Think of the everyday items you buy. They typically come in easy-to-open product packaging, whether it’s a box of cereal or laundry detergent. All of these products fall into a broad category known as consumer packaged goods (CPG).
According to Precedence Research, by 2032, the global consumer packaged goods (CPG) market is expected to be worth $3.17 trillion. This is an increase from $2.13 trillion in 2022, when digital CPG sales were 10% of the total US CPG market (up from 5% in 2019). CPG is hard to ignore.
Whether you embrace Amazon selling or operate your own online store, you can find ecommerce success selling consumer packaged goods over the internet. Here’s how to do it.
What are consumer packaged goods?
Consumer packaged goods (CPG) are everyday products that most consumers quickly use up and repurchase. They typically are sold at relatively low prices, whether in a physical store or via online retailers. CPG companies usually package these items in a way that is convenient for shoppers so that they can easily be opened and put to immediate use. CPG products typically fall into a few categories:
- Food and beverages. This category includes bread, milk, cheese, soda, and snacks.
- Pet food. CPG pet food includes both dry and canned products.
- Personal care products. CPG brands include products like shampoo, soap, toothpaste, and cosmetics.
- Paper goods. Paper CPG products include napkins, toilet paper, and paper towels.
- Household cleaning supplies. Household products include laundry detergent, dish soap, disinfectant wipes, and spray bottle cleaning solutions.
- Over-the-counter medications. Many retailers offer OTC medicine, including pain relievers, allergy medicine, antacids, and cough syrup.
Benefits of selling consumer packaged goods online
- Large pool of consumers
- Lower overhead costs
- Data-driven insights into consumer behavior
- Targeted marketing
- Scalability and flexibility
Consumer packaged goods aren’t just found in physical stores. You can tap into consumer demand by offering CPG products through an online store. Here are some of the benefits of selling direct-to-consumer (DTC) via online channels:
Large pool of consumers
CPG ecommerce allows businesses to reach an audience beyond their local market. By pursuing CPG ecommerce sales, you can tap into nationwide or even global markets—especially when it comes to customers who simply prefer shopping online.
Lower overhead costs
Online stores often have lower overhead costs than physical retail locations. Your business can save on expenses such as rent, utilities, and staffing, yielding potentially higher profit margins. You can also pass along your savings in the form of low prices, which in turn can boost customer satisfaction and lead to repeat purchases.
Data-driven insights into consumer behavior
Ecommerce platforms offer robust analytics tools that provide valuable insights into customer behavior, preferences, and online shopping patterns. By analyzing this customer data, you can make informed decisions about product offerings, marketing strategies, and customer engagement initiatives to improve the customer experience and increase your market share.
Targeted marketing
Online selling lets businesses implement targeted marketing campaigns tailored to specific customer segments. Through email marketing, social media advertising, and personalized recommendations, you can engage with customers on a more individual level. This boosts brand recognition, helps you establish credibility, and increases the likelihood of conversions.
Scalability and flexibility
You can position your CPG company for rapid growth by boosting your brand’s commitment to online sales. Online selling provides the flexibility to adjust pricing strategies and promotional activities relatively quickly, helping you adapt to changing market conditions and consumer preferences.
CPG ecommerce strategies to consider
- Leverage customer data for personalization and loyalty
- Embrace an omnichannel strategy
- Try subscription models
- Use content marketing on various digital channels
- Create a user-friendly digital shelf
- Anticipate CPG ecommerce challenges
Although brick-and-mortar stores remain important, the rise of ecommerce has created a new battleground: the digital shelf. To remain competitive in this ever-evolving landscape, CPG businesses need to innovate in the following ways:
Leverage customer data for personalization and loyalty
Ecommerce provides CPG companies with a wealth of customer data on browsing habits, purchase history, and preferences. By analyzing this data, companies can personalize product recommendations, marketing campaigns, and brand loyalty programs to encourage repeat purchases. Procter & Gamble is one brand that uses customer data and AI marketing to deliver personalized content and coupons, leading to a significant increase in customer engagement.
Embrace an omnichannel strategy
A successful CPG ecommerce strategy goes beyond selling online to create a seamless omnichannel experience for consumers. This means ensuring brand consistency and product information across all channels, including online marketplaces, brand websites, and physical stores. Harvard Business Review reports that 73% of customers prefer shopping through multiple channels.
Try subscription models
The subscription model is one of the leading CPG industry trends, offering the convenience of automatic delivery and recurring revenue. Dollar Shave Club’s success with its subscription service is a prime example of disruption in the razor market. Core3 Solutions operates multiple subscription brands, including Gentleman’s Box, Element5 Digital, Moka Boka, and Rocket Effect. Starting a subscription business will not only provide you with a steady income but also provide greater customer lifetime value (CLV) from your existing clients.
Use content marketing on various digital channels
In a world of high market saturation, CPG brands need to stand out from the crowd. You can do this in part by creating compelling content marketing that educates, entertains, and builds brand value. This can involve creating informative blog posts, engaging social media content, or how-to videos showcasing product usage. The goal is to establish a strong digital presence that resonates with target audiences and drives sales.
Create a user-friendly digital shelf
Winning on the digital shelf requires meticulous attention to detail. High-quality product images, detailed product descriptions optimized for quick voice search, and retail media for targeted advertising on online marketplaces are all essential. For instance, Unilever became a retail partner with Amazon and created interactive product pages with educational content, leading to a significant boost in sales.
Anticipate CPG ecommerce challenges
Successful CPG brands proactively face challenges like rising transportation costs and supply chain issues. You, too, can stay ahead of the curve by using new technologies like supply chain management software, customer service chatbots, and state-of-the-art ecommerce websites. When it comes to selling, consider using tools like augmented reality (AR) to simulate the in-store experience and remain competitive in a crowded marketplace.
CPG ecommerce FAQ
What does CPG stand for?
CPG stands for “consumer packaged goods.”
What is the future of ecommerce for CPG?
The future of CPG ecommerce involves sellers collaborating with retail partners and channel partners to overcome the huge challenge of high market saturation. These sellers must also focus on building a strong digital presence to maintain relevance and differentiation in an increasingly competitive landscape.
What are examples of successful CPG ecommerce websites?
Examples of successful CPG ecommerce websites include Dollar Shave Club and PepsiCo’s PantryShop.com. All-purpose CPG ecommerce websites include Amazon, Walmart, and Target, which have capitalized on their strong digital presence and retail partnerships to drive online sales and increase customer engagement.
