CPG E-Commerce on Track to Hit $10 Billion, 42% Growth in 2016

CPG E-Commerce on Track to Hit $10 Billion, 42% Growth in 2016

Using 1010data’s E-Com Insights, this report assesses the CPG online market to determine which categories and brands are currently crushing it in this space. For the purpose of this analysis, we focused on the following key CPG categories: Health Supplements, Pet Care, Facial Care, Cosmetics, Drinks, Baby, Hair Care, Health OTC, Oral Care, Cleaners, Shaving, Hand Body, Laundry & Dish, and Sun Care. 

CPG ONLINE SALES GROWTH

In the first half of 2016, CPG online sales have grown 42 percent in our key CPG categories when compared to the first half of 2015. If this growth trend continues for the rest of the year, we estimate that key CPG category online sales in the U.S. will surpass $10B for the first time. 

These results illustrate the significant overall shift towards online shopping. Each year, online sales’ contribution to total retail sales is growing. One thing that is interesting is that brick and mortar consumer spending is flat and that consumers are spending more dollars online. This suggests that the best opportunity for growth for the manufacturers and retailers of CPG is to invest heavily in e-commerce. 

CATEGORY SALES AND GROWTH

Category performance for the first half of 2016 demonstrates the power of the online market. So far, we’ve seen that the Health Supplements and Pet Care categories greatly exceed the size of any other CPG categories. The Health Supplements category has already passed $1B in sales and Pet Care is over $700M. Pet Care is the fastest growing category among categories with at least $200M in annual online sales. However, Laundry & Dish is the fastest growing category overall. Since this is a smaller category (approximately $40M), it’s not surprising that it is growing faster than large categories like Health Supplements. The introduction of Amazon Dash Buttons last year has helped propel some of the growth in this category.

While the online Shaving market is small relative to other CPG categories, Unilever’s willingness to pay $1B for a web-based start-up in this space begs some questions about how e-retailers across these categories might be seen as opportunities or threats by traditional players in the CPG space.

BRAND SALES AND GROWTH

Analyzing individual brands’ sales and growth gives us insight into where traditional CPGs are winning or losing online. Optimum Nutrition, the leading protein supplement maker, is leading in sales for a single brand so far in 2016. Half of the top 20 best selling brands are Pet Care, with Blue Buffalo leading among pet suppliers. Not only are Pet Care and Health Supplements brands killing it with online sales, but they are also growing the fastest. The fastest growing brand, however, is one you may not be familiar with: Evlution Nutrition. This is a health supplement brand that does most of its sales volume on the billion-dollar health supplements site, bodybuilding.com. 

Blue Buffalo is not new news to the Pet Care industry, but how about new entrants to other categories? When looking at the online hair loss market, the leading brand is Pura D’or. Most people reading this article have probably never heard of this brand before, but it has 17% market share and is beating out leading offline brands like Nioxin, Rogaine, and Kirkland.

Another example of an unknown entrant dominating an online is in the shaving cream/gel category. Taylor of Old Bond Street is beating Gillette and Edge, the flagship shaving brands Procter & Gamble and Energizer Holdings respectively. They don’t even exist offline. This is a potential acquisition target for P&G, but they’d never know that without subscribing to an e-commerce measurement service. 

WHAT SHOULD TRADITIONAL CPG COMPANIES BE DOING TO WIN ONLINE?

In talking with some CPGs, we identified that less than 10 percent of most manufacturer’s revenue comes from online sales, while in the entire retail market that figure is about 20 percent. Outside of Pet Care, it’s less than 5%. For new players in the CPG space, e-commerce represents an opportunity to achieve massive growth without the high up-front costs that many traditional CPG companies have incurred in marketing, distribution, and product visibility at brick and mortar stores. In many cases, brick and mortar sales are declining while minimal total sales growth is being propped up by rapid e-commerce growth. Understanding the online landscape and who the biggest threats are in this channel is the first step. 

After understanding the landscape – who’s winning, size of market, and the most important merchants – CPGs need to get a sense of how consumers shop online, what levers a brand has to increase sales, and where is best to allocate marketing and product resources. Using 1010data’s E-com Insights, brands can determine where their biggest pain points exist in the online path-to-purchase. Our data provides clients with the ability to prioritize their product assortment and media allocation based on product views versus conversion rates. Brands can understand who is defeating them for online market share, and just like Unilever, see if making an acquisition is the best strategy. 

For more information regarding 1010data’s Market Insights products and services, please go to https://www.1010data.com/products/data-insights/.

METHODOLOGY

1010data utilizes a number of sources of consumer spending data representing millions of consumers to provide an accurate assessment of online and offline retail sales, market share, and more. Our data enables clients to track consumer behavior using high-quality, granular datasets that are often difficult to source, cleanse, and consolidate.


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