We spend a lot of time and money these days on online brand building. There are thousands of online marketers who promise to transform your sales. They’ll build you funnels, buy you Facebook ads, and even write compelling copy. But who does it go to? A huge population at the top of the funnel. You’re lucky if you get 2% buy-in. Seems kind of inefficient to us.
That may work fine for personal branding, selling digital products, and even personal services. But when it comes to selling CPG brands, all that effort isn’t nearly as effective as having good physical distribution to start with.
Many consumer brand builders chose to sell their products online, not because they want to, but because they have to. The stores won’t take them. So, they attempt to mount the same type of brand building campaigns that seem to work for personal brands. If you have a ton of money for television advertisement, that may rub off as support for your online efforts. But now we are breaking the bank and the ROI is in serious question.
How CPGs Can Build Their Brand Online
By comparison, online promotions of a consumer brand that already has distribution at retail can see a handsome ROI because the consumer has already physically seen your brand. We found that consumers will be aware of a brand for several visits to a store before they make that trial purchase. Online promotion can shorten that time considerably by making the consumer more familiar with your brand’s features and benefits, providing third party endorsements, or by offering incentives. But it has to be at retail first!
Further, and most important, online initiatives can provide where-to-buys. This in itself can be used by your field sales folks to promote displays and special promotions in physical stores.
To Sell Or Not To Sell Online
So why not sell your brand online in addition to retail? Simply put, the retailers won’t touch it if it is one cent less anywhere online than they can sell it for. Many consumer brand builders list a deliberately inflated high price just to leave room for the retailers.
There has been some success with subscription models (like The Shave Club), but how many subscriptions do consumers want to engage in to get the hundreds of consumer products they need? How many deliveries do they want? What if they’re not home? At some point, a single trip to the retailer begins to look like a better choice.
New Retail Trends
The new trend in retail is to go to the retail store, choose your items, and have them delivered same day. This is kind of a hybrid between personalized attention, physical choice, and instant gratification. Or, like Home Depot and a growing group of other big retailers, you order online but pay no delivery if you pick it up at their store nearest you. This reduces their need to carry large inventories ay their stores by supplying products on demand for specific consumer orders.
Even with all these changes and much more to come, securing physical distribution is the easiest way to get discovered. It is the most effective way to use online promotion. But it’s the hardest challenge consumer brand builders face. The profits per unit are much less, the cost of sales is much more, and the ongoing surveillance is intense. So, why do it? The best volume, discovery, and large transactions that will keep your CPG business going are still at physical retail stores.
There’s no magic formula either. To get on the shelf is not the real challenge. The real challenge is to stay on the shelf. Your first big break should not be taken lightly. On the contrary, if you manage to get in at the retail level and then get discontinued (likely due to your unfamiliarity of how to service your customers), the whole industry will know. Your competition will be eager to warn their buyers not to buy your “non-starter.” Make sure your first couple of chances at retail give you the “hot mover” reputation you’ll need to expand your distribution.
Then, when you put all that money into online ads and promotion, it will have somewhere to go – into the store, where they’ve seen that brand before!
To help you out, we have developed a course called Shelf Smarts. Check it out to discover how to get your product to the shelf… and keep it there!
Who We Are
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.
They offer their Guiding Principles for Success (GPS) & Shelf Smarts courses to help consumer product brand builders achieve success. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.
Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular business site at www.thebarefootspirit.com.
To make inquiries for keynote speaking, trainings or consulting, please contact firstname.lastname@example.org.