CPG Ecommerce – How to Sell CPG Products Online

You don't need us to tell you that online shopping has transformed how we buy our essential goods. 

Today, it’s possible to purchase many of our necessities from the comfort of our own homes. Gone are the days when we had to push a trolley full of groceries through a crowded supermarket.

Instead, in just a few clicks, we can have them delivered to our door by a hopefully smiling delivery person. 

Such everyday items fall under a broad umbrella term: CPG (Consumer Packaged Goods). 

If you’re keen to get in on the CPG action, you’re in the right place. Here, we’ll look at what CPG is, CPG eCommerce as a business model, CPG online sales methods, the benefits of selling CPG online, and its challenges.

So that hopefully, by the end of this article, you’ll have a better idea of whether selling CPG online is an ecommerce venture you’d like to embrace. 

There’s lots to cover, so let’s get stuck in!

What is CPG eCommerce?

‘CPG ecommerce’ refers to how consumer packaged goods are sold online. We’re talking about products that shoppers buy often, have a short shelf life, and are intended for use soon after purchase. 

Examples include beauty and personal hygiene products, packaged food and drink, household cleaning goods, over-the-counter medicines and health remedies, and baby products. 

These goods have traditionally been available in brick-and-mortar stores but are now also sold online. CPGs are predominantly low priced, but sales volumes can be high, hence the space for a healthy profit margin. 

Quick Facts and Statistics about CPG Ecommerce

Let’s look at a few statistics to help us determine which CPG products sell better than others.

Overall, CPG sales made up 10% of the US market in 2022, up from 4-5% in 2019. In 2021, the CPG market was worth a whopping $2,060 billion and is expected to reach $2,808 by 2030, a 3.5% increase. 

The COVID-19 pandemic and subsequent lockdowns only increased this trend towards shoppers buying their daily necessities online. In fact, in the US, there was a 35% increase in people buying CPG between 7-21 March 2020, with a total spend of $8.5bn in that period alone. 

An Insider Intelligence analysis found that the most popular CPG goods sold online are pet products, with 13.3% sold online in 2016, rising to 39% in 2023. This is predicted to rise to 45.7% by 2025!

Second to pet products are health and personal care items, with 8% of this category selling online in 2016, rising to 18.6% in 2023. This is predicted to rise to 23.7% in 2025. 

Groceries come in lower, with 3.9% in this product category selling online in 2016, rising to 11.1% in 2023. However, this is predicted to increase to 13.8% by 2025. 

CPG eCommerce as a Business Model

If you’re considering CPG eCommerce as a business option, you’ll need to lay some groundwork first. 

Namely, you’ll need the following on your eCommerce store: 

• Online Product Listing Page (PLP): I.e., a web page on your site showcasing a list of products organized by categories or search queries. It’s basically a digital shelf that funnels visitors to individual product pages, where they can find specific product details. 
• Shopping Cart: When customers find CPG products they want to buy, they need to be able to add them to their virtual shopping cart, where the products will sit until the consumer is ready to checkout and pay for their products. 
• Payment Processing: When it’s time to pay, it’s essential consumers have a simple and effective payment processing system where they can input their payment details securely.
• Order Fulfillment System: Once CPG products have been purchased, they have to be dispatched to the consumer. An effective order fulfillment system ensures items are reliably picked, packed, and sent to their intended endpoint. 
• Customer Support and Returns: When customers receive their goods, they may have questions or need to return an item. So, it’s always best to have operations in place to handle returns and offer customer support. This is crucial for maintaining customer satisfaction and securing repeat purchases. 

The Benefits of Your CPG eCommerce Business Selling Online

Here are just a few reasons why the CPG eCommerce business model may be a good one to explore:

Reach a Wider Customer Base

The same rules that apply to other kinds of online businesses extend to CPG eCommerce brands. I.e., to reach as broad a customer base as possible, you need to get online. Why limit yourself to a traditional brick-and-mortar store when you could reach a much wider audience online? With the right processes in place, you could even sell worldwide!

Reduce Overheads

Conversely, you might not want a brick-and-mortar store. After all, tons of overheads come with such an undertaking. For example, rent, utilities, maintenance, etc. Needless to say, going fully online eliminates these overheads outright. 

Customer Data 

The beauty of eCommerce is that you can collect customer data and use it to inform your digital marketing and business decisions. When you have just a brick-and-mortar store, it can be more challenging to collect information like email addresses and demographic details.

In contrast, running an eCommerce CPG business empowers you to track consumer behavior, including:

• Which product pages they visit the most
• What they buy
• How often they buy

…and so on. 

There are plenty of apps you can use to track your customer’s consumer habits, for example, Google Analytics, Crazy Egg, and Mixpanel – to name a few!

Be More Agile

Building on what I’ve just said above, with customer data and feedback at your disposal, you’re better positioned to be more agile to respond to consumer demand, preferences, and eCommerce trends. 

Not only that, but by going online, it’s easier to team up with other online businesses and startups that are like-minded. Done well, this can work wonders for expanding into new markets, boosting sales, and raising brand awareness. 

For example, numerous brands have partnered with the Barbie brand, including Swoon Lemonade. This collaboration brought us pink Barbie lemonade. Similarly, Zara launched a pink range that included pink dresses and a Barbie lunchbox. 

Improve Customer Experience and Increase Brand Loyalty

The beauty of online shopping for CPG products is that customers can browse at their leisure without any time limits, such as those they might find in physical stores (I.e., opening times). 

In contrast, a CPG eCommerce store offers customers 24/7 access to your brand. 

Not only that, but it’s easier to provide customers with a more bespoke shopping experience. For example, you can offer visitors product recommendations based on browsing and purchasing history.

You can also host online competitions, give away discounts in email campaigns, run online loyalty programs, etc., all of which go a long way to enhance the customer experience, which should then translate into increased brand loyalty.

Product Subscription Services

You could consider boosting sales for some of your CPG items by offering a subscription service. Such a service allows customers to opt in to receive deliveries of specific products over set periods for which they’re billed automatically. 

Offering subscriptions to customers reduces the risk of them going elsewhere for those products. It provides a convenient way for them to receive said items.

Some examples of CPG companies running successful subscriptions include the Dollar Shave Club, which specializes in shaving and grooming products.

In just five years, Unilever bought Dollar Shave Club for $1 billion. Elsewhere, there’s meal-kit company HelloFresh, delivering weekly recipes and ingredients to your door. In 2021, HelloFresh had around 3.5 million customers in the US alone!

CPG eCommerce Channels

Now we’ve covered the basics, let’s look at the most popular CPG eCommerce channels and a few examples of brands using them. There are three primary online channels; below, we’ll explore each in turn:

BOPIS: Buy Online Pick up In-store

BOPIS is a popular option, often called Click and Collect, with US shoppers in 2022 spending $95m+ using ‘buy online pick up in-store,’ totaling 9% of all eCommerce sales. 

This is how it works:

1. A consumer chooses items from an online store they want to buy. 
2. They select which store they wish to collect their order from and at what time and date. 
3. The order is routed to the brick-and-mortar store (as specified by the consumer)
4. The necessary store or fulfillment center prepares the order. 
5. The customer is usually sent a notification email so they know their order is ready for collection. Alternatively, if the store doesn’t have the item(s) the customer has ordered, it might order the goods from a nearby store. 
6. The consumer picks up the product.

To ensure a smooth-running BOPIS operation, you’ll need a robust eCommerce platform to manage and sync all orders and inventory tracking across your online and in-store locations. You’ll also need an online checkout that allows customers to:

1. Opt for BOPIS
2. Select a brick-and-mortar store location to pick up their order.

Options worth considering include Shopify, FenixCommerce, BrightPearl, and more. 

One example of a CPG retailer that does BOPIS well is Walmart. The online and in-store retailer has used this model for over a decade. Their BOPIS program is called Pickup and Delivery, and a quick Google search reveals several positive reviews. 

 Here, customers purchase items through the Walmart app or website and choose a time slot. When their order is ready, Walmart sends a “ready for pick up” email. Customers then go to their preferred store, check-in via the app or email, park in one of the pickup parking spots, select “I’ve parked” in the app or online, enter their parking spot number and color of their vehicle, and a Walmart associate brings your order to your car. 

Simple, right?

Online Retail Marketplaces

Using popular online marketplaces like Amazon is one way a CPG eCommerce brand can find new customers. However, the downside is that marketplaces can be crowded, competitive platforms with additional fees thrown in. 

That said, there are some notable success stories. For example, in the UK, Morrisons, a physical and online grocery store, also has a tie-in with Amazon, with a minimum grocery purchase of £15 or £30 if you opt for their BOPIS service. After this partnership, Morrisons saw their online sales increase by 113% (when compared to the same period the year prior). This is primarily attributed to its link with Amazon.

Elsewhere, in the US, Procter & Gamble (P&G) has seven best-selling brands on Amazon, including Gillette, Olay, and Oral-B, having first partnered with Amazon in 2013. 

A smaller CPG brand enjoying Amazon success is Colavita, which sells Italian-sourced products such as olive oil, tomato sauce, and balsamic vinegar. Having first gone into eCommerce 19 years ago, their olive oil is now the top-selling olive oil on Amazon.

Direct to Consumer Channels (DTC)

DTC refers to eCommerce brands selling directly from their websites and/or online platforms to consumers. The benefit of this is that you have complete control over your customer experience, including marketing, sales, order fulfillment, etc. 

You also have a more direct connection with customers, which makes it easier to nurture those relationships. Hopefully, this should translate into brand loyalty.

One example of a DTC CPG eCommerce business doing really well is Misfits Market. They sell fruits and vegetables that haven’t passed retail standards because of their size/shape. Founded in 2018, this company is now a multi-million-dollar business with more than 1,000 employees.

CPG eCommerce Risks

Before venturing into the CPG eCommerce world, it’s essential to consider the risks. So, in the interest of fairness, here are a few potential pitfalls CPG eCommerce businesses might encounter:

Managing Customer Complaints and Returns

At the time of writing, online stores experience an average of 15% of their online orders returned, with some CPG categories seeing more, such as fashion (23%). 

When customers shop in a physical shop, they can inspect and, if relevant, try the product for size. As such, customers know exactly what they’re purchasing, which reduces the likelihood of returns.

Of course, this isn’t the case with online shopping.

Handling customer returns can result in added costs, including shipping and restocking, and if your returns process isn’t streamlined, it could lead to unhappy customers.

However, there are a few things you can do to try and mitigate the above:

• Provide detailed and accurate product descriptions alongside high-quality photography and videos
• Offer flexible return and cancellation policies – these should be easy to find on your online store
• Make it easy for customers to communicate with you via email, chatbot, etc.
• Provide an automated return system.

Customer Data Security and Privacy

Yes, data is king, but you have to protect customer data by complying with the necessary laws. For example, the General Data Protection Regulations (GDPR) and the California Consumer Privacy Act (CCPA). Not doing this can result in fines, penalties, and damage to your brand reputation. 

This is by no means an exhaustive list, but we suggest doing the following to help you keep your customer data secure: 

• Ensure your store has robust security, including an SSL certificate
• Offer customers reputable payment processing systems
• Train staff about the importance of cybersecurity and GDPR
• Work with reputable vendors
• Tell your customers (via your website) what security measures you have in place

White Label Competition

One interesting challenge is competition from big marketplace private label brands. For example, at the time of writing, Amazon had 88 private-label brands, including CPG brands. For instance, Amazing Baby (baby products) and Amfit Nutrition (supplements and vitamins). 

Amazon has access to vast resources, including warehouses and distribution centers, making it a fierce competitor. 

You can try to mitigate this threat by ensuring you work with a reliable eCommerce order fulfillment partner. Such a partner should help with inventory syncing to avoid out-of-stock scenarios. There are plenty of companies that offer such a service, including ShipBob, ShipStation, and ShipHero.

Conflict With In-Store Partners

If you sell CPG in physical stores and online, you may find that your physical store partners feel you’re bypassing them. This can result in collaboration difficulties – for example, agreeing on approaches to marketing, pricing, and so on. 

Navigating such conflicts can be tricky. So, it’s wise to be transparent with your in-store retail partners from the get-go about your online and offline sales strategies. That way, no one should feel as though they’ve been kept in the dark.  

CPG eCommerce: My Final Thoughts

So there you have it, our guide to selling CPG eCommerce!

In many ways, the above doesn’t differ wildly from general eCommerce. However, what we know, as our earlier statistics indicate, is that CPG eCommerce is on the rise. 

So, suppose you want your business to expand into the CPG eCommerce arena. In that case, it’s essential to do your research first, have a fulsome eCommerce strategy in place, and, if you’re taking an omnichannel approach, ensure a consistent experience both on and offline.  

That’s all from me! Over to you: Are you considering starting a CPG eCommerce business, or are you already running one? Let us know in the comments below.