New Opportunities for CPG in a DTC World
PSFK researchers explore key opportunity areas that consumer goods companies can explore across promotion, experience, fulfillment and advocacy
Brandless, the e-tailer known for its low-cost everyday essentials like food and home goods, recently announced its closure after a two-and-a-half-year run. With its focus on cruelty-free and wellness-promoting merch, a DTC approach that enabled its competitively low costs, and key popup and other IRL activations to bolster its ecommerce presence, it seemed to check all the boxes for success with today's millennial audience. Its short lifespan may come as a surprise, and for many brands and retailers, the question begs: What does it take to succeed in the CPG space today?
The researchers at PSFK Labs have been thinking about this question as they explore trends shaping the current landscape, To start with, they say these emerging consumer behaviors are influencing their everyday purchases:
- Consumers seamlessly navigate on and offline experiences, being digitally fluid and mobile-first, and m-commerce has more than doubled since 2015, accounting for a quarter of all ecommerce last year (1).
- Consumers increasingly seeking offline interactions that offer opportunities for experience and connection, shifting more of their spend to activities rather than goods (2).
- Consumers are very busy, and prioritize ways to optimize their time is top of mind—but not at the cost of good products and service (3). It turns out that they are willing to shell out for convenience, paying more to earn back time (4).
Retailers and brands are responding to these behaviors and values by finding new areas along the path to purchase that allow for greater convenience, connection and the experiential value that consumers demand. By looking across 4 simple stages of the purchase path (promotion, fulfillment, experience and advocacy), PSFK research team see how retailers can enhance their strategy by delivering the product and experiences that enable meaningful connections beyond the transaction, while rethinking how to add value throughout the relationship.
The two key opportunity areas connected with promotions are mobile broadcasts and conversational commerce. For the former, catching consumers where they already spend their time is key, and exploring new platforms that allow for creative and collaborative content is catching on. TikTok provides territory that is still somewhat unchartered for brands of all sorts looking to build authentic mobile engagement. The NTWRK shopping app is another inspiring platform, hosting live programs spearheaded by influencers, artists and other pop culture leaders where viewers can buy exclusive merch in real time.
When it comes to the second opportunity of c-commerce, pioneers are marshaling a combination of human support and AI assistance to bring info, recs and commerce to consumers' fingertips, checking the right time and right place boxes through a direct connection. Great Jones is a perfect example, a cookware maker that provides free support over text through its service called Potline, letting customers ask questions in the heat of their kitchen. Tiny Organics is another name reinventing the CPG experience, in this case for baby food: The DTC brand lets consumers text-to-talk and buy from its subscription platform providing personalized nutrition.
Digitally exhausted consumers appreciate the opportunity to discover and learn with their favorite brands. While experiential retail is nothing new, PSFK researchers explained that CPG and other brands are still finding creative and perhaps unexpected ways to bring their brand off the shelves and out of the stores. Illy, popular household coffee brand, created a dream luxury excursion for those interested in more than brew, offering one-week trips centered around coffee education and discovery in Italy. Taco Bell, too, offers inspiration with its branded Palm Springs hotel experience, where guests can immerse themselves in themed food, entertainment and design, even enjoying an on-site salon to deck themselves out in taco-esque braids and nail art.
The researchers say that this is about serving consumers at the right time, in the right place, and considering 75% of consumers now expect same-day delivery options from all brands, the demands aren't small (5). It also encompasses creating an exciting unboxing experience that goes beyond simply delivering a product and capitalizes on making the product reveal more exciting and memorable. 7-Eleven is leveling up the C-store experience with its 7NOW Pins, which let customers pick a place to receive their order outdoors, even including public spaces like parks and beaches. And when it comes to thinking outside the (inside of the) box, DTCers are focusing on enhancing the unpacking process, with subscription coffee service Yes Plz Coffee literally wrapping its roasts in the pages of its own magazine, and Good Pair Days drinks-to-door wines sending consumers personalized selections accompanied by tailored recipe and meal pairing ideas.
Advocacy offers a prime opportunity for differentiation is fostering lasting interest and rapport with consumers, says PSFK researchers. One innovative way to do so involves inviting the customer into a brand's projects and platforms—something they've called Collaborative Ownership. Consumers want to contribute to the lasting success of their favorite brands and organizations. To tap into their valuable skills and expertise of these communities, companies are creating projects and platforms that encourage their ongoing participation, while sharing the benefits of taking part. In kitchenware, online publication Food52 gathers community feedback for its new product designs and then rewards participants with early access to purchase. Consumer insights in the form of data can be part of this strategy as well: Vinebox, subscription wine ecomm, leveraged customer data to build its very own line of vino, creating the product around the types of wines that its customers liked most.
So, what to make of all this? PSFK researchers have these simple recommendations for CGP brands to not only meet modern consumers' needs but also differentiate themselves in a competitive space:
- Cater to flexible lifestyles
- Integrate into existing behaviors
- Create human connections
- Deliver education and expertise
- Offer insider opportunities
To conclude, let's look at a final example of a newcomer to the industry who is pioneering the above tactics: DTC probiotics co Seed University takes an interesting approach to generating consumer trust and acting as a guide in an age of information overload and Internet cynicism. The ecommerce operation positions itself as a resource for science-backed details and education, actually creating its own Instagram ‘university' that provides a six-part course for anyone to learn about human biology, the microbiome, bacteria and more.
But what really distinguishes this brand is the initiative it takes to ensure the dispersal of consistent, accurate information: All partners and promoters are required to graduate from the Stories school, passing an exam before they can act as an ambassador to Seed and influence its consumers. This approach takes CPG to another level, transforming the brand into an institution of sorts and giving consumers new ways to interact with and relate to the maker far beyond the products and transaction—and making an important impact in the process.
Lead image: illustration by Ouch.pics