In the past decade, fortunes have been lost as entrepreneurs tried to convince large numbers of consumers to pay for online grocery shopping and home delivery. For most grocers, the online part of revenue is limited to a small number of consumers. Everyone else remains convinced that they are paying too much for the service or that they’re not getting exactly what they want and so they continue to drive to the store. But consumer packaged goods (CPG) companies are set to exploit the online market in new ways.
CPG purchases make up a considerable part of a consumer’s weekly shopping trip. And an increasing number of consumers are finding they can purchase these goods directly from the manufacturer. New Nielsen research shows that consumers spent $12 billion buying CPG products online last year, an amount that comprised 2% of sales. That number is expected to grow to $25 billion by 2015.
Nielsen analysts say that the Gen Y group will be particularly important to CPG companies. These consumers are accustomed to purchasing everything online. But marketers will need to adjust their promotional tone to increase sales and make personal connections with consumers.
Currently, the average online purchase for food and beverages is $80 which compares to $30 offline. To grow sales, marketers also need to know:
- The online shopping experience is more needs-driven which may reduce the chances to make a last-minute emotional sell.
- Big brands may not have a big online advantage as consumers can easily use search to find the niche products they’re seeking.
- Promotions should be interactive and make use of social media and smartphone apps to appeal to younger consumers who favor the online channel.
Even as CPG marketers plot their move into direct retailing, it’s unlikely that traditional grocers and warehouse clubs will stand idly by and watch their market share disappear. These merchants will also be promoting the benefits of shopping with them.[Source: Five Things to Know about Online Grocery shopping. Nielsenwire.com. 31 May 2011. Web. 13 Jun. 2011]