Most retailers have been feeling the effects of Amazon’s dominance for years, but one industry — consumer packaged goods — has been able to float by largely unaffected by the e-commerce giant. That’s all starting to change, thanks to Amazon’s acquisition of Whole Foods. Historically, a CPG brand would focus on battling for prime physical shelf space in grocery stores rather than pouring money into online ad campaigns, but this deal is forcing them to make digital a priority. Ten years ago, most people would have laughed at the thought of ordering things like canned goods and boxed cereal online, but if you asked one of the 90 million Amazon Prime members living in the United States today if they’d order these items online, they’d likely say yes. While Amazon’s acquisition of Whole Foods highlighted its focus on entering the grocery space in a way we hadn’t seen before, the company has actually been dipping its toes in this pool for years. It launched Amazon Fresh grocery delivery in 2007 in Seattle, eventually expanding to other major U.S. cities, including Los Angeles and New York. With Amazon Fresh, Prime members pay an additional $14.95 per month for same- or next-day delivery on a broad selection of grocery items. advertisement advertisement It also launched Prime Pantry in 2014, which allows Prime members to have up to 45 pounds of non-perishable groceries delivered to their door in one box for a flat shipping rate of $6. The company recently announced it’s phasing out Amazon Fresh in some areas, but its CFO said there would be more cooperation among Whole Foods, Amazon Fresh and Amazon Prime Now two-hour delivery in the coming months. The company’s multifaceted approach seems to be working, as Amazon accounted for 18% of U.S. online grocery sales in 2017, raking in an estimated $2 billion in food and beverage sales. With these numbers, it’s clear CPG brands can’t ignore Amazon anymore. While they understand the need to adjust their marketing strategy with an added focus on digital, it can be a challenging adjustment. The key to long-term success is understanding how to use modern marketing technology to track performance in real time. Digital marketing moves much faster than offline marketing, and the brands that make quick adjustments will come out ahead. To start, CPG brands need to adjust their marketing strategies to reflect the coming shift in the sales cycle as brands now must compete for digital shelf space and drive online traffic to their products. This shift will cause the marketing funnel to change, forcing CPG advertisers to enter uncharted territory — the “bottom” of the marketing funnel. CPG brands will have to figure out how to integrate Amazon into their marketing funnel and engage with the online marketplace as a search engine of sorts. It might seem odd to think of the e-commerce giant as a search engine, but it makes sense when you consider that 56% of shoppers in the U.S., UK, Germany and France use Amazon as a starting point for product discovery. Retailers in other categories have already embraced Amazon as a channel for product discovery, and now that the company is doubling down on its grocery efforts, CPG brands must follow suit. Beyond integrating Amazon into the marketing funnel, these brands need to reach consumers on social media, where the average internet user spends 135 minutes per day. This should involve a combination of content development across their branded social accounts, paid posts and tapping influencers to collaborate on branded content. Brands in the CPG category will rely on influencers to generate demand for their products and rely on paid social and other direct response methods for converting that demand into direct sales online. Furthermore, Amazon’s acquisition of Whole Foods could signal more than just a change in the marketing funnel. Purchasing products online through a virtual shopping cart rather than a physical shopping cart also opens a new possibility, the ability for automated renewals and monthly subscriptions. Imagine rather than having to go to the supermarket every Sunday, you could have a box delivered every month filled with Keurig capsules, Cheerios, almond milk, and all the other products you love. This means CPG brands will have to start looking at KPIs like LTV (lifetime value), Churn Rate, CPA (cost per acquisition), AOV (average order value), and many more terms familiar to e-commerce and SaaS businesses. For CPG brands, the overarching takeaway from Amazon’s acquisition of Whole Foods should be to focus on digital. A rapidly increasing number of today’s consumers aren’t spending two hours at the grocery store on a Sunday afternoon, so you cannot count solely on organic product discovery through optimal shelf space in physical stores. Instead, brands need to engage customers at multiple digital touchpoints to stay top of mind and get their products into the online shopping carts of consumers across the globe. Moreover, they must set clear KPIs and keep a close eye on bottom funnel metrics. Those that can develop, execute and maintain a strong digital strategy will position themselves for continued long-term success — regardless of what Amazon does next.
Consumer goods brands need to rethink their digital strategies if they want to compete with online retail giant Amazon in the wake of its acquisition of Whole Foods, according to Eric Dahan, CEO of Open Influence. In a blog post on mediapost.com, Dahan said brands must engage with customers across social media, as well as other touchpoints, and closely monitor bottom-of-the-funnel metrics to ensure traffic is driven to their products. Amazon made up 18% of US online grocery sales during 2017, raking in 6.