CPG Brands Should Follow L'Oreal's Lead
Despite all the talk about consumer product goods (CPG) brands increasingly selling direct to consumers (DTC), a new report suggests they're not quite ready for primetime when it comes to e-commerce.
Business360, an insights services business, released new research revealing that CPG brands are running out of time to adopt to an e-commerce medium. To this day, online activity only generates less than 1 percent of sales for most CPG categories. Now Amazon.com and others are targeting the category and aggressively moving to lock down consumers with innovative subscriber models (e.g., AmazonFresh). In order to succeed in today's commerce environment, CPG brands need to be more nimble and willing to meet customers in their preferred channels.
The report reviews over 30 of the top CPG brands’ sites in each of the top 10 e-commerce markets worldwide. It revealed the lack of effort CPG brands are putting towards engaging customers online. With few exceptions, such as L'Oreal's Essie and P&G's OralB, CPG e-commerce sales are dismal at best, according to the report.
Of the four overarching companies Business360 reviewed — L'Oreal, P&G, Unilever and Colgate — L'Oreal performed the best. Its brand websites are more popular and they engage consumers better. For example, L'Oréal's brand sites have many more links-in from external sites. Against the average in the study sample, L'Oréal's brand sites have 222 percent more links-in, while Colgate has 94 percent fewer.
L'Oreal also exceeds when it comes to e-commerce functionality in comparison to other CPG brand websites. Currently, L'Oreal is experimenting with interactive websites and DTC, while Colgate doesn't even have dedicated sites for its brands. Of the 32 brand sites surveyed, 25 percent had no e-commerce functionality and didn't even link to sites that do, 70 percent linked to third party e-commerce sites, and 5 percent offered DTC capability.
By failing to provide an up-to-date e-commerce experience for consumers, CPG brands generally are missing the chance to engage with their customers and create brand advocacy, leading to dwindling sales. Losing online means losing offline in the long run, especially since CPG brands are already late to the game. My thoughts? It's time CPG brands start following L'Oreal's lead and embrace e-commerce … soon.