Ce diaporama a bien été signalé.
Le téléchargement de votre SlideShare est en cours. ×

Omni-Channel Strategies and Considerations for CPG Companies

Publicité
Publicité
Publicité
Publicité
Publicité
Publicité
Publicité
Publicité
Publicité
Publicité
Publicité
Publicité
Omni-Channel Strategies
and Considerations for CPG
Companies
Leveraging direct-to-consumer (D2C) to drive cross-
channel s...
Omni-Channel Strategies & Considerations for CPG Companies
Page 2 of 10
Table of Contents
Real-World Direct-to-Consumer Ex...
Omni-Channel Strategies & Considerations for CPG Companies
Page 3 of 10
Real-World Direct-to-Consumer Experiences
When I c...
Publicité
Publicité
Chargement dans…3
×

Consultez-les par la suite

1 sur 10 Publicité

Omni-Channel Strategies and Considerations for CPG Companies

Télécharger pour lire hors ligne

Omni-Channel Strategies and Considerations for CPG Companies - Leveraging direct-to-consumer (D2C) to drive cross-channel sales, profits and consumer loyalty in a digital world. Key considerations for companies implementing a consumer-centric value chain in a world of non-linear consumer paths to purchase.

Omni-Channel Strategies and Considerations for CPG Companies - Leveraging direct-to-consumer (D2C) to drive cross-channel sales, profits and consumer loyalty in a digital world. Key considerations for companies implementing a consumer-centric value chain in a world of non-linear consumer paths to purchase.

Publicité
Publicité

Plus De Contenu Connexe

Diaporamas pour vous (19)

Les utilisateurs ont également aimé (18)

Publicité

Similaire à Omni-Channel Strategies and Considerations for CPG Companies (20)

Plus récents (20)

Publicité

Omni-Channel Strategies and Considerations for CPG Companies

  1. 1. Omni-Channel Strategies and Considerations for CPG Companies Leveraging direct-to-consumer (D2C) to drive cross- channel sales, profits and consumer loyalty in a digital world A viewpoint paper by W. Ruiz August 2016
  2. 2. Omni-Channel Strategies & Considerations for CPG Companies Page 2 of 10 Table of Contents Real-World Direct-to-Consumer Experiences .........................................................3 The Potential Value for Early Entrants/Adopters ....................................................4 Keys to Going Direct – It’s More than Just Implementing e-Commerce .................6 Conclusion ..............................................................................................................9 About the Author..................................................................................................10
  3. 3. Omni-Channel Strategies & Considerations for CPG Companies Page 3 of 10 Real-World Direct-to-Consumer Experiences When I co-authored a whitepaper on multi-channel strategies for CPG companies1 in 2010, a lot of the discussion centered on how to succeed in the marketplace without cannibalizing sales in other channels and alienating retail partners. At that time, companies looking to experiment with omni-channel used analyst and market research firm reports, as well as early results from trend-setting companies such as P&G2 , to justify their incursion into the Direct-to-Consumer channel. Today, companies can tap into a more readily available pool of real-life business case studies showing that going “direct to consumer” works. As proof, one only needs to look at the information and number of “ecommerce success stories” shared during this year’s Consumer Analyst Group of New York (CAGNY) conference in Boca Raton, FL. In a relatively short six years, the conversation has evolved from “should we do it?” to headlines such as “win where the shopper shops3 ,” and “digital enhancing our competitive edge.4 ” Key observations and insights shared during the conference included the following:  The consumer is increasingly relying on e-Commerce channels for purchases. The implication of this trend, as laid out in Figure 1 (Consumer Traffic Shifting from Mass to e-Commerce), is that companies unwilling to leverage direct-to-consumer channels for fear of cannibalizing their sales could see their revenues diminish and overall market share decline. Figure 1 – Consumer Traffic Shifting from Mass to e-Commerce5 1 “Channel Cannibalization – Not As Relevant As You Think; Leveraging End-to-End Consumer Direct Capabilities to Build Cross- Channel Sales and Profits,” Dale Miyakawa and Will Ruiz, http://www.slideshare.net/WillRuiz1/multi-channel-strategies-for- cpg-companies-4-aa31858enw , November, 2010 2 “Alice.com Finds Its Niche in the Emerging CPG e-Commerce Space,” Joe Keenan, http://www.mytotalretail.com/article/alicecom-finds-its-niche-emerging-cpg-e-commerce-space-416384/ , August 1, 2010 3 “Visibility into the Future,” Kellogg Company CAGNY Presentation, February 17, 2016 4 “Digital Enhancing Our Competitive Edge” slide from the L'Oréal CAGNY Presentation, February 19, 2016 5 Adapted from “Traffic Shifting from Mass to e-Commerce” slide from the P&G CAGNY Presentation, February 18, 2016 (http://www.pginvestor.com/Cache/1500081080.PDF?O=PDF&T=&Y=&D=&FID=1500081080&iid=4004124)
  4. 4. Omni-Channel Strategies & Considerations for CPG Companies Page 4 of 10  Not only is e-Commerce delivering value to CPG companies by engaging higher-spending, loyal customers, and driving incremental sales, it is also influencing off-line sales positively! A snapshot of what that overall value means for a company such as Kellogg’s is depicted in Figure 2 (The Value of Direct-to-Consumer e-Commerce for a CPG Company). One of the implications of the data shared is that CPG companies should strive to be early entrants into the direct-to- consumer e-commerce channel, so they can establish and grow brand loyalty for their products before their competitors do. Laggards may very well be putting themselves in a disadvantaged market position that will be hard to recover from. Figure 2 – The Value of Direct-to-Consumer e-Commerce for a CPG Company67 The Potential Value for Early Entrants/Adopters To be sure, market research firms and analysts still play a prominent role in showing how the e- commerce channel is evolving, and depicting the overall value potential for it. At a macro level, the forecasts for CPG e-Commerce performance potential are significant. In July of 2015, Kantar Worldpanel, a global company focusing on consumer and shopper insights, forecasted that online sales for Fast Moving Consumer Goods (FMCG) would hit $130 billion by the end of 2025 (up from $35 billion in 2015).8 More recently in 2016, 1010data shared that while e-Commerce had grown by 30% during 2015, CPG e- Commerce had grown by 42% over the same period of time. A good portion of the growth, approximately 20%, was driven by Amazon’s Subscribe and Save (SNS) feature, which was a default 6 Adapted from “Visibility into the Future,” Kellogg’s CAGNY Presentation, February 17, 2016 (http://investor.kelloggs.com/~/media/Files/K/Kellogg-IR/reports-and-presentations/2016/2016-cagny-presentation.pdf) 7 “Accelerating the Growth of e-Commerce in FMCG: 2015 Edition,” Kantar Worldpanel, July 7, 2015 8 “Accelerating the Growth of e-Commerce in FMCG: 2015 Edition,” Kantar Worldpanel, July 7, 2015
  5. 5. Omni-Channel Strategies & Considerations for CPG Companies Page 5 of 10 selection as consumers checked out.9 Around the same time, a report by Morgan Stanley Research showed that more than 33% of online shoppers expected to buy groceries online in 2016, signaling this could be the next big opportunity in e-Commerce.10 But just as e-Commerce has evolved and matured, so have the granularity of reports and data published by research firms. For example, data published by MEC, a specialist e-commerce consultancy based in the UK, shows how online sales positively influence offline ones, supporting Kellogg’s observation on how digital shelf exposure influences in-store sales. Depending on the category and the market, the data from MEC’s report (see Figure 3 – The Influence of e-Commerce on Offline Sales) shows that online sales can have a significant multiplier effect (in some cases nearly 10X) on offline ones, clearly suggesting that digital shelf and virtual store presence are key for CPG brands. Figure 3 – The Influence of e-Commerce on Offline Sales11 Another example of category-level insights, this time from 1010data, showed that in the US in 2015, the top ten growth categories in CPG e-Commerce grew 60% to 85% year-over-year! Leading the way were Laundry Detergent, Toothpaste and Health Snack Bars. The largest categories in terms of online sales included Pet Foods, Moisturizers, Fragrance, Facial Cleaners and Coffee (see Figure 4 – The Top Ten Growth and Largest CPG Categories in the U.S. in 2015). 12 So clearly the product category matters, and having more granular data and insights is key to making the right decisions on which categories CPG companies should focus on (or, experiment with). 9 “CPG Killed It in E-Commerce in 2015,” 1010data, January 2016 10 “Tipping Point for Online Groceries, Are Groceries the Next Big Driver of Global eCommerce?,” Morgan Stanley, January 2016 11 Adapted from “The Ecommerce Opportunity for FMCG Brands: Sales & Halos,” MEC Commerce, April 2015 12 “CPG Killed It in E-Commerce in 2015,” 1010data, January 2016
  6. 6. Omni-Channel Strategies & Considerations for CPG Companies Page 6 of 10 At a minimum, the data certainly appears to answer one of the key questions manufacturers were asking themselves seven years ago: Will consumers purchase our traditional retail product in an online environment? Yes, they will. Figure 4 – The Top Ten Growth and Largest CPG Categories in the U.S. in 201513 Keys to Going Direct – It’s More than Just Implementing e-Commerce Even though the topic of channel cannibalization has not fully gone away, evidence of direct-to- consumer successes has led many CPG companies to embark on, or consider, their own omni-channel journey. To implement successful direct-to-consumer solutions and initiatives, CPG companies will need to consider a new world in which consumers will buy their products and interact with their brands through multiple channels in a non-linear fashion – from awareness through purchase, to feedback and advocacy using social media. Implementing an omni-channel strategy, however, is not easy. In December of 2014, PwC published results from an omni-channel survey indicating that only 16% of the retail and consumer goods respondents could fulfill omni-channel demand profitably14 . More recently, in February of 2015, E&Y published in a consumer goods and retail omni-channel supply chain survey that 81% of the respondents did not believe their supply chain to be “fit for the purpose of omni-channel.”15 CPG supply chains that had been designed to move large, pallet-size quantities of product to retailers (B2B), now have to adapt to a new reality with potentially far more distribution points and the need to handle “eaches,” as they serve individual consumers (B2C, D2C). 13 Adapted from “CPG Killed It in E-Commerce in 2015,” 1010data, January 2016 14 “Global Retail & Consumer Goods CEO Survey: The Omni-Channel Fulfillment Imperative,” PwC, December 2014 15 “Reengineering the supply chain for the omni-channel of tomorrow,” E&Y, February 2015
  7. 7. Omni-Channel Strategies & Considerations for CPG Companies Page 7 of 10 The key questions for many CPG companies now include: How can we unlock value by leveraging omni- channel? And, where should our inventory be in order to cost-effectively fulfill demand while delighting our consumers (see Figure 5 – High-Level Overview of the Route to Consumer in an Omni-Channel World)? Figure 5 – High-Level Overview of the Route to Consumer in an Omni-Channel World To answer the challenges posed by these questions, many companies will have to design new or additional supply chain capabilities from the perspective of the consumers, while still retaining the ability to change, refine and continuously improve them over time. This outside-in approach will help ensure that the overall Consumer Experience is taken into account as companies make business process capability and design decisions that could potentially be market differentiators and drive higher sales, as well as loyalty for them. An illustrative high-level overview of this outside-in perspective is outlined in Figure 6 (Outside-In Perspective for Designing Consumer-Centric Supply Chains). Figure 6 – Outside-In Perspective for Designing Consumer-Centric Supply Chains
  8. 8. Omni-Channel Strategies & Considerations for CPG Companies Page 8 of 10 The starting point of this outside-in approach is to understand how the end-consumer wants to interact with a company’s brands and purchase/re-purchase their products. One will need to understand how the shift in buying patterns, as well as the use of technology, have led to non-linear consumer journeys, and how these might further evolve in the future. Figure 7 (A Consumer’s Non-Linear Path to Purchase in an Omni-Channel World) provides an illustrative overview of a consumer’s non-linear path to purchase in an omni-channel world, and how digital processes and devices are playing an important role in it. Figure 7 – A Consumer’s Non-Linear Path to Purchase in an Omni-Channel World In addition to understanding all consumer touchpoints, companies will also need to get a handle on how to best stimulate demand. They will need to know what marketing campaigns, promotions and delivery channels will be the most effective for their consumer base. Developing these consumer insights will require the aggregation and analysis of structured (point-of-sale, membership, etc.), as well as unstructured data (social media, product reviews, etc.), so the best value propositions are delivered to their various consumer segments at the right time, on the right device. Once there is a base-level understanding on where the demand will come from and the programs that will be put in place to shape demand, companies will be able to model supply network scenarios in search for the right solution to deliver the required service level for omni-channel consumers profitably. At the same time, companies should make sure they can forecast, plan and execute so their inventory is at the right place (channel), at the right time, at the right cost, and ready for fulfillment (a must for the “need it now” consumer). CPG manufacturers will need to potentially improve their planning capabilities and implement new demand, supply, inventory visibility and S&OP/IBP processes and tools to manage their omni-channel.
  9. 9. Omni-Channel Strategies & Considerations for CPG Companies Page 9 of 10 And last, but not least, their supply chain organizations will need to be far more tightly integrated with sales and marketing as they bring products into the online channel, and continuously reassess and optimize the supply chain to adapt to changing consumer tastes and purchasing behaviors in agile fashion. Conclusion Real-life proof points show that omni-channel and direct-to-consumer digital strategies are great areas of opportunity for CPG companies. Not only is e-Commerce delivering value to CPG companies by engaging higher-spending, loyal customers, and driving incremental sales, it is also influencing off-line sales positively. But to be successful, companies will need to realize that omni-channel may require more than an e- Commerce implementation. In order to truly delight the consumer, CPG companies will need to develop supply chain capabilities that align to an omni-channel strategy, and fulfill consumer orders quickly and profitably – all areas that many consumer goods companies are currently wrestling with. To ensure a consumer-centric approach and results, companies should design the overall omni-channel value chain from the outside in. They first must gain understanding of how end-consumers want to interact with a company’s brands and purchase their products, and how their buying patterns, as well as their use of technology, have led to non-linear consumer paths to purchase. Once the newly developed supply chain capabilities are in place, companies will need to continuously adapt and refine their direct- to-consumer channel as consumer purchasing behaviors continue to evolve. This will require the implementation of new digital business processes, an upgrade of supply chain organizational capabilities, as well as the leverage of modern integrated business planning solutions. In today’s competitive market, CPG companies can no longer sit idly and wait for others to show the way on how to leverage omni-channel to drive growth in their industry and draw closer to the consumer. The winners in the marketplace will be those companies that are early entrants and can deliver a superior end-to-end consumer experience – from awareness through purchase, fulfillment and use, to feedback, advocacy and membership participation using social media.
  10. 10. Omni-Channel Strategies & Considerations for CPG Companies Page 10 of 10 About the Author Will Ruiz Will Ruiz is a frequent author of point-of-view and thought leadership articles/whitepapers focused on the Consumer Goods and Retail industries. Ruiz is a Consulting Partner and Leader of TCS’ North America Consumer Goods & Retail Consulting Practice. He has over 25 years of experience in the areas of new product development, manufacturing operations and strategy, business process innovation, and large-scale IT-enabled business transformations. His background includes a broad range of operations and business innovation engagements in the consumer packaged goods, wholesale distribution, toy, quick-service restaurant, food retail, and manufacturing industries. Before joining TCS, Mr. Ruiz was the leader of HP’s US Consumer and Retail Consulting practices. Previously, he was a Principal with IBM’s Business Innovation Services group, a Manager with Ernst & Young’s Management Consulting Performance Improvement practice, and a Senior Manufacturing Engineer with Analog Devices, Inc. Mr. Ruiz holds an M.B.A., with high honors, as well as a Master of Science degree in Manufacturing Engineering from Boston University and completed the Strategy Value Creation Programme at the London Business School.

×