Invest in E-commerce: Its Influence and Presence are Substantial

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Invest in E-commerce: Its Influence and Presence are Substantial

03/16/2017

Sam Gagliardi ,
Senior Vice President of E-Commerce, Consumer Shopper Marketing, IRI

While currently it accounts for only a small percentage of overall CPG sales, e-commerce is exploding. The channel is poised to claim an average 10 percent of industry sales by 2022, according to analysis by Chicago-based IRI.

The influence of e-retail, however, goes well beyond the actual moment of purchase. IRI reports that more than three-quarters of all shopping trips begin online—a retail value of well over $2 trillion—regardless of whether the purchase is made in a brick-and-mortar store or online. And while millennial shoppers index high, shoppers across age demographics are actively developing their personal online shopping systems.

The broad and deep reach of e-commerce demands that the channel be embraced as much or more than just a sales avenue. Its growing impact as a marketing platform cannot be ignored. Manufacturers and retailers alike need to invest in understanding e-commerce impact and potential.

Retailers Respond

There has been a flurry of activity among retailers looking to build out e-commerce capabilities, with some choosing to build their own infrastructure and some choosing acquisition of existing e-commerce retail sites. Regardless of their methods, retailers must move fast to establish a strong foothold in this dynamic marketplace.

The most complex issue in the transformation of retail to include e-commerce is that brick-and-mortar retailers must rewire their go-to-market strategies. One of the most dynamic differences between e-commerce and traditional brick-and-mortar retailers is the shelf.

Traditionally, in the brick-and-mortar marketplace, retailers invest significant sums of money to build inventory before brand-promotion efforts even begin. However, the e-commerce world has a “limitless shelf,” allowing for sales of products that aren’t even part of inventory. The onus on creating demand is placed on manufacturers, and then retailers must react. Demand creation precedes inventory build-out.


Millennials: Almost 2/3 shop online weekly

35-54 year-olds: 84% shop online monthly



Manufacturers and Marketers Engage

With more and more shoppers spending time online shopping—or at least researching products—e-commerce must be a key digital pillar for a CPG strategy. CPG marketers can grow e-commerce sales by up to 150 percent by building a strong online presence and earning shopper awareness, IRI forecasts.

The influence and impact of e-commerce can be significant and very positive, and the cost of missing the opportunity is quite high. Through e-commerce, CPG marketers are well-equipped to influence shoppers in the store and online because they have visibility along the entire path to purchase. By getting organized and setting strategies that follow shoppers’ online behavior, retailers and marketers can collaborate to make big strides and earn big. E-commerce will continue to boom, making e-retail a phenomenal growth lever for those that keep up with the revolution.

CPG E-commerce Growth 2015-2022
% CPG Dollar Sales

Source: IRI Growth Consulting Analysis;
Note: Numbers may not add to 100 percent due to rounding.

 

Brick-and-Mortar Push Strategy vs. E-commerce Pull Strategy

Source: IRI Analysis

Go-to-market strategies look drastically different in the e-commerce world.

E-commerce is as much a marketing channel as it is a sales channel.

Source: IRI Analysis

Even traditional brick-and-mortar brands must have a strong online presence and ensure that their presence is strategically located along the path to purchase.