Pulse Report: The Future of E-Commerce

Though e-commerce sales of CPG products are projected to reach $10 billion in 2014, that number still accounts for a very small share of CPG sales. IRI's 2014 "Future of E-Commerce" advises companies to be prepared for a potential rapid acceleration in the near future.

Jamil Satchu,
Partner, Global Analytics and Consulting

Average annual growth has been 10.3 percent during the past several years, compared to brick-and-mortar growth of 2.8 percent.


Pent up demand, which exists across CPG categories, will be a key driver for future e-commerce growth, the report shows. A detailed analysis comparing Amazon Prime members to other online shoppers reveals that all online shoppers, whether Amazon Prime members or not, have a higher propensity to increase online CPG shopping frequency in the near term versus those who do not currently make online CPG purchases.

Amazon Prime shoppers show a slightly higher inclination than their non-Prime counterparts to purchase CPG products via e-commerce in the coming year, particularly in the frozen/refrigerated food, general merchandise, general food, and home care departments. Nonetheless, non-members are also planning to shop for CPG online more frequently. Among these shoppers, home care and frozen/refrigerated departments stand out.

There is no question that e-commerce has momentum, and now pent-up demand has the supporting infrastructure (retailers reaching consumers through smartphone-based offerings) to actualize itself in sales. This has not existed in the past.

Digital is already demonstrating it has a strong influence on each phase of the purchasing process, and it is particularly influential among those that are already shopping online. Meanwhile, retailers like Amazon, Instacart and Google's Shopping Express continue to expand their services and offerings, looking to protect and grow their consumer base.

CPG marketers must be thinking strategically today to be fully prepared to act if the e-commerce scales tip quickly. Market research must be the foundation of all .com strategies. This research must position CPGs to address shopper needs at a very granular focus to address high value pockets of opportunity.

CPG e-commerce is likely to continue to grow rapidly fueled by significant pent-up demand

E-commerce research findings from IRI-BCG-Google joint study April 2014 highlight pent-up demand for e-commerce.

Note: Online shoppers defined as people who shopped at least 1x online in the last 12 months
Source: GMA/IRI AttitudeLink online grocery survey, April 2014; IRI Consulting Analysis

CPG e-commerce is a small share of total CPG, but is rapidly outpacing Brick & Mortar growth

E-Commerce Share of Total Store Sales Dollar Sales ($B)

Source: IRI ILD Panel Database, NBD Aligned, CY 2010-2013, Latest 52 weeks ending 10/05/2014. IRI Expert Interviews. IRI Consulting Analysis


Shopper Segmentation: Understand how your shoppers are currently participating in online CPG shopping and invest in content management, digital brand strategies, including assortment and merchandising, that will ensure you drive greater than fair share growth.

Over 70% of online shoppers indicated that a digital activity was most important in driving recent in-store purchases.
Percent of online shoppers indicating that a digital activity was most important in influencing their purchase decision

Question: Which of the following items have you shopped for in the last 12 months? Thinking about your last purchase in-store, of all the activities you engaged in, which were the most important in influencing your purchase decision, including both channels used and product purchased? Rank the top 3 activities. Online shoppers influenced by digital activity N =763.
Source: GMA/IRI AttitudeLink online grocery survey, April 2014; IRI Consulting Analysis

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