With declining numbers of consumers in mature markets, a general slowdown in global spending, and change in consumer shopping patterns and behaviour, Practicology Principal Consultant Kerry Lee reveals what consumer goods companies (CPG) should focus on to deliver growth?
With FMCG online sales growing globally by 26% in 2016, investing in ecommerce seems like an obvious answer – but how do you actually go about this without impacting your overall business as usual performance?
1. Frame, communicate and incentivise the ecommerce opportunity
Evidence shows that consumers are migrating towards online and that increasing amounts of consumer goods will be bought through these digital channels. But, what does this mean for your organisation and how big is the opportunity in your industry and market?
Practicology’s ecommerce clients are fully aware of the significant upsides of selling online, but often struggle because the rest of the business is not fully aware of the potential ecommerce prize. Non-ecommerce colleagues are rarely incentivised to change their thinking or working processes to meet the demands of ecommerce channels.
The organisations where we have seen the biggest successes have aligned the business around the vision and approach to ecommerce and all key stakeholders are incentivised to support the growth in digital channels.
2. Rethink how your consumer goods business operates
Is it possible for consumer goods companies to accelerate ecommerce within the existing environment or do structural changes have to be made?
There are a variety of avenues available to businesses that are looking to deliver online growth:
- Can ecommerce be simply bolted on to your business’ existing structure and, in this instance, how do you give it the importance and focus it requires to be a success? The ecommerce function needs to be agile and move at the rapid pace of the digital world, but how can you ensure that the rest of the organisation is set up to support you?
- ‘Carving out’ a separate ecommerce team will allow them to work in new, more agile ways but it could come at the risk of isolating them from the rest of your business.
- You may choose to introduce ‘ecommerce centres of excellence’ that can deliver the required focus of a ‘carve out’ whilst embedding ecommerce into the wider business. But this can leave your ecommerce function in a very isolated position.
Practicology has seen clients take all these routes to grow their ecommerce business, but first, it is essential to assess what is culturally and commercially right for you.
3. Define and align everyone around the marketplace strategy
A clear online marketplace strategy must be developed and understood throughout the organisation. Getting this wrong could significantly damage your margin and market share and will impact people way beyond the ecommerce account managers. Pricing, logistics, product portfolio, multi-product campaigns, supplier/distributor relations and marketing all need to be considered and aligned.
4. Upskill the organisation
One concern that we frequently hear from our clients is that they currently don’t have the capabilities across sales and marketing to succeed now and in the future. Consider the capabilities that your business will require and determine how you can develop these quickly.
5. Energise your consumer goods brands
Brand is key for consumers. Consumer goods companies are still successfully building their brands but now need to ensure that online sales driving activity is fully integrated within the brand building initiatives. Amazon and Google media activity is a case in point. How do you categorise this? Who in your team manages it? And how is it optimised?
6. International Expansion
To grow their online businesses, consumer goods companies must consider whether there are opportunities to expand into new, growing markets. Online marketplaces such as Lazada and Tmall represent opportunities to enter the growing Asian market at a relatively low cost. There are also third-party partners that can remove some of the complexity of this and enable you to test and market to new audiences. You can find out more about online marketplaces in Asia in our blog, ‘How to choose the best trade partner for your business in China.’
If you would like to find out more about growing your consumer goods business online, or are struggling to develop a growth strategy while managing business as usual, contact us today.