The Amazon Effect on eCommerce and CPG Brands

The use of digital technologies in conjunction with changing shopper behaviors is making eCommerce an indispensable part of CPG omnichannel success. Brands seeking to convert online consumers should focus their attention on convenience, and how important it is in the shopper journey. According to Jennifer Silverberg, CEO of SmartCommerce, “Consumers might not care that something is more expensive, but if they can order it online and they don’t have to go to the store, they will.”

eCommerce and its ease of entry is growing and brands are taking notice. In fact, strong growth is forecast in several eCommerce shopping channels:

  • Computers and consumer electronics total $62.7B in 2017 and that number is expected to hit $97.6B by 2021[statista]
  • Apparel and Accessories eCommerce dollar sales come in at $86B and is expected to reach $96.4B by 2021[statista]
  • Auto and auto parts currently sit at $51.6B with growth projected to reach $57.4B in 2019[statista]
  • U.S. online grocery sales totaled $7B in 2015 and that total is expected to more than double to $18B by 2020[statista]

The biggest driver of eCommerce growth continues to be Amazon.  Amazon’s success isn’t just a byproduct of its huge inventory and rapid service. The online shopping behemoth, according to Yaakov Kimelfeld, Chief Research Officer for Kantar Media, “is not a retailer anymore; it is the largest behavioral marketing company in the world.” Amazon understands shopper motivation not just with purchases but with research. Fifty-five percent of product research that led to a purchase started on Amazon.com compared to 28 percent of the same on search engines. Amazon is now the preferred starting point for product research. How did that happen?

Amazon’s march toward eCommerce preeminence starts with its creative customer service model.  Amazon lives at the perfect intersection between shopper and brand. By understanding shopper behaviors and patterns, they’re able to create actionable plans that can make a more immediate impact for consumers. They’ve also built brand affinity and awareness by positioning brands in the immediate shopper path of purchase. With a heavy focus on the customer, Amazon can optimize constantly, giving their consumers more of what they’re looking for, and driving conversions and shopper loyalty for brands. The shared success model is a driver of Amazon’s eCommerce dominance.

Where does that leave retailers like Walmart?  The shopping giant is responding by spending more on mobile and digital technologies to expand their online shopping capabilities. They’ve strengthened their presence in the eCommerce market with their purchases of men’s internet clothing brand Bonobos, and the innovative online shopping company Jet.com.  Another recent Walmart acquisition is Parcel, a New York-based same-day delivery startup that specializes in perishable grocery delivery, an attempt to leverage the former acquisitions and compete heavily in a market where they have no brick and mortar stores.

CPG brands know that being competitive in today’s convenience shopping environment means the buying process needs to be as painless to the shopper as possible. Luring consumers into buying your product is only half of the equation. Giving them the easiest path to purchase the moment they want to purchase will win the day.

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