Brands must master marketplace strategies to win consumers, not focus on mass personalization, reveals new report from Edge by Ascential
BOSTON, Dec. 2, 2020 /PRNewswire/ -- Growth for consumer packaged goods (CPG) brands will be driven by online shoppers on a small number of giant online marketplaces as we enter the next phase of worldwide retail, according to How to win in Retail 5.0, a new whitepaper from Edge by Ascential, the data, insight and advisory solution that gives global brands the knowledge to win in digital commerce.
What is Retail 5.0?
Edge by Ascential analysts define Retail 5.0 as the fifth generation of retail and the next era of the sector's evolution. This generation is characterized by marketplaces mastering personalization at scale, big data being effectively leveraged, and category domination by fast-paced, agile brand manufacturers.
Two challenges for brands
By 2025, analysts forecast that online sales will account for 40% of total CPG sales. The dominance of digital marketplaces will mean further digitization and compression of retail channels, creating opportunities for CPGs to win big. Edge by Ascential has identified two priority challenges that CPG brands need to overcome to ensure long term survival: winning at capturing the marketplace shopper and winning at product innovation and delivery.
Three steps for brand growth
According to the report, CPGs will not win the race to win over consumers with mass personalization, when faced with the huge spending power, motivation and the network effects of marketplaces such as Amazon and Alibaba. CPGs should focus now on which marketplaces are worth operating in and how to deploy winning strategies on those retailers. Edge by Ascential advises a three-step approach to a marketplace-centric growth strategy:
1. Focus on leading global marketplaces and prioritize them: No two
platforms, or the markets in which they operate, are alike. CPGs should
develop a marketplace prioritization framework based on factors such as
priority markets, consumer and brand fit.
2. Learn the marketplaces' ecosystems and how to win on each: For example,
on Amazon, CPGs should gain a deep understanding of what it takes to be
on Amazon Prime and how to convert their shoppers to "subscribe and save"
purchasing, locking them into a far stickier and more profitable
relationship.
3. Optimize marketing to capture marketplace consumers: CPGs should shift
spend away from more traditional paid search and social marketing and
allocate it to on-platform marketplace marketing with creative, targeted
marketing messages around product benefits and value.
The report also highlights the need for CPGs to review their distribution models, ensuring at least 30% of stock is immediately available for rapid global distribution. Much like commodity traders, who trade inventory based on demand and supply dynamics to maximize profitability, the best CPG firms will allocate inventory to different marketplaces on a daily basis to optimize its yield and must also always meet surges in consumer demand on marketplaces globally, with no out of stocks. Sales events will continue to be a primary source of massive inventory demand surges globally, such as Alibaba's Singles Day or Amazon Prime Day.
Deren Baker, CEO of Edge by Ascential, said:
"The message is clear: if you can't beat 'em, join 'em. As the world becomes a smaller place and the technology gap between the big ecommerce marketplaces and everyone else grows ever wider, we recommend that CPG brands avoid following the crowd on mass personalization and instead focus on implementing an effective marketplace strategy.
In the last five years, Edge by Ascential has worked closely with our CPG partners to create the most effective execution on every major marketplace worldwide that counts. Our Digital Shelf product tracks over 85m products, across 1,000+ retailers in every major market to give our customers the complete, global view of their performance and competitive landscape. We feed this data back to our CPG partners, down to an individual SKU-level, allowing them to react fast, capture opportunities and mitigate lost sales. It is this granular insight, delivered consistently at a global level, that helps our customers outmanoeuvre and outpace their competition online. Additionally, our regional experts around the world help us steer our customers' strategies based on the advancements we witness in more mature ecosystems, such as China."
How to win in Retail 5.0 is available to download here.
ENDS
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For further information, please contact:
Will Parrott/Georgie Moreton, Propeller PR
Edge@propellergroup.com
About Edge by Ascential
Edge by Ascential gives global brands the knowledge to win in digital commerce by providing actionable, next-generation data, analytics, insights and strategic consulting. Its unparalleled suite of solutions - including Market Share, Digital Shelf, Price & Promotions and Retail Insights - enables brands to develop and implement strategies that maximize revenue growth; optimize product listings; increase sales faster than the category and the competition; and drive margin growth. More than 500 global brands depend upon its weekly, daily and real-time data-driven insights.
A subsidiary of Ascential plc, the global specialist information company, Edge by Ascential has more than 400 employees in 10 offices across North America, Europe and Asia. For more information, visit www.ascentialedge.com.
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