Monday, May 7, 2012

We're All E-Commerce Companies Now.

The day of e-commerce is finally here. Online sales of everyday items — soap, orange juice, toothpaste — more than doubled between 2006 and 2010, and are expected to double again by 2014. Nielsen estimates that online consumer packaged goods (CPG) sales in the US will reach 25 billion by 2014. A staggering figure, to be sure, but I believe this growth is grossly underestimated, because when it comes to CPGs, the e-commerce we are seeing today is not the e-commerce we were expecting just a few years ago.

Traditionally, e-commerce has been viewed as buying or selling a product online with direct delivery. It was a simple business model distinction — either you sold online, or you sold in store. But over the past few years, with retailers increasingly moving their inventory online, the landscape has become more complex. Online shopping now comes in three different forms: national ship (e.g., Amazon.com), home delivery (e.g., Fresh Direct), and pick-up in store, which many retailers will be launching this year.

For CPGs, reaching consumers at point-of-purchase is no longer simply a battle for shelf space, but a war to connect meaningfully across a wide range of digital platforms and delivery mechanisms. The sheer diversity of companies entering the online shopping space, coupled with the evolving segmentation of the e-commerce model, renders the traditional definition of e-commerce obsolete.

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