E-commerce is driving all of US consumer package goods growth
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Online sales growth of consumer packaged goods (CPG) such as food, beverages, and other packaged products, has been outpacing overall sales growth for the segment, according to measurements by Nielsen Holdings and Rakuten Intelligence, cited by Internet Retailer.
Total sales in the CPG category grew 2.6% year-over-year (YoY) as of August 25, while e-commerce CPG sales went up 29% YoY. Furthermore, spending per buyer in the CPG market basically plateaued — it grew only .1% YoY — while the online figure jumped 16.6% over the same time period.
CPGs lend themselves to e-commerce because they are consistent from unit to unit and consumers can predict when they’ll need them. Packaged goods are reliable and uniform, eliminating any guesswork, unlike fresh produce, which can vary greatly depending on which one a shopper picks, for example.
Additionally, consumers can more easily estimate when they will need to restock on CPGs than they can with other goods, making many of these products better candidates for online ordering. An example is pet supplies, which is the category of CPG’s seeing the most online sales growth. Because pets tend to go through food at a consistent rate, owners can easily schedule online orders and get what they need delivered straight to their homes, Nielsen vice president of e-commerce Justin Belgiano said.
Growing online purchases of CPGs can help consumers get more comfortable with the concept of online grocery on the whole. As it stands, consumers' preference to physically see and choose their own groceries is the No. 1 reason they don’t use online grocery.
The uniform nature of CPGs can help alleviate this problem. If more consumers start using online shopping to restock on essentials, and those orders go off without complications such as crumbled food items or spilled beverages, it may encourage them to order other types of groceries online, including produce or other perishables.
In-store pickup of online grocery orders is also gaining popularity, potentially boosting sales for retailers and improving consumers' comfort with online grocery. “Buy online pickup in store” (BOPIS) has come to represent the way that 48% of e-commerce grocery orders are fulfilled as of August, a major shift from 2016, when only 18% of online grocery sales were completed this way.
This could present a sales opportunity for retailers, as customers who made a BOPIS purchase once in the past year made an additional unplanned purchase 38% of the time when they went to pick up their goods. In addition, having a store associate on hand to help with an order pickup may help customers feel there is someone to work with if they are unsatisfied with any of their items, further easing concerns over wanting to pick their own products.