In the early days of the internet, many CPG companies scrambled to create new roles to help them capitalize on the growth of e-commerce. Reflecting the thinking of the time – that online was a separate channel distinct from the main business – these positions were often siloed and divorced from other functions.
However, over the past ten years, the way in which consumers use online has shifted. So too has the thinking of CPG firms regarding the functions they need to drive growth. This article explores the changing online landscape and how it relates to the new roles being created within consumer-facing companies.
It is fair to say that in the internet’s infancy, most retail and CPG companies did not take e-commerce all that seriously. At best the channel was seen as something of a distraction, at worst a passing fad. Few foresaw the impact it would ultimately have on consumer behaviors and decision-making. For that reason, many firms were initially slow to adapt to digital.
As online grew, perceptions started to shift, and views changed from skepticism to acceptance that the channel was here to stay and would have an impact. However, among both retailers and CPG firms, the prevailing opinion was that online would be a separate channel from the mainstream business and that most consumers would never fully embrace it.
This view is why some of the earliest attempts at e-commerce involved creating dedicated roles such as e-commerce managers and directors. These positions were often ill-defined and not fully integrated into the business. They often served, largely, as a means for CPG firms to feel like they had covered the base of online selling.
Around 2015, views about online started to change at CPG firms. Faced with incontrovertible evidence that e-commerce was creating far-reaching disruption, companies began to think more carefully about the organizational shifts that might be needed to allow their organizations to thrive.
It also became clear that, rather than being a separate channel, consumers were utilizing the internet as part of a wider ecosystem of channels and tools. This led many companies to the conclusion that their own internal structures needed to reflect this seamlessness. If the internet was pervading all parts of the purchase process, it also needed to be ingrained into the thinking of all parts of the organization.
Areas e-commerce impacts
The importance of e-commerce across CPG organizations is evident from the many areas it now impacts. These include:
- Account management: Amazon and other online merchants are now big clients of CPG firms, and they require account managers and service functions. Some traditional grocers now have specialist e-commerce operations, like Walmart‘s Jet.com. These also require management that understands their particular needs. Activities around promotions, pricing, and range composition are sometimes different for online than they are for stores, so an understanding of the needs of e-commerce businesses needs to be integrated into the account management team. However, a wider appreciation also needs to be given as to how shoppers move across those channels so as to avoid confusing or conflicting messages.
- Product and packaging development: In the old days, packaging and products were developed exclusively for stores. Now consideration also needs to be given to the needs of online and multichannel shoppers. Consumers that order in bulk online, for example, may require a different type of packaging that makes dispensing doses of product easy. Equally, the design of products must look good online as well as on the shelves of stores.
- Merchandising: In-store merchandising has always been a mix of art and science, with CPG firms working closely with retailers to produce compelling displays. Online requires a similar effort, but attention needs to be focused on providing enough product information, high-quality photos, and compelling content like videos. This requirement adds a whole range of new skills to merchandising departments.
- Consumer insight: Consumer insight departments have always been the lifeblood of CPG firms. They connect the inside of the organization with external consumer demand. In the age of the digital consumer, their role is arguably even more critical, as they need to provide an understanding of the nuances of shopper journeys across channels. Allowing the firm to understand small differences in shopper needs allows refinements to be made to ensure the right product is in the right place at the right price.
- Logistics: With many CPG firms selling or looking to sell direct to consumers, the nature of logistics within firms are becoming more complex.
With e-commerce touching so many areas, it is clearly no longer a stand-alone department or something that can be managed in a silo. It has to be infused across all parts of a CPG organization.
A new role for new times
In response to the significant nature of e-commerce and its widespread impact, many CPG firms have looked to change their structures. Looking at leading firms in the industry, some of the best practices are:
- Creating cross-functional teams that deal with digital disruption: Unilever, for example, has a global e-commerce membership group that meets regularly. Its purpose is to generate new ideas, deal with specific opportunities and challenges, and manage new ways of working. The main benefit of such a group is that it brings together expertise from all parts of the business and ensures the e-commerce and multichannel agenda is widely owned.
- Widening the e-commerce brief: Although e-commerce remains a buzzword, it is more than just another shopping channel. It is part of a much wider set of trends that are disrupting established ways of doing business. As such, some firms have sought to recast the traditional e-commerce director role with a wider brief that looks at the whole business model. Johnson & Johnson, for example, recently expanded Sri Rajagopalan‘s role from Vice President E-commerce, in which he was primarily focused on online, to VP & Lead of New Business Models, in which he looks at the wider changes in how consumers shop for its products across channels.
- Infusing e-commerce across the organization: While having an overall head of e-commerce is still worthwhile, many firms understand the need to go further and ensure that digital is represented within all functions. Colgate-Palmolive, for example, has a Global E-commerce Marketing Director whose role is to look after digital marketing across all functions and geographies, while working as part of the wider marketing group.
- Having an e-commerce champion: Some CPG firms still opt to have a head of e-commerce, but the nature of the role has changed. It is usually no longer concerned with looking at the channel in isolation but is rather a position that champions changing shopping habits across the organization. In essence, it ensures that the view of the multichannel shopper is taken into account in decision-making.
- Having board representation: E-commerce used to be a side note at most board meetings. However, all CPG firms now have metrics and measurements to understand digital disruption. As these are part of board packs and agendas, e-commerce and omnichannel shopping are now arguably represented at the highest levels of the organization.
There is no one ideal future organizational model. There are different solutions for different CPG firms. However, the general direction of travel is clear. All parts of CPG firms are being touched by digital disruption, and that means an integrated approach to e-commerce is required. Responding to the new ways of shopping is moving from being the responsibility of one team to being the duty of all employees.
Neil Saunders is a retail analyst and consultant. He currently serves as Managing Director of the research firm GlobalData, where he oversees the development of the company’s retail proposition and its research output. He also works with clients to help them understand the retail, shopper and market landscape.
Neil is a founding partner of Prasentia, a firm that works with clients to help them communicate more effectively. Outside of work, Neil is an advisory board member for the faculty of business and law at the University of Southampton, an Honorary Lecturer at the University of New Hampshire, and a Visiting Fellow at the University of Surrey.