esidents in Santa Monica, Calif., who placed orders through the recently in-troduced AmazonFresh grocery deliv-

ery service this summer received free bottled water. It wasn’t a promotional incentive per se, but rather a unique way to keep refriger-ated products cold while they were sitting on doorsteps.

Meanwhile, on the other side of the U.S., New York metro-area residents who bought $20 worth of back-to-school supplies through the ShopRite from Home curbside pickup service earned $10 off a future receipt – an offer that wasn’t extended to shoppers inside the store.

This bicoastal activity was significant for a number of reasons, not the least of which was the fact that it involves the world’s larg-est, most recognizable and arguably most innovative online “etailer” on one hand and, on the other, a decidedly more traditional

1

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Playing for the FutureFitch Ratings estimates that e-commerce sales currently represent just 1% of the $631 billion grocery industry, and will grow by 10% to 15% annually to reach 3% of to-tal sales during the next 10 years. Although other sources are slightly more optimistic, projecting annual growth of 20% to 25% and similarly higher market share, no one is predicting a massive overnight shift toward online grocery shopping.

“For most CPGs, e-commerce only repre-sents 2% to 3% of their business right now, so it hasn’t become a financial imperative quite yet,” says Gregory Grudzinski, director of research and analytics at Etailing Solutions, Westport, Conn.

It nonetheless should be a business impera-tive for virtually all CPGs and retailers alike, however, because consumers are steadily acclimating to online grocery shopping and because – perhaps more importantly at this stage – several aggressive companies have identified the marketplace as the next fron-tier. (You can call this the “Amazon Effect.”)

Furthermore, debating how quickly online

250-store supermarket co-operative with a six-state footprint.

Welcome to the new playing field of gro-cery e-commerce.

Granted, at this stage in market devel-opment, there still is a lot of empty space between AmazonFresh and ShopRite from Home, geographically, competitively and cul-turally. But the divide won’t last much longer because the time has arrived for all consumer packaged goods retailers and marketers to embrace e-commerce – the industry’s “next large growth engine,” as Neil Ashe, chief ex-ecutive officer of e-commerce at Walmart, recently proclaimed.

Just one piece of advice: Don’t expect mas-sive amounts of incremental sales, windfall profits or even very much return on your in-vestment just yet, folks. The entire market-place is in “test and learn” mode, so plan accordingly.

R

By Peter Breen

The following is the first of two articles examining the emerging e-commerce marketplace for consumer packaged goods. Part 2 will take an in-depth look at winning strategies for CPG marketers.

Part 1:The New Playing Field

In collaboration with:

Winning in theE-CommerceMarketplace

SPECIAL REPORT

sales might grow should be a secondary con-cern for CPGs because one of the undeniable facts right now is that in-store sales are being influenced not just by digital shopper market-ing but by straightforward e-commerce activ-ity: Whatever you call the opposite of “show-rooming,” it’s happening, even at pure-play etailers like Amazon.com.

“Amazon itself will tell you that it only makes the sale one out of 11 times, so 90% of the consumers researching product infor-mation either end up buying somewhere else online, offline or not at all,” explains Brian Cohen, executive vice president and general manager of Etailing Solutions. “Either way, Amazon has become a critical shopper mar-keting tool” in addition to being a potentially important partner for direct sales.

Illustrating Cohen’s point is a case study used by the Amazon Media Group, the etailer’s ad-sales unit, which boasts that a targeted display-ad campaign for Procter & Gamble’s Crest Whitestrips drove $338,000 in sales through Amazon websites – but $1 million in offline sales.

“The marketers that are jumping in at this point recognize the potential of the space and want to take leadership roles in their catego-ries,” adds Grudzinski.

“We believe that our digitally engaged cus-tomers will triple in the next 24 months and represent well over 50% of our sales,” said Erik Keptner, executive vice president of sales and marketing at Ahold USA, during a key-note presentation at the Shopper Marketing

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Summit last spring. Ahold understands that a “digitally en-

gaged” shopper takes many forms, which is why the company is building a channel-agnostic engagement model that lets shop-pers buy online for either home delivery or store pickup – or keep right on buying in the bricks-and-mortar store.

“While the immediate online sales oppor-tunity is there, we see a bigger near-term payout” by influencing in-store sales, says Christine Chun, group manager of e-com-merce at The Clorox Co. “We’re simply look-ing to provide shoppers with the information that they need to make a purchase decision – wherever it might take place.”

“Even if you never sell one dollar online, if you’re not investing here and getting all the basics right, you’re eventually going to lose sales offline,” says Douglas Straton, direc-tor of Unilever North America’s E-Commerce Center of Excellence.

A Mutual MigrationAnother significant aspect of the aforemen-tioned AmazonFresh and ShopRite at Home examples is the way those services address the main barrier – for both consumers and retailers – that has hindered the growth of online grocery shopping for more than 20 years: the costs associated with timely home delivery.

That logistics issue is largely what has kept even successful home delivery operations such as Ahold’s Peapod (a $500 million company)

TOP ETAILERSIn the past 12 months, from which of the following retailers have you purchased online?

Amazon.com 68%

Walmart.com 41%

Target.com 19%

BestBuy.com 19%

Staples.com 11%

Walgreens.com 10%

OfficeDepot.com 9%

HomeDepot.com 8%

CVS.com 7%

Drugstore.com 7%

PetSmart.com 7%

Lowes.com 6%

Costco.com 6%

Petco.com 5%

SamsClub.com 5%

DollarGeneral.com 3%

Diapers.com 2%

PetFoodDirect.com 2%

BJs.com 2%

Safeway.com 2%

Meijer.com 2%

Alice.com 1%

Soap.com 1%

Albertsons.com 1%

Peapod.com 1%

FreshDirect.com 1%

Other 40%

Source: Etailing Solutions, 2013

E-Commerce = Sales and MarketingThe fact that any online communication with consumers can ultimately influ-ence a sale makes the difference between “e-commerce” and “digital shop-per marketing” a bit murky at times.

Unilever’s Douglas Straton makes this general distinction: “E-commerce is getting them to buy. Digital shopper marketing is moving them further down the purchase funnel.”

Etailing Solutions’ Brian Cohen suggests that the difference largely reflects an old-fashioned way of thinking. “Sales teams are mostly charged with getting the product on the shelf, which means mainly distribution. Then, marketing works to get the product off the shelf,” he explains. “With e-commerce, the two processes are more closely aligned.”

“E-commerce is giving us an opportunity to leverage a single platform for both sales and marketing,” adds Christine Chun at Clorox. “We haven’t had that before.”

“Whatever distinctions are currently being made will most likely go away when the CPG world adopts more of a multi-channel focus” and online sales become as common as bricks-and-mortar transactions, concludes Straton.

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and FreshDirect ($400 million) from expand-ing beyond a few major metropolitan areas, and why newcomers such as AmazonFresh are only testing in other large urban areas.

Costs are declining, primarily because re-tailers have paid attention to the shopper research and employ free or reduced shipping as the main lure to induce usage – even if that means operating in the red initially. “Amazon is very committed to moving into this space,” says Cohen. “They care less about profitabil-ity than they do about global domination.”

In fact, Amazon isn’t as interested in selling packaged goods as it is using the channel as a traffic driver to the site overall. “People buy a TV once every five years, but they buy grocer-ies once a week,” says Cohen.

With barriers coming down and U.S. con-sumers getting increasingly comfortable with technology, buying packaged goods online has become a common occurrence. And on-line shopping is no longer confined to those Millennials who simply can’t comprehend what life was like before the Internet. Now, consumers from all demographic groups are doing it. “The conventional profiles don’t ap-ply in our space,” says Chun.

More importantly, the action is becoming habitual: Etailing Solutions’ “2013 Consumer Ecommerce Study” found that, for example, consumers who bought any health and beau-ty product online were, on average, making more than half of their category purchases online. Even more surprising is that these con-sumers profess, on average, to making 15% to 20% of their food and beverage purchases – even getting 16% of their perishables – on-line. (See chart at left.)

“Consumers increasingly are going online to find everyday items, especially with low-involvement categories and high-volume products for which a brand preference is well established,” says Angela Edwards, Etailing Solutions’ vice president of marketing.

The Starting LineupAs already implied, Amazon.com is consid-ered to be the odds-on favorite to lead the CPG industry into e-commerce. But that des-ignation is based more on the company’s or-chestrated dominance of other product cat-egories such as books, music and consumer electronics. Although undisclosed publicly, Amazon’s CPG sales are generally considered to be low.

Regardless, Amazon.com attracted 95 million unique visitors in July, according to comScore Inc. It far and away was the most

popular retailer among respondents to the Ecommerce Study, with 68% claiming to have made a purchase on the site in the past year. Coming in a distant second at 41% was Walmart.com. (See chart, page 2.)

What’s more, 30% of all online product searches now begin on Amazon.com, com-pared with just 13% on search leader Google, according to Forrester Research.

It also has purchase and preference data on more than 200 million U.S. consumers, and an ability to exploit that information to drive additional sales that has made it the envy of the marketing world. And, it really wants to become a leader in grocery.

“If you follow conventional wisdom, Ama-zon and other pure-play etailers aren’t worth the investment right now. You’re not sup-

posed to spend millions to work with a cus-tomer that only delivers a million in sales,” says Danny Silverman, Etailing Solutions’ vice president, sales strategy. “But you have to be willing to spend disproportionately to the return. In five years, it will be a top-five cus-tomer for any CPG that is willing to make the investment now.”

Amazon has been molding its huge audi-ence into loyal shopper segments through its Amazon Prime membership program and a growing number of niche offshoots tailor-made for CPG marketers: Amazon Mom, Amazon Student, Amazon 50+ Active & Healthy Living, Men’s Grooming.

After operating the AmazonFresh home de-livery service for six years in hometown Seattle, the company rolled out to Los Angeles and

0 20 40 60 80 100

What percentage of your category purchases are made online?*

Books

Music

Electronics

Apparel

Baby/child products

Of�ce supplies

Health and beauty

Pet food/supplies

OTC/vitamins

Tea/coffee

Food (snacks)

Household cleaning

Food (condiments)

Food (perishables)

Cereal

Pasta/sauce

Bottled water

84% 16%

82% 18%

78% 22%

76% 24%

60% 40%

55% 45%

51% 49%

41% 59%

38% 62%

32% 68%

23% 77%

23% 77%

20% 80%

16% 84%

16% 84%

15% 85%

15% 85%

ONLINE OFFLINE

*Asked of respondents who identi�ed themselves as having made online purchases in the category.

Source: Etailing Solutions, 2013

TOP CATEGORIES

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San Francisco this summer and is expected to get to at least a few more markets by 2014.

“If you ignore Amazon, it’s at your own peril,” says Straton.

Other national etailers: As far as the “pure play,” online-only etailers that CPGs need to worry about, “It’s typically Amazon, and then the ones that are right for your particular brand and cat-egory,” says Cohen.

Among the ones most often discussed are several websites operated by Quidsi, a startup that had launched category-specific successes Diapers.com and Soap.com before Amazon bought the company in 2010.

The shortlist also includes Drugstore.com, which was head-ing toward $500 million in annual sales when Walgreens scooped it up in 2011, and Alice.com, an independent company that maintains virtual storefronts for roughly 180 CPGs (and focuses on shelf-stable products).

Home delivery specialists: Peapod and FreshDirect (partially owned by UK-based grocer Morrison’s) have long been the two leading players in this segment. While overall consumer penetration is still fairly low (see chart, page 26), many experts consider the development of efficient home delivery mod-els as the key to future growth.

“The ability to have your groceries deliv-ered is becoming increasingly relevant, espe-cially as the ‘Digital Generation’ enters the real world,” says Cohen. “Peapod and Fresh-Direct have demonstrated that there’s a mar-ket in major metropolitan areas, which is why the major players are moving into the space.”

Two other major online players, Google and eBay, are experimenting with same-day delivery services, the former with a “Google Shopping Express” that sources products from local retailers and the latter with eBay Now, which is working mostly with national

chains such as Target and Walgreens. Both services are operating in New York and the Bay Area and are expected to expand soon.

Both Google and eBay are formidable com-panies that, like Amazon, don’t mind sacrific-ing profit to get initiatives rolling. Cohen says it’s “too early to tell” if either endeavor has strong potential.

Traditional retailers: Although the tide is turning somewhat, many traditional pack-aged goods retailers have been extremely slow to enter the race. “They need to put a serious, dedicated infrastructure behind an initiative like this, and historically they haven’t been willing to say, ‘We’re going to lose mon-ey in order to invest,’” explains Edwards.

Although Walmart’s progress often seems largely a reaction to Amazon.com’s maneu-vers (Walmart to Go home delivery didn’t arrive until several years after AmazonFresh), the company certainly has the resources needed to compete – although not quite the same “profits be damned” mindset.

Walmart to Go is currently available in five markets, having moved beyond its original

San Jose, Calif., test in the last 18 months. The retailer also is gradually expanding its ability to ship online orders directly from stores to speed up fulfillment.

Elsewhere, Walmart.com makes packaged foods avail-able through its “Home Free” service (free shipping in three to five days with $45 orders). But another “unique” concept be-ing considered – having other shoppers deliver online orders to their neighbors – isn’t expected to reach bright.

In addition to the aforemen-tioned efforts at Ahold and Shop-Rite (who, not coincidentally, compete in the heavily urban Mid-Atlantic states), Safeway has quietly expanded its home deliv-ery business for several years and

currently offers the service in markets on the West Coast and in the Baltimore, Phoenix and Washington, D.C., markets.

Otherwise, notable examples are scarce. “Traditional retailers have been worried about cannibalizing store sales,” says Edwards. “But they have to start focusing on saving their shoppers, not their stores. If they don’t follow their shoppers online, somebody else will.”

Westport, Conn.-based Etailing Solutions’ mission is to help its brand partners understand, navigate and lead in the global online marketplace. Its clients include many Fortune 50 packaged goods companies. Etailing Solutions is part of the Epsilon Agency Services group and the driving force behind the Center for eCommerce Excellence, a catalyst for global learning, collaboration and best-practice development.

arget launched a “subscribe and save” service last month that lets parents schedule automatic delivery

of diapers, formula and other baby needs. The service promises free shipping on orders of $50 or more and 15% discounts on pur-chases.

Locking up future purchases is a great idea, which is why Amazon.com has been operat-ing a similar “Amazon Mom” service for three years – and why niche etailer Diapers.com (now owned by Amazon) has been doing it for even longer.

It seems almost unfathomable now that Target actually contracted with Amazon to run Target.com’s e-commerce business for 10 years until 2011 – as if no one had even conceived of a day when the upstart books and music etailer would ever be a competitive threat to other channels.

1

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© Copyright 2013. Path to Purchase Institute, Inc., Chicago, Illinois U.S.A. All rights reserved under both international and Pan-American copyright conventions. No reproduction of any part of this material may be made without the prior written consent of the copyright holder. Any copyright infringement will be prosecuted to the fullest extent of the law.

Embracing the ChannelA report released last month by investment house Sanford C. Bernstein, New York, of-fered one of the more bullish forecasts to date for CPG e-commerce, which it asserts is “fast becoming a significant market that could shift [share] to smaller players and disrupt pricing and other key parts of the industry’s business model.” The report predicts that online sales will account for 25% of all CPG purchases in as little as five years.

If that forecast proves anywhere near accu-rate, then CPGs and traditional retailers have a lot of work to do – and fast. “So far, only a select few CPGs have made e-commerce a real area of investment,” including Unilever, Procter & Gamble, Reckitt-Benckiser and The Clorox Co., says Brian Cohen, executive vice president and general manager of Westport, Conn.-based Etailing Solutions.

“At most companies, e-commerce is rel-egated to a specialty sales role, with minimal funding and little full-time attention,” says Cohen. “But it’s not just a sales function, it’s

Perhaps even more startling has been the recent decision by several chains to house Amazon Locker storage units in their stores, in theory because consumers picking up Amazon orders might become incremental shoppers. While OfficeMax and RadioShack backed away from such deals in September, a number of packaged goods retailers – includ-ing 7-Eleven, Albertsons, Safeway and Rite Aid – are still partnering with Amazon.

Such recent machinations are the latest evidence that the e-commerce marketplace for consumer packaged goods is heating up as traditional and online retailers solidify their business plans. CPGs who until now have devoted their digital marketing to driving in-store sales need to develop another plan of attack that builds direct online transactions into their objectives.

T

By Peter Breen

The following is the second of two articles examining the emerging e-commerce marketplace for consumer packaged goods. Part 1, which examined “The New Playing Field,” is available on p2pi.org.

Part 2:Developing the Game PlanIn collaboration with:

Winning in theE-CommerceMarketplace

SPECIAL REPORT

estimated shares to already be 9% for health products, 5.9% for beauty care and 5.7% for pet care.

Selecting appropriate retail partners, meanwhile, involves analyzing many of the same criteria that guides decisions in the bricks-and-mortar world: size and growth potential, category focus, logistical demands, shopper alignment and available marketing opportunities.

Rethinking the Customer PlanIf the implication isn’t yet obvious, working with Amazon is a must, even though the world’s largest etailer is still heavy on “po-tential” and light on actual CPG sales – and despite the fact that its reputation as a col-laborator isn’t ideal. (See “The 800-Terabyte Gorilla” on page 3.)

Clorox’s e-commerce team is “deeply en-gaged” with Amazon, says Chun. It also works with other pure-play etailers, and helps the sales and shopper marketing teams run “test and learns” with “a few bricks-and-clicks that have risen to the top,” she says. Most activity at traditional retailers is the re-sponsibility of the account teams.

“Beyond Amazon, the health & beauty marketplace is splintered into a number of niche players,” says Douglas Straton, direc-tor of Unilever North America’s E-Commerce Center of Excellence. “But Amazon is already starting to pull away.”

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The business economics for the pure plays is significantly different than it is for tradition-al retail channels. So just as they did 20 years ago when warehouse clubs emerged on the scene, and more recently with the rise of dol-lar stores, CPGs need to treat e-commerce as its own class of trade, with different pricing schemes, funding models, margin drivers and even packaging needs.

This channel is a little trickier, however, be-cause the customer universe also includes traditional retailers whose online needs and objectives are often quite different than those of their pure-play counterparts. “Walmart might not be as worried as Amazon about the [digital] cart-abandonment rate,” says Straton. “The pure plays need to make that sale, but the traditional retailers see it more as a media channel” to drive in-store sales.

There also may be times when a retailer’s traditional business model conflicts with its new – and separate – online strategy: Walmart.com is based in San Francisco, not Bentonville, Ark.

Therefore, CPGs need to understand how each of their key retailers operates. Don’t ex-pect Drugstore.com to act like Peapod.com. Don’t expect Walmart.com to act like Safe-way.com. And don’t expect Amazon to act like anyone else.

And, in general, don’t expect good-old salesmanship to be as important as it has been in the marketplace. “CPGs have to adjust to a

an enterprise-wide responsibility that affects the entire business.”

Acknowledging this fact throughout the organization is the first step CPGs need to take to develop a game plan, industry experts say. The next is to build the team that will drive the company forward.

“The leading-edge companies have cre-ated centers of excellence and dedicated full-time personnel to the effort,” says Angela Edwards, Etailing Solutions’ vice president of marketing.” “It should be a separate function that has cross-functional expertise in sales, shopper marketing, brand marketing, digital and even logistics.” Currently, “only a hand-ful” of CPGs have devoted more than five employees to the effort, she says.

Clorox built a central team that is charged with “building capabilities, testing and learn-ing, and then bringing the learning to exist-ing teams,” explains Christine Chun, group manager, e-commerce. The long-term goal is to help the brand and customer market-ing teams develop their own expertise, Chun says.

With a team in place, the go-to-market strategy involves two major pieces: picking the brands and retail partners on which to focus.

For the time being, not all product catego-ries have the same potential online. While online activity generates less than 1% of sales for most CPG categories, the Bernstein report

The average shopper probably doesn’t need to sift through six computer screens worth of content before buying a bar of soap – but your average search engine might.

The following is a list of product page must-haves (in somewhat-order of importance):n High-resolution packaging images (360-degree viewing is a nice touch)

n Prominent price point (with the discount as prominent)

n Shipping options (especially the free ones)

n Concise product description (attributes, benefits, awards, distinctions)

n User-generated rating and reviews (the star scale works nicely)

n Alternative SKU options (other sizes, flavors, etc.)

n Product specifications (container sizes, weight)

n Ingredients (are you healthy?)

n Cross-merchandising possibilities (don’t forget the condiments)

n Promotional video (hey, everyone says they increase sales)

The Product Page Checklist

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3

new dynamic that isn’t as reliant on one-to-one relationships between buyers and sell-ers,” says Edwards.

Rethinking the Marketing PlanThe good news about securing digital shelf placement is that it generally doesn’t require slotting fees (at least not now.) The bad news is that it often also has little to do with sales volume, category status, brand recognition or any of the measures with which CPGs are accustomed.

Algorithms determine what rises to the top of category pages and search results. These mathematical equations can vary significantly from site to site. Amazon’s search rankings, for example, are based in part on product sales and conversion rates, but also on softer parameters such as page views and quality of

content – not to mention “strategic partner” status. (See sidebar above.)

Etailing Solutions finds that 77% of con-sumers search for products by category. However, being the established category leader doesn’t mean much: Examining sales at Amazon on one day in July, the Bernstein report found the top-selling cereal brand to be … Bob’s Red Mill Gluten-Free Whole Grain Rolled Oats.

“Small brands can look large online sim-ply because they’re playing where the bigger brands aren’t yet,” warns Straton.

Moreover, the “infinite digital shelf” is a misnomer. While retail websites have a limit-less capacity to list products, online shop-pers have nowhere near the corresponding patience to search them: 70% of searchers never scroll past page one of their results,

according to the Search Engine Journal (April 2012).

Once she scrolls through that first page, in fact, the typical consumer conducts another search instead of moving to page two. So be-ing on the second page of search results isn’t like being on the bottom shelf in the store, it’s like being back in the warehouse. “No one is going to scroll through 1,800 SKUs,” says Gregory Grudzinski, Etailing Solutions’ director of research and analytics.

Thus, the primary goal of an e-commerce marketing plan is securing a visible and accu-rate presence on the digital shelf. “You’ve got to get the shelf right, and that means getting the content right,” says Straton. “You can spend two years on that alone.”

Content should be viewed as both king and queen, because it doesn’t just influence

The 800-Terabyte GorillaAnd you thought Walmart was difficult?

“Most CPGs find Amazon frustrating to work with,” says Etailing Solutions’ Danny Silverman. “It’s a technology platform, not a relationship-driven company.” That means emails instead of phone calls (and face-to-face meetings only when really necessary).

The company wreaks havoc with pricing lev-els, leaves most vendors to manage their own content, doesn’t care what its Amazon Seller retailers do, isn’t all that concerned with brand-level sales (only item-level), and lately has been putting the hard-sell on CPGs to advertise.

On the flip side, Amazon has been the para-gon of online retailing since the late 1990s. It’s credited with inventing (and perfecting) prod-uct recommendations. It has 90-plus million unique monthly visitors, what’s considered to be an unparalleled cache of shopper data, and proof that 90% of its browsers make purchases at other retailers.

“Amazon is investing quite a lot in our space and innovat-ing quite a lot,” says Clorox’s Christine Chun. “We’d love to see some of our other customers innovate as well.”

Amazon also fancies itself a strong media play – and with those aforementioned statistics, it has a legitimate argu-ment. The company is making a major push to act like a media company, boosting ad revenues 45.5% to $610 million in 2012, according to eMarketer.

The drive for ad dollars has had a profound effect on its dealings with CPGs, who are being told in no uncertain terms that their media spend will be a key driver of any col-laboration. Amazon has even acknowledged that it hopes to use the ad kitty to help drive down prices even further.

The company is actively recruiting strategic partners, al-though typically looking no lower than No. 2 in the cat-egory; at present they’re working strategically with about a dozen top CPGs, Silverman estimates.

“If you’re not a strategic partner, then basically you’re man-aging your Amazon.com presence on your own” through the site’s “Vendor Central” portal, says Silverman. “There are hundreds of large and medium-sized CPGs doing it this way.”

There have been recent signs that Amazon might be soft-ening. It rolled out a Strategic Vendor Services program for strategic partners that provides a dedicated rep (but does require additional funding). And it recently gave in to per-sistent requests and began making its vendor management and media teams available for joint meetings.

“At this point, you never really get to a state of ‘perfect,’” says Silverman. “But there’s a learning curve here: Amazon is new to the industry, and the CPGs are new to e-commerce.”

SPECIAL REPORT

4

consumers but also drives search results. So the requisite skill set requires more experience with SEO than TPR.

Success begins by cracking the code on the algorithms, which etailers often keep close to the vest “because they don’t want them to get manipulated,” says Danny Silverman, vice president, sales strategy, at Etailing Solutions. But it also requires an understanding of con-sumer search behavior.

While older consumers often utilize pre-pared left-column category links to search for products, younger shoppers rely on search. But search behavior, too, differs from site to site. “The words people use in the search box are different on Google.com than on Drug-store.com,” explains Straton. “You can’t just think about keywords, but also about need states – like ‘How do I fight dry skin.’”

The requisite content comes in two buck-ets: the internally generated materials that include product imagery and information, and the user-generated reviews and ratings that, at least for some shoppers, are far more important. (See “The Product Page Check-list” on page 2.)

Unfortunately, there are no industry-wide standards, and some etailers desiring unique content to help themselves stand out in search engines are tackling the work on their own – which can make it hard for brands to retain control of their message.

“Simple digital asset management can be a nightmare,” says Cohen. “Even replacing your old packaging graphics is impossible if you don’t have a comprehensive inventory of where they are.”

Or whom to call: There are an estimated 2 million third-party “retailers” operating through the Amazon Seller program, ac-counting for about 40% of the total product inventory.

Such “alternative” retailers basically pres-ent products in whatever manner they devise, and marketplace aggregators like Amazon, Google and eBay aren’t concerned with polic-

ing their ranks. One OTC brand audit found that “70% of the products being offered on Amazon were unfit for retail sales” and an-other that “the No. 1 product wasn’t even supposed to be available in the U.S.,” explains Cohen.

Naturally, pricing also is important, and requires the same mutual understanding of consumer thresholds and retailer needs as in the traditional world – except when it comes to Amazon, which takes the matter entirely into its own hands: The Bernstein report found that, over a two-week period, the price of a four-pack of Cheerios fluctu-ated by $12.76.

Thus, there’s a lot of blocking and tackling to be done before a CPG even begins to con-sider promotions. “Our e-commerce tactics focus on building a strong presence, driving traffic, and ensuring that the content is ac-curate and helpful,” says Chun.

There’s a clear distinction between etailers and traditional accounts when it comes to promotion, with the former group far more interested in conversion and the latter much more content to win over shoppers – and in most cases still just as happy to drive sales to the store.

And since even visits to Amazon.com can influence in-store sales (see part 1), Straton offers this advice: “Your e-commerce needs to align with your offline activity because it can have such a strong impact on offline sales.”

Rethinking the Measurement PlanDirect sales are still pretty low, indirect sales are hard to correlate, and there is no IRI or Nielsen to aggregate data. That leads Straton to admit, “Measurement is brutal.

“There is no one way to effectively, effi-ciently and consistently measure share, for ex-ample,” he continues. “The pure plays don’t want to provide that information,” which makes it extremely difficult to ascertain.

“We’re looking for a way to do it consistently, and tie it back to the offline.”

“For now, you can’t look at e-com-merce as a route to incrementality, but as a way to hold onto share,” says Co-hen. “You have to look at it as a media play right now,” which means measuring your spending by the same media metrics used to evaluate spending on People.com or even CBS, for example.

Cohen also suggests tracking overall sales growth and share of category rather than di-rect correlations. “Measure the impact across all vehicles, not just through the individual etailers,” he suggests. “It’s not just direct ROI. It’s about being available for today’s fickle shopper.”

The term “omni-channel retailing” has been revived as an industry catchphrase in recent months. But a better term to discuss the future might be “uni-channel,” to reflect a retail strategy that lets the shopper decide when and where to make the purchase.

“Online sales can be material, but it’s a fraction of the impact right now,” concludes Chun at Clorox, whose proprietary research proved that “there is a very real impact in-store. And that provided the data we needed to get the whole organization behind e-com-merce.”

The industry line should begin here.

Westport, Conn.-based Etailing Solutions’ mission is to help its brand partners understand, navigate and lead in the global online marketplace. Its clients include many Fortune 50 packaged goods companies. Etailing Solutions is part of the Epsilon Agency Services group and the driving force behind the Center for eCommerce Excellence, a catalyst for global learning, collaboration and best-practice development.