The consumer packaged goods (CPG) industry is changing—fast. Digital has redefined shopping as we know it. As new digital entrants are rapidly taking market share and retailers are becoming competitors, CPG companies need to take swift action to ensure competitive advantage today and tomorrow. This calls for re-examining the right route to market and distribution challenges because the mass market brand-building and retail partnerships of yesterday are no longer enough.
As consumers continue to live more digitally centered, online is evolving from being just another distribution channel to completely redefining the path to purchase for CPG companies. But although 90% of overall CPG growth in 2017 came from online sales,1 the top 20 CPG companies worldwide still have a disproportionately overall low share of digital sales volume. In fact, Nestlé, Procter & Gamble and Unilever were well below 10% in 2018.2 Many CPG companies have not begun to reap their full potential in digital.
Marketplaces like Amazon and Alibaba are influencing the change, and they are also seizing the opportunity. With more than half (54%) of product searches happening on Amazon nowadays,3 these tech giants have contributed to a completely redefined end-to-end shopper journey. As the go-to starting touchpoint within the value chain, these companies are owning brand visibility and delivering the last mile with private labels in all different categories.
Having a great product and strong retail partnership is no longer enough to build and maintain consumer relationships. It is time for CPG companies to regain control of the customer journey and deliver experiences that create meaningful value for consumers. So in the wake of this new identity crisis, every CPG company must ask: How do we move from product manufacturers to one-face-to-the-consumer experience brands?