How PepsiCo is reshaping its e-commerce business

How PepsiCo is reshaping its e-commerce business

Speaking at Fortune’s Most Powerful Women Summit earlier this week, PepsiCo CEO Indra Nooyi focused on how the company will respond to Amazon’s growing retail dominance, the magazine reports. Nooyi said it is critical that the company’s big brands are represented on Amazon and that innovation is required in order to create excitement online and drive impulse purchases in “new ways.” PepsiCo is on track to generate about $1 billion in e-commerce sales in 2017. The manufacturer’s e-commerce team is housed in Manhattan and California — rather than at company headquarters in Purchase, New York — because Nooyi said, “We want them to be a tech company.”

The share of grocery sales shifting online is expected to accelerate in the coming years. Amazon has big plans to disrupt retail grocery and will be a key force driving more grocery sales online. A recent Packaged Facts study projects Amazon’s food and beverage sales could top $30 billion by 2025. While that includes Whole Foods’ brick-and-mortar stores, it still shows e-commerce for the retail giant growing.

This retail reality is top of mind for food manufacturers, including PepsiCo, which are busy devising and deploying strategies to ensure their products are well represented and positioned to succeed online. According to Fortune, Nooyi said, “Our strategy is not about shelf space. It’s about how to get the right clicks so we move up in the search process.”

Getting those “right clicks” means optimizing existing platforms — like adding "buy now" buttons — as well as digital content — such as product descriptions, images, keywords, and ratings and reviews — across all retailer e-commerce sites. It means working and partnering with retailers to sell more products via their online models. If they don't already have them, food manufacturers should determine if adding Amazon Dash Buttons is a viable strategy. And spending time and energy directly targeting and communicating with consumers through social media and other digital marketing efforts is increasingly vital.

A growing roster of CPG companies are creating and growing digital teams to advance their efforts online. Two years ago, PepsiCo established what’s now grown into a 200-person e-commerce unit that the company only recently unveiled. The group focuses on marketing and packaging its products for online sellers like Amazon and Boxed Wholesale, as well as for brick-and-mortar grocers trying to grow their digital business.

In a similar vein, rival Coca-Cola also has started putting a greater emphasis on its digital business this year under new CEO James Quincey. Hain Celestial recently hired a digital engagement and e-commerce head to handle the company’s overall digital strategy and vision, including customer and commercial development and online media. Kellogg has eliminated direct-store delivery for its snack division in order to redirect resources and efforts to direct-to-consumer marketing and increased support of e-commerce.

Having an sound e-commerce strategy — and equally as important, an Amazon strategy — and dedicated teams in place now seems to be mandatory for CPG brands that want to succeed in an increasingly digital world.

Fortune How PepsiCo's CEO Is Preparing for an Amazon-Dominated Future

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