90% of Consumer Packaged Goods (CPG) Brands lost market share in 2015 according to a report by Catalina Marketing. According to the same report, 68% of CPG brands saw sales declines in addition to the loss in market share!
To make matters even worse, these losses were in every single category in which these brands compete.
That’s right, the big CPG brands didn’t see growth in a single category, not even the ones that experienced growth overall.
Todd Morris President of Catalina U.S remarked “Maintaining and increasing category share versus a growing range of national and private label competitors is as challenging as it has ever been, particularly at a time with increased fragmentation of consumer preferences and growing diversification of product choices in many categories.”
Well at least the big brands are still growing with the categories they are in right?
I mean if the headphones business gets bigger it makes sense that a rising tide should lift all boats even for the big brands.
On average even when a big brand saw a gain it was still less than the overall growth of that category.
That means that even when a category is growing, the big brands are still losing market share!
So what’s going on?
Part of it is fragmentation, just take a look at what Mondelez formerly known as Kraft is doing with it’s brand in this image, by fragmenting the big brands damaged their name value.
But, the simplest answer is that the Ecommerce boom happened.
Before the Internet, we had fewer options for buying and were pretty much stuck with the products that were stocked on the shelves of big box stores within driving distance of our homes.
Additionally, the only way we learned about new products was through traditional advertising; TV commercials, radio ads and print.
When I was a kid, someone saw a commercial for a new GI. Joe and then they told someone who told someone else until everyone knew or had seen the commercial.
What this meant was that only big brands had the cash to pay for ads that were going to be able to be seen by a large number of people.
But when the Internet started to become more popular and the Ecommerce boom happened, suddenly people had options.
And sometimes the little guy was creating a superior product; he just didn’t have the marketing budget to advertise to enough people.
Take for example Popeye’s chicken.
If you have ever had Popeye’s you know it’s by far the best fast food fried chicken. It’s spicy, delicious and juicy! It’s way better than KFC, yet KFC is far better known and more financially successful.
The Internet disrupted this in two ways:
1. Digital Visibility
One thing the big brands did not anticipate was that visibility offline, doesn’t necessarily translate to visibility online.
Take for example Harry’s Razors
In 5 short month’s Harry’s was able to jump from the 9th position for shaving related keywords to the 3rd position just one behind Gillete which was founded in 1901.
Smart companies started employing SEO consultants, content marketers and search ranking ninjas to figure out exactly how to get found online, while the big brands were still lining up to spend millions of dollars for 30 seconds of a super bowl commercials
Harry’s Co CEO Andy Katz-Mayfield even listed the ability to distribute online as a major factor in its huge leap in market share telling Forbes in 2015
“If you think about distribution – particularly in consumer products and needing to get shelf space – 20 years ago, to be able to get a foothold was very hard and very expensive. You’re competing with these massive companies that own the retail environment. You can’t really provide a different experience because you’re going through the same channels.
With the ability to sell direct online, you don’t have those barriers that were there historically—anybody can pretty inexpensively put up a website. And you’re also able to develop that direct relationship with the consumer, providing a completely different type of experience, and a level of service that builds a brand and builds a following and builds loyalty.”
Digital visibility was the first part, but Katz-Mayfield touched on the second way the Internet disrupted the big brands
With the rise of the internet came the rise of review sites like yelp, and foursquare and of course the review feature on Amazon these sites allowed users to not only review restaurants and movie theaters but also to review specific productslike garlic presses or digital thermometers.
Suddenly the quality of your product and the experience it provided your customers were public knowledge!
And more importantly people were paying attention!
Bright Local revealed that 88% of consumers trust online reviews as much as a personal recommendation!
Let’s look at some more review numbers that will AMAZE you!
- 85% of consumers said they looked at up to 10 reviews.
- 88% of consumers have read reviews to determine the quality of a local business.
- 72% of consumers say that positive reviews make them trust a local business more.
- 39% read reviews on a regular basis (up from 32% in 2013)
- Only 12% of consumers do not read reviews.
- Only 10% of consumers take no notice of reviews whatsoever.
This was bad news for the big brands, but it’s good news for you!
Suddenly the big brands were no longer just competing with each other, it wasn’t Ford vs. Chevrolet, or Coke vs. Pepsi anymore.
Now the big brands were being forced to compete with all of these small agile brands that were all more web savvy than the executives at the big companies and had a better handle on what people really wanted to buy.
Check out this video on Super-Competitors for more info:
This has lead to the creation of one of the most amazing opportunities to create a vast amount of wealth that we’ve seen since the gold rush!
What we are seeing is a disruption of the way the big brands do business and historically disruptions topple big brands.
Some of the previous disruptions in the last 100 years have included:
- Social Media
The “Big Brand” Disruption has the potential to be larger than all of them combined, as it will literally re-define the way every day goods are bought and sold.
How You Can Cash In!
If you’ve read this far, chances are you’ve already seen some of the signs I’ve pointed out in this article, you might even already be developing a brand, or in the process of selling on sites like Amazon already.
The time is now!
There has never been a better time to white label a product and begin selling your own brand.
Here’s how in 4 easy steps:
Pick a product. Easier said than done, but if you don’t have an original idea for a once in a lifetime product don’t worry! You can use a strategy known as “White labeling” to create your own version of an existing product and sell it online!
I think that was a minute!
Create a brand around your product. While you could just take the Ron Swanson approach to naming your company, you want to spend some time thinking about your brand. Remember this is going to be the name of the company you could potentially grow into big brand competitors if all goes well, so think wisely. Go beyond the name and think about what you want your company to stand for, what you want your message to be and what you want your customers to feel when they buy or use your products. You’ll also want to create logos, and other branding to put on your packaging and product to further identify it and protect yourself from Amazon hijackers (link to hijackers article)
Sell online. One of the amazing things the Internet provides is a variety of platforms for you to sell your product. There’s Amazon, EBay, Etsy, you can even sell products on Snapchat! With so many platforms there is no excuse to not get your product out there in front of a lot of potential buyers. It’s not like the old days where you had to start your own website and create your own traffic to make sales. Sites like Amazon will literally send thousands of visitors a day to your page IF and it’s a big If you pick the right product.
Expand Offline. Once you have a foothold online whether it’s on Amazon, Etsy, or your own Ecommerce website, you can begin to expand offline. If you sell on Amazon, you’ll be delighted to know that Amazon opened its first retail store in November 2015. This is in addition to small brands like Warby-Parker a eyewear company which has joined Birchbox a cosmetics company, and men’s shoemaker Bonobos in making the jump from online to retail. It’s not out of the question to think that your brand could be next!
The opportunity is limitless!
A little over 150 years ago, prospectors and fortune seekers from all over America set out for California in search of gold.
These smart, ambitious and yeah a bit wild men and women left the comfort of their homes in order to make their fortunes.
The next gold rush is not going to involve gold and it’s going to be aimed a little farther north than California, but platforms like Amazon and Ebay are providing a chance to change the way big brands are created.
It has NEVER been cheaper to start a business than it is right now!
It took Gillette 115 years to establish a dominant market share in the rzor market and Harry’s and Amazon destroyed that in less than 5 months!!!!
All you need is an Internet connection, some money for samples and your first order, which should never be more than 100 pieces anyway, and you’re ready to get started.
You, sitting there reading this article right now could be the founder of the next multimillion dollar online brand. There is literally nothing stopping you. You owe it to yourself to at least try!
More millionaires and even billionaires are going to be made in this Ecommerce revolution than have ever been made at one time in the history of human civilization. The Ecommerce revolution is going to change everything, and it’s only going to get more difficult as more and more people start jumping in.
Right now, we still haven’t hit a saturation point where there are multiple brands for every product on Amazon. In fact right now there is such a huge opportunity because there are still some products that aren’t even on Amazon at all! If you can figure out what those products are, you’ll have a virtual monopoly on that product on Amazon.
Imagine how much money you could make then?
And remember you’re creating a BRAND not just a product.
When you create a single product you’re at the whim of that products sales.
When you create a brand, you are able to have multiple products, which complement each other, which you can then bundle together in order to increase sales!
The nest big brand like Harry’s razors or Warby-Parker is out there, the question is, simply are you going to be the one to create it?