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3 Channels Your CPG Brand Should Be Exploring Now

3 channels your CPG brand should be exploring now.

Pilot44 monitors category and industry disruption across three major areas – new business models, new channels, and new experiences – to help our clients build informed innovation roadmaps and make sure they never miss an activation opportunity. 

Based on our research, we’ve put together some new channels we think will fuel the next generation of CPG industry growth. In this post you’ll get:

  • An overview of 3 channels your CPG brand should be exploring now
  • Examples of the startups and brands operating in these spaces
  • Key takeaways for how these apply to your category

Hyperlocal Commerce

The UN has forecast that over two thirds of the world’s population will live in urban centers by 2050. This increasing drive toward urbanization is changing how consumers live, increasing the demand for speed and convenience. People want short commutes, easy access to amenities like groceries and restaurants, and convenient (and fast) delivery of everything from perishables to clothes. 

Hyperlocal commerce is a huge opportunity for brands to get additional exposure, boost revenue, and be top of mind in the modern path to purchase – all by meeting the needs of convenience-based consumers. Some players in this space:

  • Darkstore – Darkstore’s mission is to make all of the world’s products accessible all over the world. With its microfulfillment centers, Darkstore partners with top brands to enable 2-hour delivery of products. And their consumer-facing platform FastAF promises fast delivery of premium essentials across personal care, beauty, pantry, fitness, electronics, pets, and more.
  • GoPuff – This local delivery platform – which recently acquired Bevmo for $350 million – offers users thousands of items to choose from and promises to deliver to their door in only 30 minutes thanks to its network of hyperlocal microfulfillment centers. 
  • Drizly – Drizly promises to deliver beer, wine, and liquor to consumers in under 60 minutes. They reported a 350% growth in 2020 , doubled the number of retailers on the platform, and raised $50 million in VC funding. 

Key takeaways: While much of the recent surge in hyperlocal commerce has been driven by the pandemic, consumers’ desire for convenience isn’t going anywhere. If you’re a fast moving consumer goods (FMCG) brand, now is the time to invest in last mile services and meet the needs of convenience-based consumers. 

Alternative retail

Alternative retail is creating entirely new shopping channels and experiences that often blur physical and digital commerce. Think popups, smart vending, and autonomous micro retail. 

These new retail experiences give brands more control over the consumer experience. Plus their small footprints and turnkey platforms help brands meet consumers where they are on their daily routine with minimal investment compared to traditional brick and mortar. Some examples for your brand to consider:

  • Smart vending and autonomous micro-retail – Vending machines aren’t just for snacks. Today’s consumers can find everything from hygiene products and winter coats to electronics and cosmetics, often in vending machines enabled with touchless digital payment systems. 
  • Next generation department storesShowfields is a new kind of retail store that helps online brands move into brick and mortar and create an immersive customer experience.
  • Virtual Pop Ups – Not ready to invest in a physical pop-up or flagship store? Obsess AR is creating interactive pop up stores using mobile AR that can live right inside your ecommerce site. 

Key takeaway: Skincare, beauty, and personal care have seen major growth in alternative retail, but any category can succeed as long as they provide a unique experience that adds value over traditional brick and mortar. 

e-commerce Marketplaces

When you think ecommerce marketplace, Amazon is top of mind. But, with over 50% of e-commerce sales coming through marketplaces, there’s plenty of opportunity for brand activations outside the e-commerce giant.

More than half of online marketplaces launched in the last seven years and saw huge growth in 2020 alone, including a 29% growth in gross merchandise. Of the 50 marketplaces based in the US, sales grew 40% in 2020. Here are some brands making waves:

  • Target+ Marketplace – Launched in 2019, Target’s invite-only marketplace acts as a risk-free testing ground for Target to meet consumer demand while testing demand for new brands’ products. 
  • Walmart – In 2020, Walmart joined forces with Shopify to open the Walmart Marketplace to their sellers, essentially doubling the size of the marketplace within a year. While smaller than Amazon and eBay, a report found that Walmart’s marketplace was outperforming both
  • Mirakl – Mirakl is a marketplace SaaS platform that empowers both B2B and B2C organizations to launch and grow an enterprise marketplace at scale. They’ve worked with clients like H&M, Best Buy, and Urban Outfitters.  

Key takeaway: Forecasts predict that online sales will account for 40% of CPG sales by 2025. The growth of e-commerce marketplaces make them a must-have for your strategy to win consumers, no matter what your category. 

Want to learn more about how your brand can enter new channels? Get in touch to learn more about Disruption Radar.

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