The COVID-19 pandemic has shaken the consumer product goods (CPG) industry. While some organizations were left struggling for survival, others have seen humongous growth with never-before-seen spikes in demand. As customer preferences continue to change/fluctuate and the future remains uncertain, it is not the time for organizations to “wait and watch” what lies ahead. Manufacturers, brands, and other retail stakeholders that look beyond the immediate complexities and into the next new normal keeping an eye for innovation — will be the winners in such a cut-throat competition.
The clear, permanent shift towards digitally-driven customer preferences is turning up the heat on retail, but for the CPG industry, it represents an opportunity. Online e-commerce platforms are, in fact, fast becoming the main growth area for CPG companies across geographies in the current scenario.
Before the pandemic outbreak, e-commerce accounted for approx 4 percent of all grocery sales, a small portion of the overall volume. But during the covid19, the share of grocery spending on online platforms has accelerated to as high as 20 per cent, according to a survey. The figure is expected to settle at about 10-12% by 2022. A boost in digital sales of essential goods and personal care products, which were purchased more frequently online during the pandemic, has driven the growth in CPG spending. It is estimated that almost 35% of US shoppers new to e-commerce plan to continue making grocery purchases online after COVID-19.
In the present scenario, it’s a business imperative for CPG players to leverage data analytics to enable quick yet informed decision-making and achieve consistent business gains. But how do CPG organizations gain the most from consumer and product data?
Unlock the actual value of e-commerce data
With the sudden acceleration in online grocery shopping, copious amounts of user data are generated, presenting online CPG businesses with paramount opportunities. The usage of e-commerce analytics will glean significant benefits and be a game-changer for CPG organizations in a highly ultra-competitive market. But, they also need to execute and plan their data strategy very carefully. The prime step toward unearthing actionable data insights is to outline the type of data to be considered. Datasets can be broadly categorized into consumer behavior data and product-based data. Product-based data involves tracking and logging product-specific trends and statistics. Some product-specific datasets are:
- Individual product sales trends
- Sales analysis of products within a category
- Distribution
- Price analytics
On the other hand, customer behavior data points would include tracking and logging purchase behavior, preferences, and trends of online shoppers. Customer-specific datasets are:
- Frequency of making purchases
- Cart abandonment to transaction completion analysis
- Brand/Store loyalty
- Consumer demographics
Once the needed data has been made available, the next step is to glean insights from the available information. Specific analysis required to be done, keeping in mind the end goal. The data captured can be utilized in various ways, such as:
Personalized marketing involves understanding customer behavior to generate recommendations and determine preferences. CPG organizations should pivot their marketing strategies to curate more personalized brand-ex for customers. POS data, loyalty data, promotions performance, engagement data from its website, and social and digital paid media data should be analyzed in a proper way.
Personalized marketing can allow more than 10 per cent growth in revenue from targeted campaigns by analyzing consumer profiles.
Recommending products based on buying behavior/patterns can drive 25% growth in revenue for CPG companies.
Order fulfillment: The rise in online CPG retail redefines the traditional order fulfillment process. With online retail, CPG players can now cater to a broader demographic and a larger locational footprint, while short-term trends like bulk buying behavior are also amazing to mold their business approach and initiatives. In this new business paradigm, they require to build on abilities to capture data from omnichannel resources and curate data lakes to ingest and analyze data from disparate sources.
Product launches: Presently, CPG companies mainly rely upon retailers for customer data generated from sales performance figures and POS transactions. In a new normal, the accrual of online retail will generate significantly more extensive and substantially more assorted data streams, which will offer the CPG companies with more unique opportunities to leverage user data and insights. This will assist them to redefine personalized recommendations with newer perspectives and offerings.
Category-specific decision-making: CPG analytics output can easily highlight weaknesses, strengths, opportunities, and inefficiencies within a particular product category giving 360-degree visibility into every product type. Organizations that have successfully adopted data analytics-enabled decision-making have seen a 22% increase in demand for specific products.
How CPG firms can build an e-commerce strategy
Data culture and automation: The most crucial step is to build on the culture of embedding predictive analytics and data & AI into daily operations to quickly address shifts in supply chain, e-commerce demand, and customer preferences. Automating functionalities across processes for demand forecasting to reduce manual labor.
Digital infra: IT, Connected data platforms, and infrastructure can allow complete visibility of the consumer’s path to purchase, and e-commerce dashboards can offer real-time insights into changes in demand. Prioritizing consumer-centricity across critical touchpoints can improve conversion rates and drive revenue growth.
Ecosystem and Partnerships: Form strategic alliances to establish ecosystems that differentiate consumer services. CPGs partnering with digital natives and 3 PLs is a vital element in exploring operating models and new revenue streams. Partner or acquire with digital specialists to contain costs by expediting and optimizing processes.
Final Thoughts
Customer demands and preferences evolve as they adjust to the new normal post-COVID-19. E-commerce sales accelerate as CPG organizations focus on customer engagement and business sustainability. CPG organizations should expand their e-commerce abilities to increase consumer outreach. They must put more of their investments in analytics to align their business models and strategies with the evolving consumer trends and requirements. Moreover, CPG organizations should improve conversion rates and revenue growth by prioritizing customer-centricity across critical touchpoints to boost online sales. Data and analytics can be a pivot in better understanding, analyzing, and approaching customers.