The Iceberg That Could Sink Traditional Brands
Life used to be pretty easy for well-established consumer packaged goods brands.
As long as they had a handle on the supply chain, manufacturing and distribution, their operations would run smoothly. Competition was centered on securing prime shelf space and fending off-brand or line extensions from other CPGs or the private label offerings of supermarkets or big-box retailers. Magazine and TV ads, along with retail coupons, would remind consumers why they preferred this brand over another. If it wanted to be seen as particularly cutting-edge, maybe the brand tried its hand at a light-hearted Twitter account.
And then things changed, quickly and dramatically. What was once smooth sailing got a whole lot rougher.
Amazon diversified its offerings so that, in addition to the latest best-seller, you could also buy laundry detergent with a single click and, in the case of an increasing number of products from batteries to diapers, opt for Amazon’s own brand. Additionally, disruptive new companies like Dollar Shave Club and Harry’s Inc. set precedents, bypassing traditional retail channels to sell directly to consumers via their own e-commerce sites — rendering the fight for shelf space obsolete. Voice and text emerged as new channels for shopping and customer care, with both offering on-demand convenience for consumers but stripping away the visual branding that so many traditional CPGs had relied on to stay top-of-mind.
All these factors have combined to form a looming iceberg that threatens to sink even the most well-established CPGs. Selling directly to consumers without the familiar retail middleman, and engaging targets who no longer respond to branded advertising. is the new paradigm they’re scrambling to address.
The age of “set it and forget it”
As recently as 36 months ago, CPGs weren't going directly to consumers. They were using traditional channels such as Walmart, Target and grocery stores. Then, Amazon completely disrupted the entire consumer engagement process. Combine this with the current impact that emerging artificial intelligence-powered platforms are having (and will continue to have), and you can see why traditional CPGs are currently undergoing an “identity crisis.”
The way that CPGs have conceived of and structured their consumer communication must be reimagined for this new reality, as does their understanding of visibility and loyalty in an era when store shelf visibility has become less important. Decades of brand equity are poised to vanish in a click or a few words spoken to an AI-enabled device.
Brands will have to work to maintain their identity by going the direct-to-consumer route. But what does going directly look like for brands that long have had an arms-length relationship with shoppers? It starts with embracing e-commerce and rapidly building out subject matter expertise that may currently be underdeveloped or non-existent.
For example, CPGs with no e-commerce site need to build one ASAP — as a first step. They then need to get into Facebook Messenger and start working through Google Home and Amazon Echo; setting the reordering capability on the former and the Skill on the latter so the consumer can re-order and ask for updates. Then comes partnering with the likes of Amazon, Walmart and Target to handle fulfillment and delivery. Acting quickly and aggressively — an unfamiliar approach for many traditional CPGs — is imperative to avoid ending up like the Titanic.
CPGs must move faster and smarter than ever before. Timeline wise, let’s just say CPGs have about six months to take action — instead of years to study and roll out products. The challenge for traditional CPGs isn’t just warding off a behemoth like Amazon or keeping pace with industry disrupters; it involves embracing a fundamental shift in how consumers shop that is largely driven by automation.
While consumers might still browse in person for big-ticket items like designer shoes or a new car, shopping as it relates to household commodities or frequently purchased items increasingly will be stripped down to its most accessible, low-touch form, driven by convenience and ease of fulfilment rather than cost comparisons or explicit brand loyalty. Consumers will buy a product and, if they’re happy with it, rely on AI-enabled devices to reorder the same product indefinitely, either at their discretion or according to a preset subscription. The “Set It and Forget It” age is here.
What CPGs must understand at every level of the organization is that consumers welcome the concept of never again having to think about which brand of laundry detergent to buy. and once they get a taste of that life, they won’t go back to the old way. They must realize that, in a house with voice assistants such as Home or Alexa, even 4-year-olds are using them — and quickly learning that this is a way to purchase products. By the time they're 13, they won't be asking their parents to take them to the mall because the mall will be their voice assistant.
AI-enabled buying shifts the nature of competition profoundly, from fighting over slivers of market share with equally well-established rivals, to a vital quest to own default-order choice in your category for a new type of brand-agnostic shopper who prizes convenience above all.
About the Author
Luke Starbuck is Linc's vice president of marketing. He built his first e-commerce website in 1997 and more recently has focused on bringing software that improves customer experience and drives revenue to e-commerce retailers. Starbuck has led product, development and customer service teams and brings his experience in print advertising and media to digital and offline marketing.
At Linc, his primary goal is to connect retailers with the knowledge and tools that drive stronger customer relationships and transform one-time purchasers into lifetime shoppers.