Online CPG Sales Heat Up

As retailers like Walmart begin to offer more and more lower priced consumer packaged goods (CPG) for sale online, all signs point to a race to be the leader in sales of everyday household items.

In the world I work in on a daily basis, the CPG world, one thing is for sure: The way consumers get their CPG items is changing. While a vast majority of consumers still shop for toilet paper and toothpaste at their local Supercenter, more and more shoppers are finding that with a little planning, they can get the same goods without leaving their homes, and various online startups and established retailers and CPG manufacturers want to make it possible.

In the past I have written about Alice.com, a newer site dedicated to selling CPG directly to consumers. The whole idea behind Alice is to give CPG manufacturers a way to sell directly to consumers, and give consumers a convenient way to purchase those necessities on a regular schedule. Alice.com has enjoyed lots of positive press which has propelled interest, not to mention the company was founded by a couple of internet veterans with a successful track record.

Big online retailers have begun to transform their own online offerings, typically filled with higher ticket items like electronics, and added lower priced CPG items. Recently, Amazon.com has increased it efforts to bring on board CPG manufacturers to round out their offerings online. Walmart.com, who until very recently didn’t sell lower priced CPG items online, has begun to sell multi-packs of lower priced items to make them more viable to online shoppers who aren’t looking to pay $6 shipping for an item priced $2.99. Now you can buy a pack of 3 items, for example, to make your cart-to-shipping-cost ratio more acceptable. Target is in the middle of a major online redesign, so look for them to come at swinging on CPG items too when their new store comes online in 2011.

Sales and Marketing teams at major retailers aren’t the only one’s with their eye on the direct-to-consumer CPG sales. As a not-so-sublte push back on retailers who are exerting more and more control over CPG companies, the largest CPG manufacturer in the world, Proctor & Gamble, is dipping their big toe into the direct-to-consumer waters as well. Recently, P&G announced a ‘test’ where they would sell direct to consumers to try to learn about consumer buying habits for their brands, and all learnings would be shared with their retailers. Personally, I think what’s really happening is an experiment to see how viable selling direct to consumers is for them. If it proves successful, look for the ‘test’ to continue. The question remains how much P&G want to invest in their fulfillment operations to facilitate these sales, but most likely they will leave that to a third party to figure out if they ever get to the point where it becomes a viable sales channel for them.

Stay tuned as the race heats up to sell everyday items online. It could get interesting.

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