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June 9, 2020

Omnichannel eCommerce "Black Swan" Event

Omnichannel eCommerce

In this episode, Peter Bond & Sri discuss the dynamic reshaping of the CPG industry outlets and why omnichannel shopping is likely your new norm. As a commercial leader, there is not other way than digital leadership. Don't be the dinosaur that holds the industry back... #sriandpvsb

Questions answered:

  1. What does the term omnichannel mean?
  2. What is the state of the CPG industry in this omnichannel shopper quest? Is this a new reality?
  3. What aspects of shopping may change forever?
  4. What are the various forms of shopping point of purchase to product receipt in a shopper’s journey?
  5. What functional areas does a CPG manufacturer need to focus on to adapt to this new reality?
  6. What is Amazon’s role in this journey? Are they omnichannel?
  7. How will this change impact advertising and consumer attention?
  8. Can you share more on this attention change? How does it impact today’s brands?
  9. Who is doing this well and have already well adapted this in retail?
  10. What’s the blueprint moving forward on this? Are there partnerships that’s a must have?

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Transcript

Omnichannel retail has been around over 2 decades with electronics and apparel having led the way. What about grocery and fast moving consumer staples? Toothpaste, food, beverages, household cleaners or cereal? Amazon has been 'the great CPG eCommerce experiment' and still a small portion of most revenue models for scaled CPG brands. Our views on Amazon for CPG are here : https://www.linkedin.com/pulse/amazon-your-dtc-strategy-sri-rajagopalan/

In this episode, Peter Bond & Sri discuss the dynamic reshaping of the CPG industry outlets and why omnichannel shopping is likely your new norm. As a commercial leader, there is not other way than digital leadership. Don't be the dinosaur that holds the industry back...

  1. What does the term omnichannel mean? Simply put, it is the ability for a consumer to browse, shop and engage with products when they want, where they want and how they want. In addition, this is also about how consumers choose to receive their product in a format and location they prefer. Consumers also engage with brands very differently on channels today - some channels play the role of learning & browsing, some strictly shopping, some price comparison and some simply pickup outlets. Together this is omnichannel shopping.
  2. What is the state of the CPG industry in this omnichannel shopper quest? Is this a new reality? Our new view is since retail hasn’t adapted this new norm, CPG which traditionally follows its largest customer bases - offline retail primarily as its anchor - hasn’t followed suit. It has also largely been retail that is taking the lead and CPG watching in rare test and learn mode as the norm. As a result a few retailers are way ahead of the curve and shone brightly during these times and will therefore benefit from this new shopping behavior permanently delivering value for the consumer in ways that are even more profound than before. This is our new reality. Some consumers who hesitated to even browse for products online have now been introduced to how easy it is to click and transact a purchase online and the convenience of receiving a product at their choice location. Some percent of those shoppers are never going back to their old ways.
  3. What aspects of shopping may change forever? The reality is virtually all aspects of shopping will change forever. We need to remember omnichannel shopping started a decade or so ago and is not a new phenomenon. What’s new is the adoption rate by the consumer. Keeping this in mind, the quest to find products, look for innovations or solutions to need states - summarized as browsing, hunting for bargains or value shopping, price comparison, engaging on social conversations on brands via ratings & reviews, referring a product to a friend, shopping with convenience from home or a perhaps while on transit on a bus, 2 hour delivery expectations - these are priceless and have changed how a consumer thinks. The outcome - Amazon, Target and Walmart who are ready are taking a giant leap forward. Tomorrow - some of these shoppers may never go back to their old habits and platforms. 
  4. What are the various forms of shopping point of purchase to product receipt in a shopper’s journey?  The ones that stand out amongst others are buy online, receive at home, work, a location of choice. Buy online, pick up inside a store, buy online pick up product kerbside at the store, complicating it further buy from a third party seller online, receive product at a pre determined location. I’m addition there’s two day shipping, longer ground shipping, cross border month long shipping, tow hour shipping, one hour shipping, the list is endless. Then there’s social media and shop now buttons such as Facebook or instagram, swipe up ads that lead to shop now, apps vs websites or tv based shopping, AI induced shopping engines and voice based shopping, not to forget subscription auto shop, one click purchase, and referral based. All this online compares to one way offline, checkout at a counter by scanning product. 
  5. What functional areas does a CPG manufacturer need to focus on to adapt to this new reality?  Since the path to purchase now has changed so spectacularly, it’s important a brand trace and try to be Omni present all along the way. That’s product seed to distribution and consumption. All matter. This means things like R&D now needs to understand that innovation has to deliver value for the consumer inside out as it’s going to be price shopped, packaging needs to have technical aspects addressed such as a QR code, referring to a platform review or traceability of a product formulation. Marketing needs to drive product equity at all points when a consumer interacts with a product. Multipacks need to be a new norm, bundling is a new SKU, advertising changes to be hyper targeted changing metrics such as impressions to be virtually irrelevant. Supply change now faces a new threshold of delivery metrics and capabilities. We can keep going on...the list is endless.
  6. What is Amazon’s role in this journey? Are they omnichannel?  Well, to being we are here with great value to the consumer thanks to Amazons relentless attempt over the year to continuously test and learn ways to deliver for the consumer. The whole notion of some day delivery at a convenient location originates mostly with Amazon. Without the Amazon revolution there is no ecommerce. However, Omni channel retail originated within Western Europe, likely the UK first. Grocery retailers such as Walmart, HEB, Meijer evolved to be digital and Omni channel many years ago testing click and collect models. Amazon acquired Whole Foods a few years ago and has integrated it into Prime Now delivery to become a true omnichannel retailer. 
  7. How will this change impact advertising and consumer attention? What was primarily print and TV mass media emotional advertising targeted at very large segments of the population has now changed to hyper targeting. The brand, based on many data sources can virtually pin point a consumer need based on very personalized demographics. Add digital re targeting and persuasive custom ads, the conversion tends to go up, not to forget influencers and how recommendation and socialized messaging on brands previously mlm models now is available to all marketers. There’s no doubt scaled media is now slowly becoming irrelevant being replaced by personalized marketing. Streaming vs live video is the next big change to advertising as outside a handful of live TV programming, it is totally irrelevant these days. The role of the older agencies which are slow to adopt will diminish significantly and marketing skills now begin with digital. If you’re an emotional marketer vs digital - your leadership will need to evolve. More to come at a later episode on this. 
  8. Can you share more on this attention change? How does it impact today’s brands?  Take an example of human attention spans - due to the prevalence of many devices and engagement platforms, what used to be significantly longer is now significantly shorter. Advertising is an area where the greatest brands created attraction through emotional connections. They had 30 plus seconds on TV to do this, and a consumer could not forward or rewind it - as in it had to run its course and the consumer watched it - radio and print are no different. The new norm is headed to the 5 second commercial. Imagine what a marketer has to do for a brand to communicate value, efficacy and leave a lasting impression in 5 seconds. This is directly proportional to growth in streaming video which allows a consumer to skip an ad after 5 seconds. This may increase to 15 seconds in the future, but we also see plenty of paid subscription models with no advertising period.
  9. Who is doing this well and have already well adapted this in retail? Walmart and Target were investing in digital consumer outreach in many ways well before this epidemic. CVS has moved fast in the last few months. Some grocery retailers like HEB, Meijer, Wakefern companies have always led this and continue to deliver a plethora of ways for the consumer’s new digital shopping journey. 
  10. What’s the blueprint moving forward on this? Are there partnerships that’s a must have? The one that comes to mind is Instacart. Concierge shopping has been a blessing to many in the epidemic, post it will be sticky is the question. We think of it as no different from the food delivery business. Once introduced its a new option that will craft its way to a decent market share of the transactions. This needs both brands and retailers to understand their equity is being represented by a platform that’s not a 3p marketplace and learn that digital content, extending offers, and driving SEM to it is equally important as their own equity vehicles. Another area is technology - AI, voice, GPS for kerbside or click & collect models. This is not a traditional strength outside Amazon and very few brands experimenting at best. We would think starting with partnerships and learning the way into it is the best way to go.

Our intent is not to forecast the future or suggest there's only one way. Our ambition is to see the CPG industry progress in delivering maximum value for the consumer via quality products widely available to all.