Amazon’s Disruption In the CPG Industry
Amazon's Disruption in the CPG Industry
How are consumer-packaged-goods distributors expected to compete with amazon?
What Netflix was to the entertainment industry is what e-commerce, namely Amazon, is to the consumer-packaged-goods (CPG) industry.
Amazon added $64B in growth from 2010-2017, the combined size of Macy’s Nordstrom, and Sears. (ecommerceiq.com) How are consumer-packaged-goods distributors expected to compete with the Seattle-based titan and create a lasting margin? By identifying trends and leveraging this industry disruption into business opportunities.
Over 52% of all U.S. households subscribe to Amazon Prime
More consumers are ordering direct to home via Amazon Prime and other ship-to-door services, essentially killing off the necessity of foot traffic for traditional retailers.
The introduction of Amazon Now is poised to cause even greater disruption with consumers receiving ship-to-door delivery within two hours or less.
The emergence of mobile access across devices is further accelerating CPG industry disruption. According to two recent McKinsey studies, mobile-device owners engage in online research and purchases at higher rates than the overall population with a strong emphasis on CPG categories. (McKinsey)
Packaging as brand experience
The concept of sustainable packaging for shelf life is quickly being replaced with nimble packaging intended for temporary transport. Unilever global e-commerce supply chain manager Dhivant Patel shared this perspective, “Businesses are starting to realize that shipped packages are a direct touchpoint with consumers and, thanks to e-commerce, a rich marketing opportunity.” (Packaging News)
Industry disrupters inspiring others to take action
It’s the same approach used by Dollar Shave Club and Harry’s to disrupt the nearly $30B shaving industry. (The New York Times) While some may view Dollar Shave Club as simply a unicorn, we see inspiring industry disrupters.
Identify trends and leverage disruption into opportunities
Graze is changing how the world enjoys healthy snacks. Trunk Club is helping revolutionize how men piece together their wardrobes. Splosh is focusing on eco-friendly cleaning solutions that are right-sized for the average household consumer sent in letter-sized boxes.
Glossier focused on a Instagram-first approach for disrupting the massive beauty and apparel industries. Glossier encourages customers to share their full beauty routines, even if some of the products used are not purchased from Glossier. As founder Emily Weiss shared, “Traditional beauty companies had been reluctant to acknowledge that customers shop across different brands.” This acknowledgement and openness to share is what’s inspiring more beauty consumers to trend towards Glossier’s inclusive community.
Hair color startup Madison Reed recently raised $13M in new venture capital, an impressive amount for a niche market. (TechCrunch) and much of its success can be attributed to Madison Reed’s highly popular hair color quiz and mobile app experience. Madison Reed saw an opportunity to engage with the consumer on an organic level at any moment and turned engagement data into hyper accurate marketing.