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CPG eCommerce Insight: Winning at the Digital Shelf

November 16, 2014
Written By

The CPG industry is going through a period of exponential change, with recent estimates suggesting that online will account for more than 50% of the CPG sales growth between now and 2018. In a presentation given at the Fall edition of the LEAD Marketing Conference, Profitero’s Keith Anderson looks at how CPG brands can maximize impact to win on the digital shelf.

The Digital Future report prepared earlier this year for the Grocery Manufacturers Association (GMA) by BCG/Google/IRI talked about irreversible shifts in the CPG landscape – with digital technologies reshaping both consumer demand and competitive dynamics in the CPG marketplace.

The report revealed that online is expected to represent more than 50% of CPG sales growth between now and 2018, with digital’s current 1% penetration most likely reaching 5% – but with a possibility that it could reach as much as 10%. Coupled with growing evidence that online retail is a key influencer for in-store purchases, it’s clear that CPG companies need to be prepared for this shifting retail landscape.

Figure 1: Online will account for ~50% of CPG Sales Growth 2013-2018E

Source: BCG/IRI/Google

There are obvious parallels between the in-store shelf and its digital equivalent (in terms of availability, share of shelf, brand visibility, price and promotion), but for CPG brands to be successful in the online channel, manufacturers require a new level of eCommerce insights and analytics to truly optimise their brands’ online performance.

In this blog, we look at four key areas in which CPG brands can enhance their online performance: Pricing, Product Content, Placement, Ratings & Reviews.

Figure 2: In-store and digital shelf parallels

Source: Profitero

1. Pricing

We’re living in an increasingly price-transparent world. Online pricing is dynamic, competitive and ultra-transparent for shoppers – therefore it’s increasingly essential to understand how your products and competitors’ products are priced online on a daily basis.

Profitero recently analysed the average monthly price changes per product within the Health & Beauty category on Amazon and Whilst Walmart changed its prices close to 1x/month (or less), Amazon changed its prices 4-5x/month on every product.

It’s critical that CPG manufacturers understand this level of price dynamism in order to manage brand equity and ensure retailers comply with Minimium Advertised Price (MAP) policies.

Figure 3: Online pricing is dynamic

2. Product Content

Ensuring you have high quality, comprehensive product information is key to driving conversion rates online. Product content is your ‘digital packaging’ so you need to be well-presented online.

Profitero analysis of the top 20 best-selling products on Amazon for chocolate, dog food and toothpaste shows a clear correlation between comprehensive product information (# of images, average word count description) and sales.

Good product content also influences search ranking at many online retailers, especially on Amazon.

Figure 4: Product content drives performance

3. Placement

Online shoppers are searchers, who more often than not know exactly what they want when they arrive at a site like Amazon. In fact, Amazon calls these shoppers ‘spearfishers’.

Search ranking drives findability, therefore ranking on page 1 of an online retailer’s search results for key terms is critical for findability. Product titles, keywords in descriptions and sales ranking are often key factors.

Using the same product categories as earlier – chocolate, dog food, toothpaste – Profitero analysed the percentage of Amazon top 20 best-selling products that appeared on page 1 for these search terms. Again, our findings reveal a significant relationship between ranking and conversions: 55% of Amazon’s top 20 dog food best sellers appear on page 1.

Continuously monitoring where your products rank for key search terms – especially those related to your brand and category – and optimizing your product content to improve search ranking is essential to driving sales.

Figure 5: Search ranking drives findability

4. Ratings & Reviews

According to Deloitte, 64% of consumers say reviews and ratings are important when grocery shopping online, whilst 59% of consumers said they trust online reviews as much as personal recommendations (source: Balihoo).

CPG manufacturers need to regularly monitor and identify negative reviews and respond quickly – focusing on their top-selling products – as well as maximising the impact of positive reviews.

To summarise: online is the fastest-growing channel and winning at the digital shelf requires new CPG eCommerce insight and analytics. Optimising your brand’s Pricing, Product Content, Placement and Ratings & Reviews are all key to succeeding in this new channel.

To find out how Profitero helps CPG brands around the world to optimise their online performance, get in touch and request a free demo.

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About Profitero

Profitero is the leading global provider of eCommerce intelligence for retailers and brands, collecting online data on more than 275 million products every day.

We provide both brick & mortar and online retailers with their competitors’ prices, promotions and full product assortment information. More than 50 global retailers, including Staples, Waitrose, Ocado, Morrisons, Walmart-owned Sam’s Club and Worten, rely on Profitero’s accurate and timely competitor price intelligence to make better informed and more profitable pricing decisions, helping them to increase sales as well as margins.

Profitero also supplies brands with critical online insights, helping to enhance their online sales and market positioning. We deliver key online metrics, including share of online shelf, share of voice, pricing, brand price monitoring and new product monitoring, in any country and from any online or multichannel retailer, updated every day.

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