FMCG brands: When product makers become experience providers
Traditional FMCG manufacturers are losing sovereignty over the visibility of products to platforms such as Amazon, which push their own competing product lines towards customers instead. Here's how they can ensure that their benefits go beyond the products, and service the customer's holistic needs
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For the consumer products industry and its many low-involvement products, digital business transformation is tantamount to a real "make or break" situation
Imagine this: A printer cartridge is empty and you are looking for a quick replacement. In the past, you could have looked directly at the manufacturer for a suitable cartridge, as this guaranteed that the quality and compatibility would fit 100 percent. However, the original cartridges were very expensive, as the manufacturers subsidised the device price. In the age of Amazon, this belongs to the past. With its Amazon Basics products, high-quality, "low involvement" goods such as printer cartridges, batteries, cables, towels or household appliances, the platform has positioned itself strategically. It uses its position to specifically set its own brands, thus eliminating the need for expensive branded products.
With growing brand awareness, it is clear why the customer does not ask, "Alexa, show me printer cartridges from Canon". Instead, he asks, "Alexa, I need an ink cartridge for my Canon printer". He no longer formulates his inquiries to a product in a problem-oriented manner, as he would in a conversation with a consultant. The result: Alexa looks for the product of her own brand, Amazon Basics, and orders it directly.
In the medium term, this is a big problem for traditional FMCG manufacturers. They lose sovereignty over the visibility of products to platforms like Amazon, which push their own ranges towards customers. In this way, they are increasingly competing with their own brands in the digital platforms. The FANGs (Facebook, Amazon, Netflix and Google) reinforce this. Not only do they present the products, but they also use their direct, digital customer access to generate profound data and consumer insights with which they continuously optimise their processes, products and placements. That is a real competitive advantage over the stationary trade.
- Think holistic: Brands, without falling behind their value, should also offer a holistic customer experience. Its platform and all its measures must fully contribute to the experience in terms of personalisation, situational relevance and consumer convenience.
- Creating business areas and ecosystems: The creation of a holistic ecosystem requires a physical product that is enriched with digital services. More so, as today’s consumer needs do not end immediately before the purchase and immediately after the use, owners should never lose sight of the product, and must think beyond their own category. With a motto of 'Think Big', they can create a complete ecosystem that spans out the real and digital space in a customer-centric way.
By following these two simple steps, decision makers in the consumer goods industry can continue to play a significant role in their consumers' lives in the coming future.
The author is Group Vice President at Publicis Sapient.