In 2020, the pandemic significantly impacted the entire retail industry. Brick-and-mortar stores shut down, and customers flocked online to get the items they needed.
For consumer packaged goods (CPG) brands, in particular, this change in the way consumers shop necessitated a different approach: omnichannel.
In fact, in a research study BigCommerce conducted with Retail Dive, 46% of retail executives said they planned to increase their investment in omnichannel retailing moving forward, compared to their plans prior to COVID-19.
“If you are over-invested in any one channel to sell your goods or products, and that channel goes away for any reason, you’ll be in a tight spot,” said Sharon Gee, Sr. Director, GM of Omnichannel at BigCommerce. “But the reassuring strength of an omnichannel sales approach is that it’s a risk mitigation strategy at its core. It allows retailers to ask, ‘Where are my shoppers and how can I be where they are?’ and make changes accordingly.”
So what exactly is an omnichannel strategy? And how can CPG brands leverage this approach to accelerate growth? That’s exactly what we are going to cover in this blog.
The Four-Pillar Approach to Omnichannel Commerce
When you think about omnichannel, the first thing that comes to mind is probably your sales channels. But that’s just one small piece of the overall puzzle.
A successful omnichannel strategy encompasses a four-pillar approach that takes into account your sales channels, marketing, operations and fulfillment. Each of these pillars must work together to form a consistent experience across every stage of the consumer journey.
Let’s take a look at some examples of how CPG brands can leverage each of these pillars.
1. Expand Your Channel Mix by Selling Online Direct-to-Consumer (DTC)
An August 2020 study called DTC and the New Brand Loyalty Opportunity revealed that in the past year, nearly 55% of consumers have used DTC channels to purchase CPGs or nonperishable items they use on a regular basis.
Another study from BrandShop in 2018 also found that, if given the option, 87% of consumers would buy products directly from a brand online.
Selling directly to consumers makes sense. Of course, it’s easier said than done. Launching an entirely new ecommerce website takes the right strategy combined with the right technology.
Here are some helpful tips to get you started:
- Create a plan for managing potential channel conflict. This could be as simple as selling a different product online than what you sell in-store, or as complex as starting a new brand. No matter what route you take, the key to success is working with your retail partners.
- Integrate new technologies. To get started, you’ll need an ecommerce platform, ideally one similar to BigCommerce that supports both B2B and DTC. You’ll also want to ensure you have payment providers that can process customer transactions.
- Put the right back-end systems in place. Make sure you have the right fulfillment infrastructure that can handle smaller orders. Also, think about how you will need to support increased customer service needs.
When done right, launching a DTC ecommerce website can offer many benefits, such as a new revenue source, better relationships with your customers and an influx of first-party data that you didn’t have before.
2. Market and Promote Your Brand on Social Media
If you have a strong social media presence and you’re already selling DTC on your website, you can easily take the next step and allow shoppers to buy directly from your Facebook and Instagram.
However, if you don’t have a social media presence, now is the time to get on social media. While some products lend themselves to strong imagery, like skincare, others might not have the same visual appeal.
But that’s okay! You don’t need stunning pictures to make it on social media. The secret is to use social media for what it was originally intended — creating connections.
For instance, Dove’s Real Beauty campaign isn’t about how clean their soap will get you; it’s about helping everyone understand that they’re beautiful no matter what. It taps into feelings that we all have to create an emotional connection.
And no discussion about social media would be complete without mentioning Tik Tok. This popular platform is ideal for CPG brands to get creative and show off their fun side.
3. Make Your Inventory Visible With the Right Back-Office Solutions
While it’s listed as the third point, inventory visibility is arguably the most important pillar of your omnichannel strategy. Without having the right amount of products available and the right solutions to track inventory, you could be setting yourself up for failure.
Before you start selling on any new channels or doing any marketing to increase demand, make sure you have the right back-office systems in place. Here are some solutions to consider:
- Listings solutions can automate your ability to publish products to new sales channels, adopt niche sales channels, optimize product content per channel and unify order management.
- Inventory and order management systems will manage complex workflows around order routing, inventory, shipments and purchasing workflows. They also support third-party logistics (3PL) solution integrations and reporting.
- Enterprise resource planning (ERP) solutions combine a number of back-office operations into one software solution and can offer organizations even greater back-office efficiencies.
Once you have the operations solutions in place and can centralize inventory visibility your supply chain will be optimized for omnichannel.
4. Offer Ship Orders for Faster, Streamlined Fulfillment
The final piece of the omnichannel puzzle is shipping and fulfillment. This is an area where CPG brands can really step up to grow sales and delight customers.
“Most people see logistics and fulfillment as the technical side of ecommerce, but it’s actually another extension of the customer experience,” said Matt Crawford, General Manager of Shipping at BigCommerce.
If you’re already selling or planning to sell DTC, this will be a part of that strategy. But let’s say you don’t have the ability to create an ecommerce store and sell online — but your retail partners do.
The catch is that they might not have the space to house the required inventory or the capabilities to offer shipping.This is where you can step in and offer to fulfill the orders directly if they manage the ecommerce side.
While this system of order fulfillment and shipping will still require additional resources all around, it helps both CPG brands and retailers to continue, and potentially grow, their sales. Best of all, it offers a good experience for customers who want more shopping options.
As retail trends change and customer expectations evolve, even after the pandemic is over, one thing is clear — omnichannel is essential for driving growth.
Solving for the added complexity of selling everywhere requires the right strategy, which is why the four-pillar omnichannel approach is such a valuable framework.
Sales channels, marketing and advertising, operations and shipping and fulfillment work together to help you diversify your audience while also creating smoother back-end processes — which leads to a better shopping experience for your customers.