Stocking the infinite shelf − How top consumer goods companies gear up for the omnichannel world

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Ten years ago today, Frank Ahrens of the Washington Post predicted that e-commerce would soon be a must-have channel for consumer goods companies. The prophecy came true.

Today, the Washington Post is owned by Jeff Bezos, and e-commerce is the fastest-growing channel by far. Even traditional brick-and-mortar retailers are already generating three to six percent of their revenues online. Sales within physical stores are at a standstill, while those of online retailers zoom along in double digits. In the past decade, e-commerce sales have grown ten times faster than in-store retail.

Today, two thirds of all shopping trips begin online, regardless of the channel in which the purchase takes place. In 2020, e-commerce will account for 20 percent of all retail sales. The future of commerce is not just stores and not just online, but a combination of the two.

In the old days, consumer goods manufacturers used to wage price wars with one another, arm-wrestle with retailers over shelf space, and shake media agencies down for volume discounts on print advertising. It wasn’t always pretty, but the roles of the players and the rules of the game were reasonably well established. What do you do when stores become virtual, shelf space is infinite, advertising turns into a string of automated auctions of micro-messages triggered by Google search terms, and smart refrigerators place their own grocery orders online?

As a consumer goods company, how do you adapt your business model to this new reality? In what follows, we look at successful applications of eCategory management solutions for different stages of the value chain, from strategy to pricing, and in a wide range of categories, including food, furniture, and apparel.

E-commerce is everywhere, and experts agree it will keep growing at the expense of established channels. Consumer goods companies have heard the call, but many of them don’t know what to do. According to our research, almost two thirds of consumer goods executives—such as general managers, sales and marketing executives, and directors of analytics—consider “building e-commerce capabilities” a top priority.

The expected benefits they name are manifold: keep up with evolving consumer needs, build a direct channel for interaction with consumers, strengthen their brands online. At the same time, only a meager 13 percent say that eCategory management is fully implemented at their companies. Two thirds say that it isn’t yet implemented, or only in a few pilot categories. Only a handful of the respondents say they have capabilities for deep insight generation.