By Greg Stevens, MyWebGrocer

How big of a dent can Consumer Packaged Goods (CPG) brands make online, an area where they have long struggled to succeed? That’s the question industry analysts posed last month when Mondelez, makers of popular products such as Oreo cookies, Trident gum and Cadbury chocolate, announced it would be heavily investing in e-Commerce in order to double its online revenue over the next couple years. Skeptics pointed out that 90% of grocery purchases are still made in store, and the potential for CPG sales growth online in the near future is low. But they’re not looking at the whole picture.
While the 90% statistic is correct, it should be taken with a grain of salt. We live in a world where sales are moving from brick-and-mortar to online incredibly fast, and in the grocery industry, e-Commerce revenue has grown 34% since 2012. That’s dramatically more than in-store sales have grown, and it’s a statistic CPG brands and grocers shouldn’t ignore. This growth is being fueled by mobile commerce, which now influences 20% of all online grocery orders. It’s a number almost guaranteed to increase as mobile-addicted millennials will become the biggest consumer buying group by 2020, according to Accenture.
Mondelez’s move to increase its digital presence through shoppable ads with “buy buttons” is a smart one that will set them up for early success in an emerging space. In the modern retail era, all brands, including CPG, need to align themselves with changing customer behaviors and reach shoppers through all channels to remain competitive.
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CPG brands have always been faster to adopt new technologies than grocery retailers, and Mondelez isn’t the only example of a forward-thinking company here. We’ve seen manufacturers like Pepsi Co. and Procter & Gamble develop e-commerce practices within their firms, hiring entire teams to ensure the digital shelf is optimized for their product portfolio. This isn’t an experiment or passing trend — companies are investing significant funds and time into digital marketing and e-commerce.
Let’s look at some numbers we’ve seen in MyWebGrocer’s online grocery data to prove just how much growth potential there is for CPG brands online. First, the average online basket includes 53 items with a value of $157, versus an in-store average value of just $50. On top of that, conversion rates for online grocery orders are high. Pick up orders have an 86% conversion rate, while delivery is at 82%. This is a positive sign for CPG brands, since snacks and packaged foods are some of the most popular items in online grocery carts. Up to (76%) of carts in Q1 2015 contained snacks, and 68% contained canned or packaged goods, with both appearing in the top 10 categories of grocery items purchased online.
It’s important to clarify what we mean by “e-Commerce” in relation to grocery. Typically e-Commerce means ordering online and having items shipped to a customer, which sounds expensive when you’re talking two-liter bottles of soda and heavy canned goods. But the majority of online grocery orders are “click and collect,” where shoppers are ordering online and picking up orders at the store. This option is becoming increasingly popular, and CPG brands should be heavily marketing to these shoppers online.
The best place to reach potential customers is through ads placed directly on grocers’ e-Commerce portals, where visitors are already in a grocery shopping mindset. However, CPG brands should use all digital channels to market themselves via mobile, email and web campaigns. With modern data collection capabilities, it’s easy to segment targets based on location (most significant for “click and collect” shoppers), demographics and past purchase history.
While the future is e-Commerce, web and mobile channels are also highly influential when it comes to shoppers’ in-store decision making. Shoppers are using their devices for product research, recipes, digital shopping lists and more. In order to prepare for the next five years in an increasingly omnichannel retail environment, CPG brands will need to go where their customers are going: Online.
Greg Stevens oversees Sales, Insights & Activation at MyWebGrocer, the leading provider of digital solutions to the grocery and CPG industry. In this role he works with CPG brands and grocery retailers to create personalized digital campaigns on MyWebGrocer’s marketing platform.