On-line sales the next C.P.G. frontier
December 3, 2013
by Keith Nunes
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NEW YORK — Consumer packaged goods companies may be missing an opportunity to sell food and beverages on-line. While industry executives view on-line sales as a possibility, consumers say they are open to doing business with C.P.G. companies on-line.
“Increasingly, consumers desire the convenience of the on-line channel to purchase their groceries,” said Pat Conroy, vice-chairman of Deloitte L.L.P. and the firm’s consumer products sector leader. “Although consumers are changing their behavior, C.P.G. companies are not as prepared as the data suggests they should be to take full advantage of this growing opportunity. The importance of e-commerce to C.P.G. companies has not, in most cases, translated into a fully-developed strategy for capitalizing on this channel.”
Deloitte has published a study titled “Digital commerce in the supermarket aisle” that features the results of a survey that included more than 2,000 adults between the ages of 21 and 70. The survey also includes interviews with 43 industry managers currently engaged in activities related to digital commerce at C.P.G. companies.
The study revealed that while both executives and consumers anticipate on-line sales of food, household and personal care products will grow in the next year and over the next three years the consumers’ intent to purchase the products on-line far outpaced the industry executives’ expectations for both time periods. Executives expect 35% growth in the next year and 76% growth in three years. In contrast, consumers expect their on-line purchases to increase by 67% in the next year and 158% in three years, according to the report.
At the company level, the study also indicated that while 92% of C.P.G. executives agree e-commerce is a strategic sales channel, there is a disconnect between the expressed opinions of the executives and the readiness of their companies to execute. Only 43% of the executives think their company has a clear, well-understood digital commerce strategy.
Forty-one per cent of the consumers surveyed said they neither like nor dislike shopping in supermarkets. The indifferent consumers combined with those who said they dislike shopping at supermarkets, are most likely to consider e-commerce for C.P.G. products. If given the right incentives, the Deloitte study said they may be enticed to shop on-line for their products.
Although consumers are unable to touch products on-line, and do not like paying shipping charges, the report identified a number of drivers that may influence digital commerce’s reach to consumers. Such factors include free at-home delivery (84% of consumers said is “very important” or “important”), pricing similar to or less than traditional physical stores (80%) and free in-store pickup (67%).
“To successfully capitalize on the e-commerce channel, there are a number of critical steps C.P.G. companies can take,” Mr. Conroy said. “Executives first need to establish a clear and well-understood digital commerce strategy. They should collaborate with retailers and social media platforms, and build a single view of the consumer. In tandem with that approach, they need to foster and build a talent base within their organization that includes digital commerce skill-sets.”