The Future of E-Commerce

We have heard the argument by some consumer goods (CG) manufacturers that direct-to-consumer e-commerce will upset their retailers. This is changing. The Apparel & Footwear sector moved beyond this argument, and other sectors are soon to change the dynamic as well. Whether they open their own stores, follow China’s model of a store-within-a-store, sell via Amazon or direct-to-consumer via web sites, change is upon us. This month, we ask John M. Rossi, general manager and global head, Consumer Goods Consulting, Wipro Technologies (and CGT Executive Council member) to break down the implications that this trend has on sub-vertical markets.

What will e-commerce look like for Food & Beverage (F&B) manufacturers over the next 3 to 5 years?

Rossi: Once same-day delivery occurs in most major cities, e-commerce will “take off”. The convenience factor and auto-replenishment will be key decision points. Why will I want to lug around heavy, bulky items when I can have it brought to my door via free shipping, and on the same day? While they’re bringing me those items, I need milk, eggs and bread (and maybe a bottle of wine).

There has always been an argument about freshness, people wanting to choose their own products and the point-of-purchase selling opportunities as being reasons e-commerce won’t work for F&B. Working couples and technology, especially mobile devices have now rendered those points moot.

Convenience, free shipping, auto-replenishment and same-day delivery makes this too easy to not occur over the next few years. Expect totes of your favorite products to appear at your door via UPS, FedEx or Amazon trucks.

What will e-commerce look like for Home & Personal Care (HPC) manufacturers over the next 3 to 5 years?

Rossi: HPC is even easier to consider for e-commerce. Brand loyalty is very high for cosmetics, hair care, facial and toilet tissue, detergent and cleaning supplies. People are comfortable with these products. Brand switching is not as prevalent as in the F&B sectors.

Whereas F&B items are decided in the moment (“I don’t feel like pasta tonight” or “That fruit doesn’t look fresh”), HPC is more measureable. We use certain items every day, so I need one box of facial tissue per month in the summer, but three boxes per month in the winter. Auto-replenishment is an easier consideration.

Cosmetics are different; they’re more personal. For high-end products, going to the department store will still be prevalent. For everyday products that are purchased at the drug or grocery store, e-commerce makes sense. These “basics” can easily be ordered via e-commerce.

E-commerce will make it harder to switch brands. As a manufacturer, this can be great or terrible. If your company has deep relationships with the consumer, they love the idea of making it hard to switch from their brands. Expect the best companies to be rapidly moving to e-commerce.

What will e-commerce look like for Apparel & Footwear & Accessories (AFA) manufacturers over the next 3 to 5 years?

Rossi: AFA manufacturers were one of the first CG subverticals to move into e-commerce. This has been a 10-year journey and others can learn a lot from them. It wasn’t that long ago that we heard these arguments: “If they start selling directly to the consumer, their retail partners will lock them out” or “no one will buy clothes via the web, they want to try them on” or “luxury items will never be sold via the web, that shopper wants the human touch”. For the most part, none of this has held true. Not only did AFA open web sites, they opened their own stores. They still sell through department and specialty stores, but they also have their own stores, web sites, mobile and apps. It’s global, not just U.S.-centric. It’s been a tremendous success as an additional set of channels with little cannibalization.

The next phase will be “personalization” where your measurements, preferences and body shape will be automatically shown on the screen. This sector is ahead of the pack building the true omnichannel experience.