Creates a social environment: Users of grocery shopping apps, like Shopkick, are encouraged to share their shopping and saving experiences online via Facebook and other popular social platforms. This creates a community of fiscally savvy consumers who discuss money-saving tips.
  • Communicates in the moment: As already discussed, millennial consumers touch their phones hundreds of times a day. An app that can connect with them as they’re in the shopping aisle is extraordinarily effective for gaining brand recognition.
  • Extends social responsibility: Digital apps offer a benefit that paper circulars and advertising materials can’t: They’re scalable and responsible. That means that millennials don’t have to worry about the waste involved with paper coupons or offers—and brands don’t have to spend money printing materials.  

Today’s millennial consumers are not coupon clippers, but they are fiscally intelligent. They want to save money while they’re saving the environment. This is why grocery retail apps are so appealing to this group. They allow shoppers to collect the rewards that make them feel fiscally responsible while limiting the waste of paper coupons or rebates.

Millennial shoppers are informed shoppers. They don’t want to just buy from a CPG brand, they want to know more about the brand than the product they sell. They want to know where that product came from, how it was sourced, and how it can make their lives better. Marketing to the millennial consumer is therefore not just about sales; it’s about providing a free exchange of information.  Using technology, brands can better express their sustainability methods, money-saving ideas, and incentivized sales in a way that truly resonates with these new consumers.

Shopkick offers a platform for fiscally savvy millennials to explore while our partners get the opportunity to interact more thoroughly with this unique consumer base. For more information on how our platform creates relationships with today’s millennial consumer, contact us today.

Image courtesy GeorgeRudy