Do PepsiCo’s new direct-to-consumer websites show a new future for food retail?
Wednesday, May 20, 2020
PepsiCo's new direct-to-consumer sites could mark a significant turning point for the retail grocery industry. The corporation studied the increased demand for products amid the coronavirus pandemic and witnessed shoppers’ frustrations with empty aisles in supermarkets and other grocery stores.
In announcing the launch of two new websites, PantryShop.com and Snacks.com, the company said that it wishes to offer shoppers easy and fast access to products in these uncertain times.
After the initial phase of panic buying in March, consumers increasingly turned online for their food and beverage needs. PepsiCo created the new sites to help them choose and order an assortment of their favorite PepsiCo's products easily. While companies like Blue Apron have made a name for themselves in the direct-to-consumer scene, PepsiCo is the first major consumer goods brand to dive into the segment in a big way.
Retailers and retailing intermediaries will have enough cause for concern if the company's direct-to-consumer experiment works and others follow suit. They will no longer be an integral part of the supply chain that they have controlled for decades.
Like other competitors in the sector, PepsiCo, too, has invested in e-commerce and digital capabilities but never as fast as it did in the last month or so to overcome the distribution chain slowdown. The consumer packaged goods (CPG) giant is the first to be ready with curated products that are delivered directly to the customers' doorstep.
PantryShop.com allows consumers to order pantry kits containing that bundle top-selling pantry favorites like Quaker, Sun Chips, Gatorade, and Tropicana, among others. Snacks.com will enable them to choose from hundreds of Frito-Lay products like Lay's, Cheetos, Tostitos, and Ruffles, with other crackers, nut brands, dips, and more included. The company has promised to add new items and offer further customization to meet consumer preferences.
Retail and consumer trends have changed drastically in the last two months. A Brick Meet Click report states that online shopping has exploded since March of this year due to the quarantine. Online orders have almost tripled between August 2019 and March 2020, from 16.1 million to 46.9 million. While online grocery buying is expected to rise, COVID-19 accelerated that movement.
CPG companies are witnessing consumers stock up on a host of different types of products, both for meals and for snacking. They see that online buying has amplified during the pandemic as most shoppers are reluctant to leave their homes during the quarantine.
Most industries are reflective of these changes and believe that they need to pivot to sustain and survive. In the CPG sector, PepsiCo has taken the bold step to plunge into its direct-to-consumer initiative.
Earlier, most CPG companies did not feel that this was a profitable channel, as shoppers preferred to go to the store and browse through the aisles to buy. But that was the past, and this is now — online grocery shopping is the new normal.
Fashion and clothing have traditionally done better online than groceries in the past. Now, they are facing revenue losses everywhere since shoppers are more focused on essential goods, groceries, the home, and kitchen appliances more than clothes. Analysts say that even when people go back to brick-and-mortar stores, they will continue to buy online. The pandemic quarantine will ensure that online shopping will become a habit, meaning e-commerce and direct-to-consumer grocery shopping will only increase.
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