Wednesday, July 18, 2012

Can Mobile Break Retail's Grip On CPG Sales?

Today, although consumers can buy CPG items online, physical retailers aren't feeling much of a pinch from those sales. But what if a more enhanced/convenient form of selling in the m/e-commerce space was to arrive?
Is it hard to imagine that if CPG products became ultra-convenient to buy with a couple of taps on a phone drug/supermarket/discounter sales might truly get hurt?
The internet is a disruptor to many business models, affecting and destroying business/commerce platforms that were once immovable. And while retailers place a lot of faith in the fact that people like visiting a store and touching and feeling product, there are two scenarios where experiencing physical product is not important to the sale: repeat purchases and commodity items. That sounds a lot like CPG.
Consider an early example that may have legs: Dollar Shave Club.
Razor blades are a necessity that you pick up on a regular shopping trip or, in an emergency, when you've run out. Dollar Shave Club is trying to change that thinking and it has acquired funding to do so. Their model is predicated upon automated recurring monthly shipments based on your anticipated regular usage for as little as a buck a month (plus $2 shipping). Time will tell if this start-up will catch on with consumers, but here's the take-away: it's a simple model that's vying against a very old purchasing pattern.
And ... it's not the only innovative model for CPG's to open their minds to.
In a ubiquitous mobile future with one-touch payment capabilities (practically upon us), imagine how easy it would be for a virtual packaged goods seller to offer an app that lets you order a replenishable item for delivery the moment you realize you want it, anytime, anywhere, competitively priced with retail stores. If the app (or mobile ads) tied single item purchases into lifestyle/location patterns in a tap-and-go purchase scenario that took only seconds, it could seriously change the perception and buying habits of CPG consumers — at the expense of physical retail.
Arguably, the two biggest changes to retail CPG sales in the last 50 years have been the family pack and the convenience store. So is it really so unimaginable that new thinking, targeting new audiences, might just reshape another industry as subtly as the wrecking ball (a.k.a. the internet) has devastated bookselling, travel, music and much more?

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