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The holidays can be a blue time for retailers of CPG products, or cheery with the right promotional and pricing strategies.
According to data from Nielsen, 75% of U.S. adults are “omni-shoppers” who buy products both online and offline. However, one-third of these omnishoppers have not purchased CPG products online.
However, the holidays are the largest single point of entry for new consumers in the online space, including CPG shoppers. Nielsen data reveals that in the fourth quarter of 2018, 9 million more shoppers made a CPG purchase online than in fourth-quarter 2017, amounting to $1.64 billion in year-over-year growth for the quarter.
Looking at what motivates consumers to make an online purchase, Nielsen found that product deal (36%) and free/reduced shipping (31%) were by far the two biggest motivators. Following were novelty (26%) and subscription service (5%).
Zeroing in on the motivating power of free or reduced shipping costs, Nielsen analysis indicates that two-thirds of new fourth-quarter 2018 online shoppers used Amazon as their point of entry. As a result, many other retailers are offering free next-day delivery to effectively compete. Because most of these retailers have a minimum spend requirement for free shipping, customers will often add one more item to their shopping carts to qualify.
Nielsen advises this offers CPG brands and retailers an opportunity to better understand the variance in online basket compositions compared with brick-and-mortar, so they can effectively develop cross-promotions and targeted ads.
In addition, Nielsen advises CPG companies looking to obtain new online customers during the holiday season to improve page listings whenever possible, as the percentage of sales falls drastically for items that are not listed on the first page of sales results. CPG companies are also advised to automate competitive pricing processes, which can drive up to 17% growth in brand performance on Amazon.