"There is little doubt that digital technologies are creating challenges for consumer goods companies, also known as consumer packaged goods (CPG) or fast-moving consumer goods (FMCG) brands. Digitally-native consumer goods startups like Casper, Away, and Glossier, are on the rise and continue to steal market share in the consumer goods landscape. As a result, online sales are booming in the industry and, according to McKinsey, “as much as 30%, or $50 billion, of the CPG industry’s sales growth in the next five years will come from online.”
Not only have online sales dramatically increased, consumer demand has cultivated the subscription economy. With the click of a button, consumers can have anything delivered to their door from laundry detergent to jewelry, automatically restocking so they never run low. Subscription companies like the Dollar Shave Club, Blue Apron, and Birch Box have elevated the concept of digitally native and vertically integrated. These companies operate with ultrafast supply chains and have capitalized on digital channels to create convenient, curated, and authentic shopping experiences. Not surprisingly, subscription brands have grown 100% in the last 5 years.
Traditional CPG companies have been slow to adapt to these trends and are being forced to take a closer look at how they market and sell their products. To avoid brand commoditization and a further loss of market share, consumer goods companies must transform digitally."