E-commerce’s impact on brand’s evolving story

In the world of consumer packaged goods, the shift to e-commerce is far from a secret. According to Statista, total e-commerce sales in the United States are expected to increase by more than $225 million from 2017 to 2022, while total market sales are expected to be flat during that time1. Given this shift, 10% of all CPG sales will happen online in 2022, which is more than double the current rate2.

For brands to maintain their current market position and growth, they must perform well with online shoppers. The online shopping experience is more efficient and customizable than brick-and-mortar stores, so more consumers are gravitating to it as its convenience continues to improve and their lives get busier. In order to win in the digital landscape, brands need to shift their mindset in four critical ways:

1. New Triangle: Convenient, Quality, and Value 

For years, the paradigm of product development has been “Good, Fast, Cheap: Pick Two.” In the past, companies had three options, and due to the mutually exclusive nature of these characteristics, they could only choose two as their focus for that product. In today’s digital landscape, as consumer expectations change, and technology continues to improve the product development timeline, the model has shifted to “Quality, Convenient, Value: Have All Three.”

Consumers don’t want to buy the cheapest product. Rather, they want the best value from products that are worth buying. This minimization trend has resulted in consumers reducing the amount of low quality items in their homes and replacing them with fewer higher quality goods. This reprioritization has enabled the explosion of direct-to-consumer brands, which is disrupting longstanding market leaders and traditional product channels.  

Online shopping offers more convenience and less stress than the in-store retail experience. Companies deliver convenience through easy ordering through Amazon Dash, subscription services like Quip, and fast shipping. Some brands, such as Dollar Shave Club, are also expanding their product offerings into related categories, while still keeping their overall SKU count low by reducing their variety of options in each category. The end result is brands that reduce the number of decision fatigue in consumer’s lives, improving their perceived quality of life, and thus increasing brand loyalty.

 

2. Humanize the brand’s connection with consumers

Consumers have a more fleeting relationship with brands than ever before. Due to the variety of high quality options readily available, it is difficult even for the strongest brands to develop consumer loyalty. The brands that have become the most successful at creating loyalty with consumers do so by building personal connections that are deeper than just the product, rather than only focusing on what features and benefits they have to offer.

Brands take a variety of approaches to building this connection, such as emotional media campaigns like Olay’s #FaceAnything, developing a personal brand story like Burt’s Bees, partnering with social media influencers, or breaking the mold on their social media channels similar to what Wendy’s has achieved with their Twitter. All of the methods have one goal: breakthrough the market’s noise and follow the consumer to prove your relevance to them3. 

 

3. Design the entire experience

According to a recent Nielsen study, consumers spend substantial time researching products online prior to purchase. The same study found that Millennials are three times more likely to switch products due to better packaging design than older generations4. To ensure the brand is accurately represented to consumers and prevent confusion, packaging design needs to be optimized, and visuals showcasing the brand’s packaging need to be carefully designed for each touchpoint where consumers may experience the brand.

Many companies use traditional hero product shots across all touchpoints, and don’t take image size or legibility into consideration. As the digital landscape shifts towards more use of phones or tablets over the traditional computer, images need to be optimized so that the most important information is readily available for consumers on smaller screens. Additional specs and legally required information can be added to additional thumbnails to ensure the focus is on the most important information at their first point of contact with the consumer.

Brands also need to consider their impact post-purchase, and how they can extend the brand experience as long as possible. For example, Jet.com uses customized shipping boxes for their private label products, with large splashes of the brand’s logo and signature purple color. These boxes, which provide an additional injection of the brand’s character, delight consumers when they are delivered.

 

4. Voice: Consumer and Search

Online shopping has given consumers a louder voice post-purchase than ever before. Their voice greatly impacts future purchases for other consumers. According to BigCommerce, 68% of online shoppers in the United States are influenced by online reviews before making a purchase5.

It is critical for brands to monitor the reviews they receive and react accordingly. Increased participation in discussions with consumers allow brands to develop substantial goodwill, as well as human connection mentioned previously. Reviews can also be used as a resource for improved communication about their current products, and suggestions for the development of new or updated products

Along with the consumer voice, direct ordering through mobile ads, social media, and voice services will greatly change the future of e-commerce. Consumer’s ability to buy in real time has already increased dramatically in recent years, and its prevalence will continue to grow as the user experience becomes more seamless and more consumers gain confidence in these technologies.

Consumers will continue to substantially shift their spending from in-store to online in the coming years. While the shift to digital won’t overtake brick-and-mortar as the largest avenue for spending anytime soon, it will represent the overwhelming majority for sales growth during this time. Brands that don’t embrace this transition will fall behind their competition, and potentially be uprooted by those brands that handle this market evolution the best.

 

 

Sources:

  1. https://www.statista.com/statistics/638521/cpg-e-commerce-sales-share-us/
  2. http://www.nielsen.com/us/en/insights/news/2017/as-us-retail-shifts-continue-e-commerce-thrives.html
  3. http://www.nielsen.com/us/en/insights/news/2018/when-it-comes-to-building-loyalty--leaders-say--dont-just-make-a.html
  4. http://www.nielsen.com/us/en/insights/news/2018/four-design-driven-trends-sweeping-the-adult-beverage-category.html
  5. https://www.statista.com/statistics/788185/us-online-shoppers-purchase-influences/

 

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