The Future of E-Commerce for CPG Brands

Even though grocery stores remained open during lockdown, many people chose to do their grocery shopping online to avoid exposure to COVID. In fact, in SLD’s recent study on e-commerce for CPG brands, 69 percent of respondents said they shopped more online for groceries during the pandemic. For CPG brands, this news is not generally received with enthusiasm. The online shopping experience is extremely different from a shop in the store and options, such as saving your previous purchase list for reorder can make it harder for brands to be noticed. Some CPG brands are wading into the waters of direct-to-consumer platforms but with mixed success.

Today, we’re talking to SLD’s Lori Smale, Sebastian Maynard and Richard Dirstein about the challenges brands are facing in the online world.


Melinda: Hi, I’m Melinda, and you’re listening to Think Retail.

Even though grocery stores remained open during lockdown, many people chose to do their grocery shopping online to avoid exposure to COVID. In fact, in SLD’s recent study on e-commerce for CPG brands, 69 percent of respondents said they shopped more online for groceries during the pandemic. For CPG brands, this news is not generally received with enthusiasm. The online shopping experience is extremely different from a shop in the store and options, such as saving your previous purchase list for reorder can make it harder for brands to be noticed. Some CPG brands are wading into the waters of direct-to-consumer platforms but with mixed success.

Today, we’re talking to SLD’s Lori Smale, Sebastian Maynard and Richard Dirstein about the challenges brands are facing in the online world.

Lori, welcome. Thank you for joining me today. Can you start us off by telling us a little bit about you?

Lori: Thanks for having me on. As you mentioned, I have 10 years of experience with CPG brands. I’ve worked with some great clients and deal with projects, understand what the clients have to say, and the challenges that they have every day.

Melinda: Yeah, so let’s talk about that. I mean, you’re constantly talking to clients about what their biggest challenges are, and what are they saying to you about the online grocery shopping experience?

Lori: Yeah, I think it’s definitely a big change and different for them now. We work obviously a lot in package design and packaging, and the way consumers shop for packaging in-store is completely different than what they would do online. Where you used to think in terms of the package design and how it pops on shelf, you now have a thumbnail. And I think that’s really challenging for CPG brands and how they kind of come across online.

You know, you used to try and breakthrough in the aisles or buy more displays in-store, and now they have to kind of pivot and think, how are you going to do that breakthrough online and really capture the consumer’s attention while they’re scrolling through the websites? So, I think that’s been a huge challenge for them is how do you capture the consumers’ attention in that blink of an eye, and then do that in the online world, which is a very different ballpark.

Melinda: Yeah, you’re dealing with platforms that are all relatively different, whereas grocery stores are generally…I mean, there may be some differences within a store, but generally, the shelves are more or less the same, but the websites are quite different. Some offer a lot of options for, you know, maybe you can upload five different pictures, maybe some only allow you a teeny tiny, little thumbnail, some might allow you some product description, and others less. So, that means you have to have a slightly different strategy for every single one of these partner sites, which makes it even more complicated.

Lori: For sure. And it’s even just a new way of thinking for the brands too. Like, that has never really been, I don’t think, on the forefront of their process, and now thinking of beautiful renderings and beautiful product images, it’s a whole new avenue they have to kind of start thinking about as they’re launching.

Melinda: To take a deeper look at the e-commerce study, I spoke to Sebastian Maynard, a Digital Marketing and Communication Strategist at SLD, about the key insights and his perspective.

One of the big takeaways from the study was that even though consumers still have a strong preference for the store, even those who really prefer the store, still plan to shop more online.

Sebastian, how are you?

Sebastian: Good, thanks. How are you?

Melinda: Good. What do you make of this?

Sebastian: It’s interesting. I mean, we’re so engrained in the COVID world for the past year and a half, or it feels like two years now, that we’ve been talking about this new normal and how really things post-COVID are never going back to what they once were. And a perfect example of that is how this shift to online shopping I think will continue on. And at first, it did feel like a necessity, social distancing, stores were closed, it felt like the right thing to do, and a lot of people kind of embraced it for that reason. But I think as we move on, the idea and the reason why people are going to continue shopping online changes. And there’s been this perceived value that now people have started to understand and appreciate.

Interestingly, for me, as a millennial, I haven’t really gotten into the online shopping for food, but then talking to even some of our co-workers like Lou, one of our designers, he does it for pet food or he subscribes to a coffee service and things like that. So, people are kind of being able to explore how online shopping is making their lives easier.

And when it comes to value, yes, there is the cost associated with it, but also it helps you with saving with time, maybe you get some added perks, maybe you’re finding some things that you can’t get in-store, you’re feeling a part of a community, all these different things that have kind of come up with online shopping that maybe didn’t resonate as much when you were going into the physical store. And we are seeing that grocery stores or CPG brands are trying to kind of close the loop, whether it’s through a loyalty system, an app, some online promotions that are exclusive if you sign up, or if you’re a repeat shopper. So, consumers are realizing that it’s not just convenience or safety that is the main driver of value with online shopping. And it’s up to brands to really home in on what their customers are looking for, and how do they make that value speak to them.

Melinda: Right. And I think the thing that really struck me was that people are shopping both channels. There’s very few people who are saying, “I’m only going to the store,” or “I’m only shopping online.” People have different reasons to go to the store than maybe they would have two years ago, where they maybe would have gone into the store to do that big shop all the time, now people are maybe doing the big shop online and going in the store when they want something special, or when they’re looking for a particular ingredient for a recipe, or whatever. And so, knowing that consumers are going to be shopping online, whether it’s on your app or on a website, it seems like people were kind of 50/50, but they’re also going to be going into the store.

So, the connection between all these channels really needs to feel seamless, and I think that’s the next sort of stage. There’s lots of companies who were really kind of behind on the online experience and have really upped their game during the pandemic. But the next step is to make sure that these things are working together really cohesively so it doesn’t feel like when you go into the store, you can’t find that thing that was on the website that you said you had in store, where is it? You know, to make sure that it’s really seamless is the next step to me.

Sebastian: For sure. And, you know, people are so… There’s so much information out there. And I think maybe two, five years ago, however long ago, it was a certain demographic or a certain age group that was going to conduct their research before going into the store. And they already knew what they were looking for, and what the price was, and what the reviews were. But now I think that’s becoming a little bit more universal. You see in grocery stores all the time someone’s looking at their phone, and they’re kind of price matching. They’re looking at, “Oh, what is it like at Walmart? What is it like at No Frills? What is it like at Metro?” And so, trying to find that perfect kind of balance between both the online and the physical, and understanding that they are not separate. It’s easier said than done, especially for large brands with massive inventory, massive websites, and the logistics are daunting, but people are just so educated and they’re going into the store with an idea of what they’re looking for, what the cost will be, and I think that that has kind of shifted and will continue on moving forward as well.

Melinda: Yeah, absolutely. So, according to our study, there were a few key groups who really prefer the online experience. The biggest group, the biggest fans of online shopping, they were the most likely to adopt online shopping for the first time during the pandemic, are high-income consumers. What do you think this group is looking for?

Sebastian: I think you kind of dive into it more in the study, but it’s this idea of the exclusivity that can come with being able to buy from a store that isn’t necessarily just down the street from you. So, the world has really expanded in terms of what you can buy online, but I’d be interested to hear your thoughts as well.

Melinda: Yeah, I think when I reviewed all the data, what was interesting to me is that high-income consumers are also looking for value, like, price comparison is also relevant to this group. It’s just that what they view as a good price is going to be different because their point of reference is different, but they still want value, but they’re also looking for an experience. So, when we asked them about things, like, you know, how important social media was, how often are they looking to influencers, celebrity chefs, and that kind of thing, they’re much more engaged in sort of the whole lifestyle of cooking and food, especially during the pandemic, we know everybody was cooking more at home. So, they’re not just going online for convenience.

On the flip side, another thing I found really interesting was that lower-income consumers, they’re generally less interested in the online experience, but 28 percent of them said that COVID had no impact on their grocery shopping behavior. What do you make of this?

Sebastian: Yeah, I agree. It is a little interesting. And my first thought is do things like shipping costs, access to internet, those types of kind of basic questions, is that one of the hindrances, because we take it for granted that having a stable internet connection, and being able to get same-day delivery are available, but not necessarily for everyone. And so that kind of is my first question is, is there still a barrier for some people with online shopping? And how can brands kind of break down that wall? And, yeah, we’ve talked about kind of the higher income ones and how we can cater to them, but how can we also cater to those people that are looking for the cheapest and the best product available, but without all the frills. And so this is an eye-opener for brands, is that there’s a huge market that is not taking advantage, and how can you get them online and be a repeat shopper with you on your e-commerce platform. By partnering with fulfilment centre uk, they can overcome logistical challenges and offer affordable, prompt delivery, making online shopping accessible to a wider audience.

Melinda: I had exactly the same thought. You know, you would think that, for anyone during COVID, the convenience, the additional safety, the time-saving…you’re maybe going out less anyways. And so, to me, the thought that there is a barrier, in terms of maybe I have a limited amount of internet service, so I’m really going to be conservative about how much I’m using data, or maybe I don’t even have internet in my home, maybe it’s just my phone that I’m using and I’m no longer going to the office, I don’t have that free WiFi that I’m connecting to at the office, so now I’m even more limited, so thinking about how to reduce that barrier to engage lower-income consumers, I think that’s definitely going to be important for brands to think about.

Sebastian: Yeah, and it goes back to the idea of value, and value is different to everyone. It’s saving money, it’s saving time, it’s perks, it’s all of these things. And so regardless of income, or demographic, or whatever, it’s figuring out who that customer base is, who you want to target, and how do you really bring value to them, and entice them to embrace online shopping and embrace your e-commerce platform.

Melinda: So, after speaking to Lori and Sebastian, I wanted to get a designer’s perspective. So, I connected with SLD’s EVP of Creative and Innovation, Richard Dirstein, on how brands can improve visibility in the online experience.

So, tell me about visibility online versus visibility in-store. What are some of the unique challenges of the online experience?

Richard: Yeah, that’s a good question. I would first say that the good news is that there are some parallels between the physical journey in-store, in bricks and mortar, and the online. So, there’s some great learning that can be had that we can take from the retail journey. But online does offer a unique set of challenges. And, you know, I’ll just go through a few of these.

So, the first one I would talk to would be the lack of a sensory experience. When we shop, we physically pick up a package, we turn it around, we read the back label, we judge its weight, the texture of the packaging, maybe the printing. So, there’s a lot of visual, touch, sensory that’s missing from the online. And, you know, from an impulse standpoint, as we say, from an emotional connection standpoint, that’s missing online. The next point I’d make would be that the overall experience is nonlinear. And by that I mean, when a person enters a supermarket or a retail store, there’s a physical journey. So, think like IKEA, you enter in the front door, you go into this area, then this area, this category, and so on. And in that process, you’re exposed to products that you might normally see. This is that old adage about putting milk at the back of the store, so they have to make sure that you go through the whole store and get inspired. That’s missing often from an online experience. AI is very good at assessing your needs, but the challenge of exposing customers…or that opportunity to expose customers to different products that they’re not aware of is gone.

The next area of challenge would be that, you know, there’s no forum for an individual to look at the category in a whole. We can process information and imagery very quickly. We can look at a whole shelf and take in hundreds of products in a very, very short amount of time. And that as well is missing from online. Online, you can see a group of imagery, but often scale is preventing you from seeing them and judging them. You know, you don’t have the mass of a product, let’s say, 30 or 40 SKUs all sitting together of the same shape, of the same color to attract the eye. So, you’re looking at products individually one at a time as they’re being shown to you, rather than in conjunction with each other.

The next point I would make is the impulses challenge. And what I mean by that is, during a normal customer journey through a store, we refer to the use, or the validation of the BlinkFactor. So the BlinkFactor is, what great color, shape, packaging, substrate, what is really disrupting the category and allowing your product to come forward? So, you know, you’re not being served all of these products in the same way, the emotional heartstrings are a little bit harder to get to, and to take that even further, customers are empowered by easily opening another window, and quickly reading customer reviews, validate claims and pricing before they buy. So, that emotional touch, feel, hug that you get in-store with a physical product is being replaced by someone quickly being able to ascertain if this is what they’re looking for. So, those are some of the challenges that I think that online offers up.

Melinda: So, what about some of the positives if you think there are any?

Richard: The good news is, there are some great positives, and I can outline a few of them.

I think, best of all, or most importantly, with shopping on an online retail environment, e-comm site, you have the ability to leverage AI and data. And by that, the customer preference, aptitude, or propensity to try something new, is being assessed, and new and potential products if they’re not familiar with being offered up to the customer, that can be food pairing, that can be an alternate product to one that they typically get that might be low on stock. So, from a customer experience standpoint, the AI experience can be much richer. It can get the customer to their needs much quicker than shopping on their own, or relying on a store clerk to help them.

The next point I would make is, again, research and validation. So, that ability for a customer to, while they’re shopping, pull up another window on their phone, let’s say, or on their computer, or on the same device to quickly look at whether this the right purchase, are if they getting it at a good price. That is really empowering the customer.

I would also add the convenience. So, not just convenience in the time it takes to shop and the reduction of having to get in a vehicle or walk through the store to make your purchase, but, again, back to this help of AI, and the ability for AI to recognize patterns and unique purchase opportunities, and individualize that experience for each guest, that’s very powerful. And it’s very hard to offer that in a physical journey in a store.

Melinda: Great. So, thinking about the online grocery shop, what do you see the opportunity as being or the opportunities, if you see multiple opportunities?

Richard: The opportunities are much like what is happening in a retail environment. So, those core strengths around package design are really leveraged for online. Things like color, a unique color, and shape, that’s a validation, that’s also disruption. Something that is unique and recognizable, or even having your brand stand out against a competitor on a comparison page. Obviously, the logo, again, for driving brand recognition and creating that initial customer experience, customer connection. So, telling a story is an opportunity.

In an online experience, often the consumer is left with one image to try and understand the offering of the product. Again, they have no sense of scale, there’s no head-to-head comparison, even within a category or against other products. There’s a real opportunity to educate the customer on the brand, you know, proof points that could be origins, ingredients, use, or the greater family of products. And as an example, I would say Sephora. So, Sephora will often, much like a grocery retailer, showcase the plethora of products that they have. And if you’re not familiar with the brand, they will take certain product offerings, and they will show them in context, a colorful background or a backdrop to give it context. And then they will have subsequent imagery that shows maybe a close-up of the packaging, or a unique product feature, or the actual product itself.

So, it’s really telling that story, romancing the product and giving that customer, you know, almost that touch and feel experience, a sensory experience.

I would also add that it’s important to keep it clean and clear. And by that, I mean just like a physical product sitting on a shelf, again, the BlinkFactor, to quickly convey the product offering so that a customer can, in as quick a time as possible, decide if this is the product for them. We’ve got to win them over quickly. So, I would say, ensure that your packaging has a strong brand architecture, so that you have consistent logo placement, consistent messaging placement. The hierarchy of communication or messaging on the package is very important. If the customer has only got a split second, what is their key takeaway? Is that brand first? Is it product function? Is it the product differentiator? So, it’s important to have that so that in this online world, e-comm, that you can quickly convey that offering.

I’ll give a quick example. You know, we’ve all stood in an aisle of a supermarket, often comparing two similar products, often, even the same product from the same company to try to understand the difference between the two SKUs. And you can imagine the challenge in that decision-making is further amplified by having a customer then open up two windows and researching at the same time. You know, the online experience does allow you to validate quickly, but to a point. Opening up multiple windows and you start going off in a different direction to research and it takes you away from the shopping page, and often takes you away from that impulse purchase. So, let the package speak for itself, have clear and consistent messaging, and really connect with your customer quickly.

Melinda: Great. Thank you.

Richard: Thank you.

Melinda: If you want to read the study and dive into greater detail, you can find it at under the Insights section, and we will link to it in the podcast transcript. The study includes CPG e-commerce personas, direct-to-consumer strategies you might not have thought of, and some easy wins to improve your performance on partner sites. Thanks for listening.