For decades, the consumer path for buying consumer packaged goods (CPG) has been the same: CPGs distribute through retails stores, not directly to consumers. The primary focus of most CPG marketers has been branding so that when consumers go to store, they seek out and buy their brand’s toilet paper, soap, mac & cheese, etc.
But Amazon changed all of that. Consumers are purchasing household items online and most experts agree that this trend continues to grow and is here to stay.
“E-commerce’s current roughly 1% to 2% grocery penetration most likely expands to 5% but could quickly accelerate to 10%—or more in certain categories and geographies,” says Gabrielle Novacek, Partner and Managing Director, Boston Consulting Group.
Although the in-store purchase is still, by far, the primary channel for CPG sales, the most forward-thinking CPG marketers know that they must test and learn on Amazon now so that they will be prepared for the inevitable future where online shopping is a much more significant percentage of CPG sales.
As Jie Cheng, Director of Digital and E-commerce at Campbell Snacks Division of Campbell Soup Company, says “You can’t afford to not work with Amazon.”
The following are the 5 new ways that CPG marketers must rethink advertising in the Age of Amazon:
1. Rethink how consumers buy consumer packaged goods
The simple fact is that consumer trends in shopping behavior are moving online. eMarketer points out that “the fastest-growing category on Amazon this year is food and beverage, up 40.1%, with the health, personal care, and beauty category close behind at 37.9%. While sales volume is still small, the uptick shows consumers are turning to e-commerce more often for everyday items and grocery shopping.”
2. Rethink how vital your Amazon product listing pages are
As crucial as optimizing a website for search engine rankings, having the best Amazon product listing page, including the best images, descriptions, options, and prices is key to success on the platform. Brands must gain control of their presence on Amazon because sometimes outdated, poorly optimized product pages are up from previous efforts – either by the brand or even resellers.
“It’s a time-consuming process, it’s a manual process, where the brand locates all the ASINs, and requests control of each of the product listings, proving to Amazon that they own the brand,” says Daniel Knijnik, CEO of Quartile. “Once they have control over the listing, they can create an account and start changing the listing.”
3. Rethink packaging and pricing for the online shopper
The expectations of the online shopper will be slightly different than the in-store shopper and CPG marketers will need to get savvy about how to win on Amazon.
“For many companies, this means creating different pack sizes or slightly different volume options, which can make it harder to make direct comparisons,” says marketing agency, SoMe. “Offering unique packaging, dropping prices slightly, and managing overall channel conflict – including pricing – are all part of successful marketing tactics that CPG brands can utilize for Amazon success.”
4. Rethink how consumers find your products
For decades, CPG marketers have been highly focused on the in-store strategy with regards to shelf space, shopper eye line, and other physical location optimizations. With online shopping, CPG marketers will have to win at digital channels such as search engine marketing and social marketing to drive sales, not just for branding.
5. Rethink brand loyalty
With more information and choices just a click away, the online shopper is less brand loyal than the in-store shopper has traditionally been.
“Lifetime consumer loyalty is no longer a valid goal in the world of CPG because as much as it suits manufacturers, it’s simply no longer meaningful to consumers,” says Kathleen Kusek.
This doesn’t mean that strong brand equity won’t have any impact on online shoppers, but CPG marketers must adapt to the changing times and find the right approach to brand building in this new era.
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