3 E-commerce Trends Boost The Profitability Of Consumer Goods Companies

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Chi Vo

2022-11-15 04:56:20

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After the outbreak of Covid-19, the FMCG retailing sector witnessed unprecedentedly high consumer spending power, as food and basic needs were in great demand due to country lockdowns.

 

According to McKinsey's forecast, not only will the expansion of e-commerce in consumer goods continue beyond the epidemic, but it will also evolve in the next few years.

 

Specifically, the explosion of new platforms, channels, and available data, in particular, will only continue. As consumer products firms figure out how to best connect with their customers, this movement presents both opportunities and challenges.

 

If you are operating a consumer goods company, this article is for you. In this blog, VNEXT Global will introduce 3 e-commerce trends that can increase the profitability of your company. So, what are the major trends in e-commerce?

 

1. New approach methods for customers

 

To keep up with the transformation of customers’ buying behaviors, consumer product companies must be active across numerous different platforms and formats.

 

There is increased consumer demand for Home delivery (from a local store), ship-to-home (from a distribution center), and click & collect. They are all omnichannel fulfillment replacing the in-store shopping experience.

 

From 2021 to 2025, e-commerce, which expands reach through selling through social media channels, is predicted to more than double, accounting for around $80 billion in retail sales. 

 

With the rise of quick e-commerce (home delivery in less than an hour and as quickly as 15 minutes), new entrants like JOKR and GoPuff are changing customer expectations about delivery speed. 

 

This channel is expected to remain a small portion of total e-commerce sales in grocery, but it is having a significant impact: in 2021, approximately 30% of online grocery shoppers chose two-hour or less delivery, and 14% of consumers expressed an intention to increase their use of express and same-day delivery.

 

vnext global new approach methods for customers

2. Spending more money on e-commerce ads

 

Profitability problems are getting worse as e-commerce grows, so retailers have to look for new ways to make more money. E-commerce media, like retail media networks (RMNs), lets retailers make money off of their first-party customer data by selling advertising on their websites to brands. Amazon's booming advertising business, which is built on the same rich transaction data that all retailers have, gives retailers a huge reason to get in on the action. 

 

Changes in consumer opinions and laws about data privacy are also helping e-commerce media grow. This has made closed-loop channels that use only first-party data from users who have given their permission more appealing. In the past two years, more than a dozen retailers have started using RMNs, and others are planning to do the same soon.

 

According to McKinsey’s survey, about 100 people in charge of consumer goods e-commerce found that about 15% of all advertising and promotion spending is already going to e-commerce media, which usually makes up between 2% and 10% of gross sales (depending on the subcategory). By 2024, spending in the channel, which includes Amazon, is projected to reach more than $100 billion and grow by two to three times each year.

 

At first, e-commerce media will be hard for companies that make consumer goods because it will put more pressure on their marketing budgets and their profit-and-loss (P&L) ratio. But if it's done right, it can help companies that sell consumer goods improve not only their marketing but also the shopping experience. 

 

Approaches like retail media networks can offer a tailored, personalized experience that fits the changing privacy, control, and transparency preferences of consumers. Companies that sell consumer goods can also use e-commerce media to add to the data they use for targeting and closed-loop attribution. If they do these things right, consumer goods companies can get three to five times more out of the money they spend on ads in this new channel.

 

vnext global spending more money on e-commerce ads

3. Personalization and quality-centric are top priorities

 

The rise of online shopping and the digitalization of business, in general, are creating a huge amount of data about consumers’ purchasing behaviors. With more transactions happening online, companies also have a better idea of how customers buy things, including metrics like cart abandonment, add-to-cart rates, browsing behavior, and the time it takes to buy something.

 

Due to their close relationship with shoppers, retailers are in a good position to collect this information and make use of it to personalize the shopping experience. 

 

In turn, their customers have quickly come to expect that companies will interact with them in a way that is personal and relevant. Even though consumer goods companies may not collect as much data as retailers, they have had to improve their data management skills to keep up with the rising trend of customer personalization and get a return on their investment.

 

Final thoughts: 

 

People and technology are constantly growing, and because e-commerce connects them, we will always be looking to the future, which is e-commerce trends. Undoubtedly, it's never too late to change and assess whether it's appropriate for your consumer goods companies. For the time being, consumers are in control, and e-commerce enterprises will personalize the path ahead for them.

 

 

If you are looking for a trusted IT partner, VNEXT Global is the ideal choice. With 14+ years of experience, we surely can help you to optimize your business digitalization within a small budget and short time. Currently, we have 400+ IT consultants and developers in Mobile App, Web App, System, Blockchain Development and Testing Services. We have provided solutions to 600+ projects in several industries for clients worldwide. We are willing to become a companion on your way to success. Please tell us when is convenient for you to have an online meeting to discuss this further. Have a nice day!

 

Author: Chi Vo - Content Marketing Executive

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