CPG Ecommerce: Eight Best Practices for Sales Growth and Seamless Fulfillment
Consumer packaged goods (CPG) had a banner year in 2020. Increased consumer demand resulted in a 10.4% compound annual growth rate for the industry. While it seems unlikely CPG will continue this fast-rising trajectory, brands can bank on ecommerce as a mature channel. Consumer behaviors have changed with a growing percentage of shoppers permanently shifting to online shopping. With more brands crowding the digital shelf, CPG leaders are under increased pressure to retain existing customers, acquire new ones and keep margins healthy. That’s no easy task, which is why we’ve curated our best practices for CPG ecommerce success. From sales growth to seamless fulfillment, these strategies and tactics can drive customer happiness, expand your footprint and build the bottom line.
Ecommerce Marketing Tips for Sales Growth
Variety is the spice of life (and sales). Although expensive for CPG brands to manufacture, multi- and variety packs win customers. Not only are they great introductory purchases to sample your brand, variety packs also result in larger basket sizes. Many CPG brands, however, struggle with determining the right combination of products to sell. Ecommerce has a distinct advantage over brick and mortar in this regard. The digital shelf is fluid unlike a retail shelf where products can languish with no insight into what’s moving for weeks and months. A savvy ecommerce agency can test combinations in your product listings to see what the consumer’s appetite for that variety pack might be. As a full-service modern commerce partner, Whitebox can also create your variety packs on the fly so brands can test and learn before committing any dollars.
Discover unlikely pairings with Amazon Market Basket data. What do consumers really want? Amazon Market Basket data is a good place to start answering that question. Amazon data reveals product pairings to test as bundles on a brand’s owned site where margins are higher. Drive revenue for that consumer-created bundle by selling it exclusively on a single channel, like your own. By the way, bundled products tend to have higher repeat purchase and upsell potential than individual products. Analyzing Market Basket data can help CPG brands get closer to customers, improve product strategy and increase sales.
Love your products equally. There’s no “I” in catalog. Individual product pages are part of the team so make them work harder for you on Amazon. Upselling and cross-selling on your individual product pages can drive incremental sales while increasing awareness of your catalog. Search offers another way to cross-promote your catalog. When a customer searches for a specific product, use a portion of your ad space to showcase complementary items. For example, if a consumer searches for your coffee, use three of your ad placements for that coffee and one for your branded creamer. On your own branded site, tap into your existing customer list to send promo codes for other products in your catalog or incentivize customers to purchase a bundle that includes the product they purchased with another lesser-known or new item. P.S. promo codes can also help drive more frequent repeat purchases.
Apply an active testing mindset to search. Search is not a set-it-and-forget-it channel. Algorithms change. Consumer search behaviors fluctuate based on need and seasonality. At every opportunity, use search data to test and optimize for customer retention and acquisition. For example, a brand may invest heavily on searches for its name on Amazon. That’s great if your awareness is very high and you’re in an unsaturated category. But this strategy focuses on a smaller pool of customers than what’s available online. To drive new customer acquisition, expand your paid search to more general terms such as “coffee” instead of “John’s Roast.” You’ll cast a wider net to those in-market coffee consumers who may not have discovered your brand yet. In one such case, Whitebox drove more than double the sales for a brand by refocusing its paid search on category versus its own name.
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Focus on core strengths—outsource the rest. True of any business, do what you do best and find a partner for the rest. Many CPG brands excel at product development or marketing in-store. Ecommerce fulfillment and advertising may not be in your wheelhouse as they do require different skill sets. For many brands, the costs of handling fulfillment in both resources and time far outweigh the benefits when considering economies of scale. An experienced third-party logistics (3PL) partner can effectively manage your pack size, carrier relationships and even customer experience. Similarly, outsourcing your ecommerce sales to a marketing agency means you gain the people and technology to create and optimize listings, campaigns and promotions across all your channels.
Beware of margin becoming the enemy of sales. CPG is a volume business. Because products sell at low price points, margins are thin, whether in brick and mortar or ecommerce. The cost of shipping individual products matters especially when it comes to large, lightweight items like a bag of chips. Here’s where an ecommerce data-driven partner can add tremendous value and insight to your strategy. Knowing who your actual consumer is and where they shop can inform which channels you choose. For example, if you have a small catalog of 10 products, stocking in Whole Foods nationally may seem like a smart approach: good margin, single point of fulfillment. But, if your next best customer doesn’t shop at Whole Foods, you’re missing a chance to increase your customer base. Selling on Amazon is a great first step, but brands should also consider building their own online store where they can develop closer direct relationships with consumers and benefit from higher margins.
Do your shipping due diligence. It’s easy to go down a rabbit hole when trying to understand the differences among carriers and how shipping rates are calculated. You can count on zero standardization of costs across carriers. What you can rely on is this basic truth: light but large products cost more to ship. Although the cards may feel stacked against you, there are efficiencies to be gained in shipping. Pack size analysis, for example, can reveal how much you’d pay for a six pack of soda versus an eight pack versus a 10 pack. This data-driven exercise focuses on revenue and costs to arrive at the sweet spot for your brand. A savvy partner will illuminate not only what configuration of products are most cost-efficient but also layer into the analysis the proper packaging and what will drive repeat sales.
Know your damage. No supply chain is 100% damage-free. Understanding where and how your products can be damaged is critical to not only your sales but customer happiness. At Whitebox, we take a wide view of damage to include how products are produced, what materials are used in packaging and delivery to the consumer. For example, if you sell beverages in a thin metal can, can that packaging withstand air travel without exploding? How will you properly secure individual cans inside the box to avoid dents or spillage? Are your can materials strong enough for rough-and-tumble delivery or is this an opportunity to rethink how they’re manufactured? A fulfillment partner should provide more than just a static damage report but rather proactive suggestions on how to improve the supply chain at every step.
Whether you’re building a new DTC brand or a traditional CPG expanding to digital, the key to ecommerce success is to test, measure and apply those learnings. There’s no shortage of data you can collect from your digital efforts and the right partner will help you maximize those insights to meet your goals. Need help advancing your ecommerce strategy? Whitebox can help. We power our CPG clients’ success with a data-driven, tech-powered approach to supply and demand in one centralized ecosystem. Gain operational efficiencies from fulfillment insights and unlock the full value of ecommerce data with Whitebox. Reach out for a demo today.