CPG companies need to catch up as Online sales boost.

A major change in consumer packed goods (CPG) from offline to online stores is taking place but the manufacturers aren’t keeping the heat on. Online sales grew staggeringly from 2013 to 2018 with 19% growth annually, yes you read that right, 19% annually. This is against a mere 1% growth rate of in-store sales. In the current age, 40% of the growth in CPG retail sales are accounted for by e-commerce methods.  The problem with such a change is that CPG companies continue to lack the infrastructure of going online and hence fall short on this front rather than offline. If the companies don’t aim to go online or upgrade their e-commerce stand, they stand to lose around 5 to 10 percent points below the shares in the brick and mortar world. This accounts to hundreds of millions of dollars in such lost sales opportunities. In addition to this, CPG companies have failed to develop online categories wherein a large percentage of sales are unplanned- like confectionary, where almost half the sales are impulse. Using market research, companies should target online segments and should understand how the diverse retail environments currently exist and should develop strategies to compete in each one. Secondly, they need to focus on driving online traffic to their platform and should also ensure a higher rate of conversion than competitors once they are on their platforms. Lastly, they should have a robust/strong operations strategy so that there is stock always available to prevent stock-outs and should also be reliable.