CPG Online Channels – Behavior of Customers Have Impact

Within the context of this blog, our investigation into the consumer packaged goods (CPG) eCommerce area will continue with an examination of the various online distribution channels. The behavior of customers is changing, and CPG businesses and retailers need to adapt to it by selecting the appropriate online channels to communicate with them. During the course of the previous year, internet channels were responsible for nearly 70 percent of the overall expansion in CPG. Additionally, online grocery sales are still on track to account for twenty percent of total grocery sales and grow to a market size of one hundred billion dollars by the year 2022.

CPG Online Channels - Behavior of Customers Have Impact

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Let us take a look at the many online channels that clients use in order to purchase consumer packaged goods (CPG):

Customers purchase products either through traditional online retailers like Amazon, Walmart Online, or Target Online, or they buy them directly from the CPG DTC brand. Traditional eCommerce Customers are now able to buy products online through the company’s website or mobile app and pick them up in a physical store under a new purchasing option known as “Buy Online, Pick-up in Store” (BOPIS), which was brought about as a result of the epidemic. The shop will then complete the customer’s online order, at which point the shopper can pick up their purchase from the shop. This is an excellent strategy for increasing foot traffic in stores and enables customers to combine their online and in-person shopping experiences.

The practice of selling goods and services online through social networking websites like Facebook, Instagram, and Pinterest is known as “social commerce.” Social Commerce is a subset of eCommerce. Initially, consumer packaged goods companies that sold personal care products turned to this channel, but in recent years, its use has increased significantly. For instance, L’Oréal sells its products on social networking platforms by utilizing aCommerce’s Social Commerce. In 2021, it was anticipated that more than 22 percent of those who use the internet in the United States will have made at least one purchase through Facebook.

Voice Commerce: Voice Commerce makes it possible for customers to buy things online by using voice commands and a smart device that is compatible with them, such as a mobile phone, tablet, or smart speaker. Voice Commerce also enables users to make payments using their voice. According to the findings of a survey that was carried out by PwC, three out of every four consumers are using their mobile voice assistants at home. The primary reason for this is because it is so easy to access. In addition, fifty percent of those who participated in the poll have already made a purchase via their voice assistant, and an additional twenty-five percent are thinking about doing so in the near future.

Q-Commerce: The expansion in urbanization has led to an increase in the number of families consisting of only one person. As a direct consequence of this, there is a growing preference among customers for the delivery of products in smaller amounts rather than bulk items at wholesale prices. As a result, fast Commerce, also known as Q-Commerce, was developed to cater to the needs of these customers. Clients can buy the product(s) online from nearby stores (like D-mart or Walmart), and Q-commerce will deliver these tiny quantities of items to customers almost immediately after the transaction (within an hour). Even though Instacart is a big player in the Q-Commerce industry, there is now significantly more competition as a result of the entry of other food delivery service platforms such as DoorDash, GrubHub, and Uber Eats.

According to a study that was published not too long ago, increasing the delivery window to two hours would result in an increase in customer loyalty, and 73 percent of customers stated that having a comfortable time frame is more significant than having a product delivered quickly.

There are particular aspects of consumer behavior that play a role in determining the necessity of online platforms. Let’s take a closer look at each of these factors:

Order Quantity is the total number of items and number of units of a product that a client places an order for from a store or manufacturer.

Product Segmentation: The products that are sold by the brand are divided into high-end and low-end categories according to their price and value.

Delivery Time is the amount of time it takes for a consumer to receive their product after they have placed an order.

Convenience can be defined as whatever best meets the needs of the consumer, such as the time window for delivery, the place where the product is ordered, the payment option, the easily available platform, and the mode of delivery.

Customers Who Choose the More Conventional Methods of eCommerce

Order quantity – bulk

Choose the high-end, long-lasting product segment wherever possible.

We are willing to wait for the delivery.

At first, customers were ready to wait for a delivery time of two to three days; but, as the demand for same-day and next-day delivery has increased, merchants and manufacturers should optimize their supply chains in order to meet the requirements set forth by their respective customers.

PepsiCo is creating automated micro fulfillment centers in Chicago, for instance. These centers have the capacity to process 7.5 times as many units per hour as a conventional e-commerce warehouse operation would be able to in their new location.

Customers who choose to engage in social commerce

High order quantity was placed.

Choose more expensive brands of goods, such as clothing and personal care products.

The need of quick and easy delivery is emphasized here.

Things used to be different when it came to using social media as a marketing tool to boost customer interaction, but now things are different. Users do not need to switch platforms in order to take advantage of social shopping. Without ever having to leave the social network, users are able to complete the entirety of the process, from in-depth examination of the products offered by the brands through checkout and payment.

Social commerce is here to stay due to the fact that about 70 percent of the population in the United States has at least one social media account. As a result, consumer packaged goods (CPG) brand producers and merchants ought to sell more products through social commerce given that traditional eCommerce is gradually transitioning towards social Commerce.

Customers who choose to conduct their business via Voice Commerce or Q-Commerce:

Clientele who are more interested in low-end products

Order quantity, which is low.

Heavy reliance on the ease of things and on having things delivered more quickly

Customers in this industry are willing to pay a premium price in order to receive things more quickly.

The majority of the products that are bought through voice commerce are either of a low quantity or are ones that a customer can acquire without necessarily having to see the product in person (to determine quality, for example). Nevertheless, this pattern is about to shift, and the use of voice assistants is on the rise. As a result, businesses need to update their SEO to accommodate voice searches. For instance, Unilever is centering its digital transformation on voice control.

At the moment, enterprises who participate in Q-Commerce do not keep any inventory; rather, they collect products from retail partners and then deliver them to clients. However, in light of recent developments such as the proliferation of BOPIS and online food shopping, they are required to manage their stocks independently. As a result, enterprises who engage in q-commerce need to begin renting up facilities within the city, such as disused basements in strategic areas, in order to store up on goods that will be delivered.

In conclusion, an increasing number of customers will switch to shopping online, and CPG manufacturers and retailers will need to adopt the appropriate online channels in order to suit the shifting behavior of their customers.

Consumer Packaged Goods (CPG) Business Model

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