CPG DTC Guide: How to Sell Consumer Packaged Goods Online (2024) - Shopify (2024)

Consumer packaged goods (CPG) like food, beverages, toiletries, and household items were once the exclusive domain of brick-and-mortar stores. But in recent years, the landscape of CPG businesses has undergone a significant transformation, with the rise of direct-to-consumer models reshaping the way these products reach consumers.

Capitalizing on this evolution in shopping habits, a wave of direct-to-consumer businesses offering consumer packaged goods have sprung up across the marketplace. These include everything from snack box startups to subsidiaries of multinational consumer-goods companies like Unilever, which acquired Dollar Shave Club in 2016.

In this article, we’ll explore how a CPG company can effectively integrate DTC strategies.

What are consumer packaged goods?

Consumer packaged goods are everyday products consumers use regularly and typically replace at frequent intervals. The CPG industry encompasses a diverse array of items, including packaged foods and bottled beverages, cleaning products, personal care items, and over-the-counter medications. CPG brands are characterized by their fast-moving nature, short shelf life, and consistent demand.

What is a DTC business?

DTC stands for direct to consumer. The direct-to-consumer model involves selling directly to consumers without intermediaries like retailers.

In the context of consumer packaged goods, DTC businesses skip traditional distribution channels like brick-and-mortar retail chains and instead sell their products directly to customers online. This approach allows CPG companies to establish a direct relationship with a target audience and gain valuable insights into consumer preferences.

Benefits of CPG DTC

There are numerous advantages to employing a DTC model when selling consumer packaged goods, from creating a more cohesive consumer experience to enhanced data harvesting and analysis practices. Here are a few specific benefits.

Full control over the customer experience

Operating in a DTC model empowers CPG companies with unparalleled control over the customer experience. From the initial interaction to post-purchase marketing follow-ups, CPG brands can tailor every touchpoint to align with their identity and values and maximize the experiential flow.

For example, by centralizing all product purchases through your company’s own website, you can better control for and prevent technical impediments that might frustrate customers and obstruct a sale. This level of control fosters a tailor-made customer journey, which can strengthen brand loyalty.

Access to first-party customer data

One of the key advantages of the DTC model is the direct access it provides to customer data, such as frequency-of-purchase information. By collecting and analyzing first-party data, many CPG companies gain comprehensive insights into consumer behavior, preferences, and purchasing patterns.

A data-driven approach allows for more targeted marketing strategies and personalized customer interactions. For example, customers can opt into subscription models that allow them to automatically purchase high-turnover goods at regular, predictable intervals. They may also turn on app-based, email, or SMS notifications to receive reminders directly from your business when predictive analytics indicate they’re due for a restock.

High customer lifetime value

DTC businesses have the opportunity to produce higher customer lifetime value (CLV) compared with those that rely on traditional retail channels. The direct relationship established with customers allows brands to nurture long-term connections, resulting in increased repeat purchases and customer loyalty. Elevated CLV contributes significantly to overall, long-term business success.

Tips for selling CPG DTC

Some best practices for selling CPGs via the DTC model include:

• Build and maintain strong customer relationships
• Diversify across multiple channels
• Use comprehensive data for decision-making
• Optimize the customer journey
• Stay agile and responsive to consumer expectations

Let’s take a closer look at each one.

Build and maintain strong customer relationships

Without a strong, loyal customer base, your CPG DTC business is done for—or at best you’ll need the assistance of a big retailer. Customer relationships are the core of a successful CPG DTC strategy. Use email marketing, personalized communication, and customer feedback loops to engage customers more consistently.

Diversify across multiple channels

Although single-platform DTC is a powerful model on its own, it becomes more effective when you diversify across multiple channels to reach a broader audience. Explore brand collaborations and use an ecommerce platform that powers omnichannel integration to maximize your brand’s visibility.

Use comprehensive data for decision-making

You can use the wealth of first-party data at your disposal to make informed business decisions. This will help you understand market dynamics, consumer preferences, and emerging trends to stay ahead of the competition and better serve your customers tailored experiences.

A comprehensive view of consumer data provides valuable insights for these functions and for product development, improved marketing strategies, and overall business growth.

Optimize the customer journey

Analyze your customer journeys meticulously, identifying pain points and areas for improvement alongside what’s working. This will help you streamline the purchase process, enhance the product selection experience, and allow for more effective customer support. A seamless and enjoyable customer journey contributes significantly to customer retention.

Stay agile and responsive to consumer expectations

Consumer expectations are continually evolving, and staying ahead requires agility and responsiveness. You must regularly assess market trends, listen to customer feedback, and adapt your strategies accordingly. Attunement to customer preferences ensures that your CPG DTC business remains relevant and competitive.