Dive Brief:
- PepsiCo CEO Indra Nooyi told investors the company's e-commerce sales are "growing brilliantly," due in part to recent initiatives focused on developing easy delivery, simply packaged snacks, and ice-cold drinks.
- Nooyi said there's a need to create impulse-buy opportunities online for newest generation of shoppers who do all buying online, which includes improving direct-to-consumer sale capabilities.
- This may include leveraging virtual reality tools to simulate the grocery store experience online, for example. Or, increasing the cube efficiency of snack packaging.
Dive Insight:
Pepsi's focus on direct-to-consumer sales reflects a growing trend of brand manufacturer seeking to skirt traditional retail channels as brick-and-mortar sales decline.
However, to do so, consumer packaged goods manufacturers must be able to present the same experience online and upon-delivery as is found in-store. Consumer seek a seamless experience, especially when it comes to delivery. Products sold in-store are out of the maker's control and therefore may not be positioned ideally, or even under the right conditions, such as properly chilled. By taking back control and selling directly, companies can execute their own strategies about how best to meet the customer's needs. The cold chain can be maintained, ensuring that every customer receives the best possible product.
Numerous other companies are following the DTC route. One example is Nike, which is focusing on its direct-to-consumer channel, hoping to grow sales by a whopping 250% by 2021. Kellogg also is changing its supply chain model to better facilitate DTC sales. At the end of the day, however, a clear understanding of the end-consumer is required to provide what's really wanted, both at the product-stage and the shopping experience. Can Pepsi retreat and retrench to reach their imagined Generation Z via DTC? It will be interesting to find out.
