Channel Smart B2B – CPG, Customer Products, and Retail

By 2022, an estimated 10% of all CPG sales in the U.S. will be through e-commerce channels. It is then no surprise that the CPG industry is rapidly steering away from old ‘shelf-stores’ and embracing the high currents of e-commerce.

Another essential point of focus for the industry is developing an effective omnichannel strategy that captures the market with a pre-planned and strategic approach. A channel-smart B2B course of action is, therefore, the need of the hour.

The need to adopt a channel-smart approach

When e-commerce suddenly proliferated in the past few years, CPG brands were faced with a unique problem – preventing conflict between different e-commerce channels.

Some focused on selling products through their own channels but still had to maintain relationships with brick-and-mortar retailers that stocked their goods.

Therefore, determining to price and maintaining strong retail relationships became central to ensuring emerging e-commerce channels didn’t compete with retailers.

In the past few years, the industry has seen a major shift. Giants like Amazon, changing customer expectations, smartphone penetration, and home delivery of household items have all contributed to disrupting the old sales model of CPG. Against this backdrop, CPG brands are realizing the need to offer alternative channels to adapt to shifting customer mindsets.

Today, CPG companies must manage traditional brick-and-mortar channels with emerging e-commerce channels.

Other than pricing, packaging and distribution also present challenges. Let’s see how CPGs can adopt a channel-smart approach to business.

Establishing an omnichannel presence

Considering the growing age of digital commerce, manufacturers and retailers cannot expect to sustain the business while operating in the old brick and mortar model.

Making it big in the present market requires brands to choose a suitable channel of distribution, i.e. an omnichannel strategy.

This means they must sell products in physical stores, large e-tailers like Amazon and on their own e-commerce channels.

Because customers today have a wealth of options, CPG brands can’t restrict themselves to a single channel and risk losing a huge portion of market share.

While in retail stores, brands can capture traditional shoppers, e-commerce is important to capture modern shoppers that prefer shopping for staples online.

To optimize an effective omnichannel strategy, brands must develop a database about consumers and establish an ‘insight factory’ – data about customers that reveals purchase patterns, channels preferences, and the types of CPG goods purchased from different channels.

Invest in power-partnerships

Power-partnerships refer to partnering with some of the highest pockets of growth in the market. Such partnerships operate within both traditional and modern retail channels.

CPGs should find partner retailers whose value potential and strategic goals reflect or enhance their own. A developed and detailed consumer portfolio of these pockets of growth can help gain insight into market needs.

The business can, therefore, focus on tailoring its product portfolio in accordance with the different channel requirements and adjust resource allocation in tune with expected channel growth.

If your brand is just starting out, identifying some key retail partners can immensely help your growth. This is true even if you are a big CPG brand.

Partnerships with key retailers mean both parties plan business together. When both suppliers and retailers are on the same page and share customer data, everyone wins from customer insight and higher revenue.

Final thoughts

In the business world, nothing is a constant except change. Whether it is a product or business model, innovation is always in order. So if you stand still or become too content with ‘what is’, you will soon lose out to a competitor.

In the end, success in the CPG industry needs a mix of innovation, strategic partnerships, and an omnichannel approach.

To win in the competitive market, brands cannot afford to ignore new and emerging e-commerce channels, which can make all the difference to the bottom line.