Will CPG Sell More Online Due to Retail Practices?

Articles
June 07, 2010

Will CPG Sell More Online Due to Retail Practices?

When retailers raise their ‘gateway to shoppers’ tolls to CPG, they may gain revenues in the short term, but they fuel alternative thinking by consumer-goods marketers that could come back to bite them.

When retailers raise their ‘gateway to shoppers’ tolls to CPG, they may gain revenues in the short term, but they fuel alternative thinking by consumer-goods marketers that could come back to bite them.

CPG companies are more artful than blunt when they say their direct-to-consumer online efforts are primarily to keep the communications pipeline open and to learn more about the e-retailing process. Retailers that believe this might consider buying a bridge we have available.

How significant are e-sales by CPG? Dollar volume grew from $4 billion in 2004 to $9 billion in 2008, and is projected to reach $12 billion in 2010 and $16 billion in 2012, according to Nielsen data reported by eMarketer.com.

New research in the Internet Data Book from Forrester Research and Barclays Capital digs deeper. This past year alone, food/beverage and over-the-counter remedies/personal care e-dollar sales each advanced by 18%, and pet products e-dollar sales were up 20%, they noted, according to a Brandweek account.

The potential for online CPG sales is great (especially in non-perishables) because with direct contact, there are no store-execution mishaps, traffic, parking, weather or illness to impede purchases. We also believe that CPG will more easily master a direct-seller role than retailers have mastered the brand-marketing role (as with private label), because they hold many insights into how consumers relate to their brands and use them.

Procter & Gamble calls its online store that sells 2,000 items a “living learning lab and a work in progress,” it told The Associated Press. The company says it is sharing findings with retailers. The Lempert Report accepts that, but we also recognize that wherever P&G goes, others follow – especially when prodded by retailers that impose allowances, take unauthorized deductions on invoices, force branded manufacturers to manage store brands for them, and more.

With CPG websites and social media such as Facebook becoming places for consumers to find coupons and deals, and share feedback on brands, CPG has greater opportunities to engage them directly and influence their behaviors without the full involvement of retailers as gateways. 

If retailers would deal more fairly with CPG, they won’t have to wake up one day to look in the mirror and say, “We have met the enemy and they is us.”