5 CPG E-commerce Trends to Watch in 2020
Welcome to the 2020s! As a CPG professional, you’ve heroically made it through an intense decade of transformation, so don’t feel bashful about giving yourself a pat on the back. Just don’t celebrate too long, because with the increased momentum and competition that has occurred in the CPG e-commerce space in 2019, 2020 is bound to be an even more transformative year. I’m sure that wasn’t the prediction you were hoping to hear, but don’t worry, because this article details five of the biggest e-commerce trends that you need to be aware of going into this new decade.
Sustainability Throughout the Value Chain
While eco-friendly products have been gaining in popularity over the past few years, sustainability’s true impact on the CPG industry will be felt throughout the entire value chain in 2020. Sustainability is rooted in social altruism, but it’s no surprise that corporations tend to be more intrinsically motivated by a trend’s ability to influence revenue creation. With approximately three out of four consumers willing to change their purchasing habits to improve the environment, sustainability has proven its ability to drive CPG sales. In fact, Nielsen projects that U.S. shoppers will spend $150 billion on sustainable CPG products by 2021, an increase of between $14 billion and $22 billion.
As more sales move online, brands will have to think past sustainable product attributes and consider the larger environmental impact of e-commerce as a sales channel, particularly in terms of packaging and shipping. Amazon, a longtime proponent of eliminating packaging waste, is forcing many brands to confront this issue head-on. Last year, it made Frustration-free Packaging a requirement for all items larger than 18” x 14” x 8” or 20 pounds, meaning vendors that want to continue selling items of that size on Amazon must comply with the program’s rules or face potential chargebacks.
While implementing sustainable e-commerce packaging is likely to have a negative short-term impact on CPG brands’ finances, it will undoubtedly yield margin-accretive results in the long run. The best example of a brand reconfiguring one of its products for e-commerce is Procter & Gamble’s Tide Eco-Box, which serves as its own shipping container and contains a more concentrated formula that makes the product smaller and lighter.
Location-based Digital Marketing
Most CPG brands are still trying to understand how to operate in a digital-first world, yet as this year’s Black Friday showed us, we are quickly evolving into a mobile-first world more specifically. In fact, Abode Analytics called Black Friday “the biggest day ever for mobile,” as almost 40 percent of all online sales were completed on a smartphone. While that statistic might sound terrifying to an industry that is still dominated by physical retail transactions, it should have CPG brand marketers salivating at a major opportunity in 2020.
Consumers have their smartphones attached to their hips 24/7/365, and with geo-targeting through advertising platforms such as Facebook, brands can market to customers based on their individual locations. On top of that, research has shown that grocery shoppers who use their phones in stores end up spending an average of 41 percent more than those who don’t. This presents a unique opportunity for brands, who should work together with their retail partners to bridge the gap between digital and physical channels, implementing omnichannel marketing strategies that leverage retailers’ physical locations as an asset.
Impact of 5G
5G, the next generation of wireless technology for digital cellular networks, could cause wide-ranging disruption throughout the CPG industry. You might be asking yourself, “What does a technological advancement in wireless have to do with selling CPG products online?” It’s a valid question, but the answer, quite honestly, is everything. 5G technology enables faster data transfers and allows for increased use of Internet of Things (IoT) devices. These devices will be adopted throughout the entire supply and value chains of the CPG industry, providing integral real-time data that should make digital teams at major brands excited about future possibilities.
Additionally, 5G builds on the momentum of traditional mobile shopping, as it makes speeds 10 times faster. With reduced friction from slow wireless connectivity, more consumers will be able to quickly and easily shop wherever, whenever and however they want to, further blurring the lines of offline and online commerce. 5G also opens up advancements in the use of AR and VR for in-store and at-home shopping.
Note: 5G will likely not be nationally disruptive until 2021. This is because wireless networks have currently only been upgraded in a handful of select cities, and many people don’t have phones capable of connecting to these networks.
Evolution of Direct-to-Consumer
While growing direct-to-consumer website sales is undoubtedly on every consumer brand’s strategic map for 2020, doing so can be an extremely tricky undertaking for CPGs. Despite this, brands will continue to feverishly increase investments in their direct-to-consumer websites in 2020. The most innovative brands will offer exclusive experiences that differ themselves from retailer substitutions, instead of perpetuating the boring direct shopping experiences and played out subscription models of the past. The next wave of CPG direct-to-consumer subscription models will integrate artificial intelligence to improve personalization, introduce service-based elements, and include solutions to improve sustainability.
The Importance of Product Content
There is a trifecta of changing dynamics in the CPG industry that is pointing directly towards the growing importance of search optimization and product content:
- The percentage of total sales attributed to e-commerce is increasing.
- Online shoppers are predominately using non-branded search terms to discover and purchase CPG products through retailer websites.
- Low barriers to entry for manufacturing have caused an explosion of competitors that are quickly creating close substitutes.
While these shifts have been on most brands’ radars for several years, 2020 will be the year that it will become more imperative than ever to utilize product content as a strategic differentiator. Consumers are increasingly discovering new CPG products online, which means a brand must focus on creating product content that helps them both rank well in search results and stand out from competitors. When creating product content, brands must think beyond basic product attributes and speak to the unique use cases and brand stories that connect with consumers in a one-of-a-kind way.
OneSpace Can Help
OneSpace helps CPG brands centralize, optimize and publish product content that wins top position on the digital shelf. By combining e-commerce search data and content optimization tools with software for content storage and syndication, OneSpace’s Product Merchandising Platform helps brands increase organic search visibility and conversions across multiple online retailers at scale. Contact us to see how we can help.