The transition from e-commerce to retail is a pivotal moment for emerging CPG brands. We partnered with our friends at Izba to share invaluable insights for brands preparing for this leap.
Understanding E-commerce and Retail Dynamics
Leveraging E-commerce Data: E-commerce platforms offer rich, immediate data that can inform strategic decisions. Emerging brands should use this data to understand buying patterns, create success stories, and make fact-based decisions.
Navigating Retail Complexity: Retail environments, especially through distributors, can be opaque and challenging. Brands should be prepared for less transparent data and longer feedback loops compared to e-commerce.
Physical Presence in Retail: Unlike e-commerce, where customers have already bought into your product, retail requires compelling in-store presence. Investment in packaging and in-store marketing is critical to influence purchasing decisions.
Key Strategies for Retail Readiness
Market Research: Before entering the retail space, brands must understand where their products fit. Research to identify the right type of retailers – grocery, pharmacy, big box, or department stores – based on the product category, price point, and target customer.
Managing Trade and Forecasting: The complexities of managing trade in retail, particularly regarding deductions and promotions, demand meticulous planning and understanding. Brands should be aware of the different requirements of distributors and retailers.
Preparing for Varied Geographic Performance: Performance can vary significantly by region. Brands should analyze and anticipate these variations when planning their retail strategy.
Tactical Tips for Emerging Brands
Building Relationships: Success in retail often hinges on relationships. Networking with mentors, brokers, and experienced industry professionals can provide crucial insights and opportunities.
Data-Driven Decision Making: Rely on concrete data to guide decisions. Utilize e-commerce data to understand your brand’s trajectory and prepare for retail challenges.
Product Assortment Optimization: Avoid over-diversification. Focus on a few key products that have shown success, and use data to rationalize your product lineup.
Understanding Retail Logistics: Don't overstock in anticipation of retail orders. Understand your manufacturing lead times and align them with potential retail orders. Be aware of your capacity to meet sudden large orders.
Financial Planning for Retail Terms: Retail terms can significantly differ from e-commerce, often involving longer payment schedules. Plan your finances accordingly to accommodate these terms.
Conclusion
For emerging CPG brands, the move from e-commerce to retail in 2024 will require careful planning, a deep understanding of different market dynamics, and a strategic approach to product assortment and supply chain management. By leveraging the wealth of data available from e-commerce, building strong industry relationships, and preparing for the logistical and financial aspects of retail, brands can successfully navigate this transition and thrive in the diverse and competitive CPG landscape
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