Consumer Packaged Goods in an Era of eCommerce and Frictionless Markets

Natalie Eastwood Posted by Natalie Eastwood on Thursday, 25 January 2018

How will retail become frictionless? 

Direct to consumer (D2C) eCommerce is on the rise as manufacturers experience the vast benefits of bypassing the retailer. This year, it is predicted that there will be a 71% growth in D2C channels with the industry’s boom driven largely by online retail, including Amazon subscription sales which more than tripled last year.

The success of Amazon’s services demonstrates that retail and the smooth delivery of CPG’s can be effectively facilitated by subscription services. Subscriptions offer members value, convenience, curation, guided purchasing decisions and personalisation, making them an increasingly popular choice among consumers. This form of D2C selling makes financial forecasting and stock level management much more accurate, whilst reducing friction for the brand manufacturer alongside many other benefits. 

In the future will people actually shop? 

D2C retailing has gone full circle – from the milkman delivering to your door, we moved to love huge supermarkets and are starting to prefer direct to the door models once again.  

Humans are creatures of habit and subscriptions not only remove the pain of paying each time, they also provide convenience by reducing physical shop visits. 

So are the days of going shopping coming to an end? Replacing product-driven shopping with a myriad of services was the focus of a recent think piece [1] by Danish MP Ida Auken, first presented at the 2017 World Economic Forum. In the article, Ida presents a world where technology has made shopping and product ownership all but obsolete, with products available whenever they’re needed.

Subscriptions are an ideal way to facilitate the provision of goods in a timely fashion, either exactly when or shortly before they’re needed, reducing the need for physical store visits and improving convenience for consumers.

Large CPG retailers that offer subscriptions include names like Graze, Nespresso, Hotel Chocolat and Dollar Shave Club, and the list is only set to grow. It’s not just about food and personal care either, as brands identify new niches and gaps in the market, with subscriptions available for such diverse product types as pet food, care and toys, gaming, clothing, collectables and candles.

Coffee Subscription

Chocolate Subscription Options. Friction-less retail.Whilst subscriptions do reduce friction during the customer journey, there are other reasons why shopping for CPGs on a recurring basis is increasing… 

Health Food Trends  

Changing trends in food shopping have led to a boom in subscriptions for ready-made meals and ingredient kits. Companies such as Hello Fresh and Diet Chef provide customers with ingredients or ready-made calorie controlled meals to the door on subscription. Similarly, health shop Holland & Barrett offers a repeat order system and Vitabiotics offers a subscribe and save scheme where customers receive 20% off. Companies such as Graze have enjoyed significant success on the back of the subscription health food trend.  Health Meal Eating on Subscription - Friciton-Less Retail

Self-Gifting  

The rise of the phenomenon of self-gifting (purchasing gifts for yourself, often as a form of self-reward) has been tapped into by retailers. Single’s Day has become one of the biggest shopping days in developed nations. In the UK, spending during the event grew by 32% in 2017 [2].

Self-gifting also ties into the trend for promoting self-care, which a number of businesses and charities have been quick to capitalise on with the introduction of subscription boxes [3]. Self-gifting via subscription isn’t limited to self-care, with beauty brands making prominent entries into the marketplace.

Technology That Makes Buying Easier 

Technology such as one-click purchase and shopping by voice has been driven by the requirements of today’s consumer, making a vast array of CPGs available to reorder with ease. Consumers are increasingly looking for a hassle-free experience, shunning lengthy checkout processes to shop in ways that are more convenient for them. Auto-replenishment of commonly used goods is perfect for this, making sure consumers never run out or forget to add products to their shopping list.

Conclusion  

Perhaps the end of shopping as we know it today is near, but nevertheless, people will always shop, just in different, more technologically innovative ways that enable a more frictionless experience and better customer journey.

References

[1] https://www.weforum.org/agenda/2016/11/shopping-i-can-t-really-remember-what-that-is/

[2] http://www.thedrum.com/news/2017/11/23/singles-day-surges-32-year-year-uk-consumers-warm-event-shopping

[3] http://www.independent.co.uk/extras/indybest/food-drink/subscription-boxes/best-self-care-wellness-subscription-boxes-a7906216.html

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