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    September 9, 2021
    6 minute read

    Ecommerce Challenges for CPG Companies

    by: Jonathan Herman

    Consumer packaged goods (CPG) companies have historically seen success selling in traditional brick-and-mortar retailers.

    They're optimized for scale in these channels, rather than diversification and dispersion throughout multiple opportunities for consumers to buy. And, as a result, they’re struggling to keep up with the growing market online. 

    Pressures from new and old competitors and increasing online-only consumption patterns are forcing CPG companies to adapt or risking losing significant market share in their categories. Even the largest CPG brands struggle.

    What are the main CPG marketing challenges brands face; what should they be concerned about; and how can they combat this market share disparity?

    CPG Commerce Marketing Challenges

    If consumer confidence is strong, and CPG brands are performing well overall, why should they be concerned about ecommerce share and digital commerce?

    Here are some of the challenges that CPG brands are actively facing in today’s modern commerce environment.

    Private Label Brands Are Comparable to CPG Brands 

    Many online retailers have launched their own label of CPG products. Private label brand retailers include: 

    • Amazon;
    • Walmart;
    • Target; and 
    • CVS.

    Private label brands offer everything from clean baby products to grocery items and household essentials.

    They’re comparable to traditional CPG brands in quality, price, and ease of access. 

    Subscription Services Have Gained Popularity

    Another growing trend in the market is the use of subscription services that eliminate the challenge of shopping brick-and-mortar by establishing set delivery shipments of necessary household items online. 

    This eliminates the need for consumers to consider and shop for products by increasing reordering of products they already use.

    According to Statista, some of the most popular U.S. subscription services are: 

    • Amazon Prime;
    • Chewy;
    • Walmart;
    • Dollar Shave Club;
    • Instacart; 
    • Shipt; 
    • Hello Fresh; and more. 

    Digitally Native Vertical Brands (DNVBs) Are on the Rise

    DNVBs are highly specialized companies that sell products to a specific target audience. They typically start out with no physical retailing space, but that’s not to say that physical retail can’t play a role in their strategy.

    DNVBs are cost-saving due to their direct-to-consumer (DTC) model. The middle-man markups that most traditional CPG brands experience are eliminated. 

    Additionally, these brands are getting support from venture capitalists, which only indicates their increasing and continued influence on market trends and consumer behaviors.

    Why Are DNVBs Popular?

    DNVBs are gaining popularity and market share quickly. The pandemic has created a unique opportunity for ecommerce brands to outshine CPGs, which means that traditional CPG brands need to be prepared to compete with these brands in all arenas, but especially online.

    Some DNVBs to look out for are baby, beauty, and household products from The Honest Company and online grocery store Brandless. Brands like these are usually seen as honest, responsible and friendly. 

    According to Digital Commerce 360, some of the most common products DNVBs sell are: 

    • Meal kits; 
    • Mattresses; and 
    • Apparel. 

    What’s Next for CPG Companies?

    While big changes are hard, there are some key themes to keep in mind that can help guide any organization forward.

    Find Your Target Audience

    Who is your target audience? Figure out who they are, and embrace them as the loyal, lifelong customer you expect them to be. 

    Win Over Your Audience 

    Gain their trust and keep it by continually striving to create products and experiences that demonstrate your authentic commitment to serving them.

    Use every opportunity to reinforce this mission through your design and messaging on your brand website, social media channels, and wherever else you appear. 

    It's also imperative to rack up those page views and achieve visibility. You need to boost search results (both organic and paid). 

    Offer the Best Product Pages Possible 

    Constantly refresh your product detail page to always reflect the best your product has to offer throughout the year. This may include new versions of the product, seasonal changes, or trying bundles and other offers.

    Always Measure Your Performance 

    Constantly measure your performance and respond. CPG companies need to experiment within the market to establish the correct strategy or risk losing market share.

    Once products are at the top of a category, they're constantly rewarded with better search performance and conversions, but falling to the bottom means that products quickly cease to have relevance.

    Implementing these strategies and improving your product detail pages will help your brand overcome CPG commerce marketing challenges. 

    Download our CPG Product Detail Page Checklist to ensure your brand has everything it needs to create winning product pages.

    Download Now

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