The world of online commerce can be a double-edged sword for consumer packaged goods (CPG) companies. On the one hand, it allows these brands to expand their audience by advertising outside of a physical space, reaching out to new markets such as international consumers in South Korea, China, and Taiwan, for instance. This can be a significant boon for CPG brands facing a crowded marketplace within the US.
On the other hand, direct-to-consumer sales have always been a challenge for the CPG industry as consumers have traditionally sought out products in big box, grocery, or drug stores. The growth of e-commerce, then, requires CPG brands to shift their primary marketing strategy from selling through a retailer to selling directly to their market.
Gaining attention on popular shopping platforms, such as Amazon, is a significant challenge for CPG brands as there is a much larger base of products to compete with than on retail shelves. This is where a third-party app can support the trend of CPG e-commerce growth. Third-party apps can help increase your CPG market share by buoying your brand above its competitors, helping you to overcome the major hurdles involved in achieving success through e-commerce growth as a CPG company.
CPG E-Commerce Growth: What Holds Brands Back
CPG e-commerce growth is a trend that shows no sign of slowing. However, your brand’s success in the shifting digital marketplace could be in jeopardy if you do not address some of the key hurdles the CPG industry as a whole is currently facing.
Online marketplaces put much of the onus on CPG brands to maintain and grow their market share, meaning they must earn the attention of consumers who are looking for products in their category, which may include hundreds of similar items. Let’s explore a few of the distinct hurdles facing brands in the era of CPG e-commerce growth:
- Direct to consumer challenges: D2C sales channels are a challenge for consumer packaged goods brands as most consumers who are purchasing CPG products are doing so in one bulk visit to a retailer or online site. Convincing these consumers to segment their shopping and visit brand pages to buy products individually is a challenge, especially when a brand doesn’t have a wide-ranging product line.
- Potential share loss to niche players: In 2015, 90% of the top 100 CPG brands lost market share—and they lost it to niche players. E-commerce has seen the rise of smaller, independently-owned boutique shops that specialize in specific product segments. Challenger brands, i.e. smaller brands that compete with established industry leaders, are able to successfully market by taking advantage of their ability to leverage personalization thanks to e-commerce.
- Sacrificing personalization for scale—and vice versa: With the growth of e-commerce, it is possible for CPG brands to craft a smaller, niche presence and a personalized experience for their audience. However, they are then marketing to a smaller group of consumers. On the other hand, they can leverage a large online retailer, like Amazon, to get in front of a wider audience. However, via large online retail platforms, they lose the ability to personalize the customer experience.
- Marketing to emerging markets: Emerging markets make up 85% of the overall growth of CPG brands via brick and mortar and e-commerce sales combined. That means the CPG industry must be prepared to connect with customers in India, South Korea, and other rapidly growing geographical markets. Brands must understand individual emerging markets or risk alienating its consumers. This was a hurdle that Gerber faced when they tried to roll out their line of baby foods in Africa, where it’s common to put a photo of what’s in the product on the label. Gerber’s packaging included their iconic baby image, leading to the horrifying misunderstanding that Gerber baby food actually contained babies. Needless to say, sales were slow. The lesson here is that brands must understand that strategies that have seen success in the US won’t necessarily be effective marketing tools in new or emerging markets.
These challenges can be overcome but, often, brands will need to align with a marketing partner that offers a direct connection to consumers within the digital e-commerce space. This is where third-party apps are ideal as they can be used to guide and incentivize the online shopping behaviors of your target audiences in your favor.
Third-party apps can support CPG brands navigating e-commerce growth trends by creating a path for purchase for consumers.
How Third-Party Apps Help CPG Brands Leverage E-Commerce Growth
Third-party apps can support CPG brands navigating e-commerce growth trends by creating a path for purchase for consumers. This allows a brand to get the best of both worlds when it comes to both scale and personalization as they can use the app to market in a unique way to specific audiences, while piggybacking on the success of online retail platforms to get their products in front of a worldwide audience.
This is a strategy that’s relatively easy to implement, as described below:
- Establish online sales platforms for selling products, either via a branded website, an online retailer such as Walmart.com, or both.
- Partner with a third-party app that has an engaged audience within your target demographic and offers the ability to customize your content.
- Create content specifically for the third-party app to share your brand’s message with its interested and active consumers.
- Incentivize sales by offering rewards, rather than discounts, to consumers for shopping your brand.
- Direct the purchase path by providing links to your online marketplaces.
Established third-party apps allow you to gain attention from consumers and provide a personalized message, much like if you were a niche seller. Simultaneously, they allow you to gain consumer attention in high-volume sales spaces. Your brand will gain visibility among consumers who are looking for products like yours and be able to conveniently direct them to the e-commerce channels important to you. This allows your products to compete with both established and challenger brands—and adapt to emerging markets effortlessly.
Shopkick is an established and engaging shopping rewards app that offers a unique marketing solution to our partner brands interested in e-commerce and in-store growth. Our platform allows your brand to reach new and existing target audiences with personalized—and impactful—content. For more information, contact our team today.
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