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Insights from Consumer Goods Report: B2B vs B2C Relationships

Discover insights and trends for the future of consumer goods companies with the Consumer Goods and the Battle for B2B & B2C Relationships report.

Discover insights & trends for future of consumer goods companies with the Consumer Goods and the Battle for B2B & B2C Relationships report.

Both consumer and consumer goods (CG) companies are in the middle of a retail renaissance, and the traditional CG landscape of physical shelf space and shopping carts will never be the same. Consumers have total control of where and how they buy, along with unprecedented access to products and fulfilment options.

Consumer goods companies now have to establish a B2C relationship with customers while maintaining a good B2B relationship with retailers. As CG leaders battle on both fronts, they should expect pressure from four key forces:

  • Amazon and other online marketplaces with advanced supply chains and distribution tactics.
  • Consumers and their expanding expectations.
  • Traditional retailers and their volatility.
  • Technology and its associated data complexities.

These challenges create unique obstacles and opportunities for businesses. The best CG brands are optimising for the future and preparing their business plans and investments to stay relevant, competitive and future-proof. How can you use this information to help your business succeed?

CG leaders have concerns about Amazon and changing consumer behaviours

Six in 10 CG leaders (61%) feel that Amazon is beating traditional retailers on repeat purchases and fulfilment. Sixty-eight per cent think that consumers are more loyal to Amazon’s Marketplace than individual brands, which studies have proven to be correct.

When consumers are asked why they choose to buy from marketplaces instead of retailers and brands, they cite reasons like price, product variety and product availability, which are the marketplace’s biggest advantages. Consumers are savvier and more demanding than ever, and these numbers indicate that they expect a wide variety of products with a fair price and immediate availability.

Poor in-store execution

The B2B relationship between CG companies and traditional retailers still drives the majority of CG sales.

Today, fast-moving consumer goods earn $1.01 trillion in the U.S. annually – and 95% of those sales come from traditional retail. However, CG leaders face challenges in growing – let alone maintaining – the trillions of dollars in that supply chain. When asked what percentage of their merchandising and marketing plans are executed as intended at brick-and-mortar retail locations, CG leaders said only 48% hit the mark.

A poor relationship between CG companies and traditional retailers comes with a high price tag. Consumers expect their favourite products to be available at the right price at the right time, and when retail execution is not up to standard, neither is the consumer experience.

Consumer goods leaders prioritise B2C relationships

CG companies have traditionally been separated from their end consumers, living almost exclusively in the B2B realm and selling to retail and other indirect channel partners. But with e-commerce, brands can increasingly sell directly to the end consumer, driving a need for strong, relevant customer relationships. CG leaders are increasingly focused on going direct-to-consumer (D2C).

In our study, 99% of CG leaders say they are investing in D2C sales. There’s a huge financial incentive: despite online sales comprising only 5% of the total U.S. fast-moving consumer goods market, those online sales account for 40% of the market’s sales growth.

Planned actions & investments

CG leaders plan to adjust their financial investments to improve both B2B and B2C operations in the future. The two biggest areas of planned investment over the next three years are first-party consumer data and digital customer service support, with 82% planning to increase their investments in these areas.

In planning for the future, CG leaders know an excellent consumer experience can be ruined by poor service interaction. These service investments are simultaneously an investment in loyalty. We also see CG leaders planning to invest in unified commerce and second-party consumer data, with 74% planning to increase investments in these areas – continuing the trend of unifying identities, data and experiences across channels.

With 99% of CG leaders investing in D2C, communicating with consumers is a key priority for future success. When asked about the channels used to communicate directly with consumers, CG leaders rated the following as the most effective:

  • Social ads
  • Service via live chat
  • Service via email

They are also looking closely at new technologies: within five years, 34% say AI will emerge as a key transformer in connecting shoppers with products, and 22% say it will do that in just two years.

With a strong focus on consumer relationships and the growing obstacles from massive marketplaces, it’s more important than ever for businesses to establish strong B2B and B2C relationships to succeed.

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