By Stew Bishop, President and CEO
As we prepare to head to Natural Products Expo West in Anaheim next week, I have been thinking about what has changed over the past year. Leading up to 2017, CPG brands typically handled ecommerce as a bolt-on: hire an ecommerce channel manager, sign up with an Amazon broker, and follow instructions.
That worked when ecommerce sales were too small to materially affect traditional channels or the bottom line. Those days are over. Ecommerce distribution and spending must be managed with the same account level P&L rigor as in the brick and mortar channel, if not more.
The on-demand grocery business is here to stay, even if it is not yet profitable for the manufacturer, retailer or e-tailer. The longer your brand has existed, the harder it is to recognize the value-deflation being driven by price transparency, competition and margin pressure due to delivery costs. If you are a new brand, you have the luxury of building your business online first. Which products should you distribute, in which channels, and at what price…..and increasingly important, how do you keep all of it in stock? How much should you spend to buy reach (the equivalent of shelf space in the online world)?
Another major change since last year is the Amazon acquisition of Whole Foods, the migration to centralized category management, and the implementation of new “pay to stay” fees. Small natural brands will no longer be able to build their business one outlet at a time with founder-led store and shopper relationships.
Yet consumers continue to want new “better for you” items, and there are plenty of entrepreneurs creating innovative products to meet evolving consumer demands. If you are a start-up that has found a niche, how can you scale? If you are part of a larger company, how can you move at the pace of smaller competitors and capture the attention of teams focused on much larger core businesses? How does your company manage a portfolio of new items while balancing SKU count reduction and price deflation?
In this complex environment, a brand may not be able to get to their desired spot on the field immediately. The key is to understand your current position and the series of plays needed to get where you want to be. To use a football analogy, your choices at “3rd and 13” are very different from those at “1st and 10.”
CMG has been helping CPG brands execute an effective playbook for more than 20 years. If you are courageous enough to listen to an objective third party, leveraging proven analytical models and years of learnings across dozens of categories, we would like to have a conversation about your business and how CMG could help you optimize all customer related activities and spending to achieve sustainable growth.
But don’t just take my word for it. Last year we met Good Karma at Expo West. CEO Doug Radi recently stated that “CMG is not only a functional expert in the area of trade spending, but is also a strategic advisor to senior management. Their technical expertise in trade spending and investment, combined with their world class analytical capabilities, makes them a truly unique and invaluable partner.”
If you are looking for a partner to help you plan your next season, we would love to start a conversation.