CPG brands can’t compete with marketplaces like Amazon and Alibaba when it comes to the mass personalisation that defines the new model of owning consumer relationships – and they shouldn’t even try to, according to a new Ascential White Paper, How to Win in Retail 5.0.
Subtitled CPG Strategies for Success in the Coming Era of Commerce, the paper argues that CPGs should instead focus on understanding how to win in these marketplace ecosystems and optimise their marketplace-specific shopper engagement strategies accordingly.
Mass personalisation, or “personalisation at scale”, is made possible by digital commerce and its underlying technologies and that dream continues to be an ambition of nearly all major consumer brands. But, the White Paper notes, the race to own the consumer has hardly got going and the winners will be that handful of players with huge profits to invest.
It adduces several reasons why CPGs can’t win:
- Unlike CPGs, digital marketplaces, social media platforms and search engines are “network effect” businesses: the more consumers that use them, the better they get at serving customers, which in turn attracts more customers.
- The death of third-party cookies will eliminate DMPs as an alternative option for CPGs to connect with online shoppers. Within a couple of years, DMPs will be irrelevant.
- Marketplaces will spend many billions to attract shoppers to their sites. Already, spending in the US has hit $22 billion and the paper expects marketplaces collectively to be spending almost double that within the next five years – “figures that are unmatchable for CPGs”.
- Marketplaces simply have to win the mass personalisation battle if they are to survive. “Their chief executives will bet the farm on winning this war. And the better they get at it, the more effective their marketing spend will become at pulling in more customers (i.e. their marketing conversion rates will increase), creating a virtuous cycle.”
So what are CPGs to do? “Rather than trying to expensively buy a crowd (which we believe to be a lost cause), they should leverage marketplaces’ already acquired consumers,” the White Paper says.
That means developing a marketplace prioritisation framework for the 20-30 leading global marketplaces (Alibaba, JD.com, Amazon, Walmart, etc) based on factors such as priority markets, consumer and brand fit.
CPGs must then understand each marketplace’s ecosystem and how to win within it. This requires global marketplace visibility and insight into digital shelf positioning, optimisation and performance measurement.
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, the White Paper advises.
For more on capturing marketplace shoppers and succeeding in product innovation and delivery, download the Ascential White Paper, How to Win in Retail 5.0.
Sourced from Ascential