|September 11, 2013|
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On-Line Retail and the Tissue Industry
By Lindsay Gervais
Online consumer spending was estimated to grow four times faster than total consumer spending last year. As such, it is not surprising that retailers have targeted this channel to drive sales growth which is approaching 10 percent of total consumer spending in the U.S. However, consumer packaged goods still represent a small percentage of the non-travel online consumer spending (~1%). Online sales of drugstore products, such as bath and towel tissue, also have a small share.
When Amazon-owned Quidsi launched soap.com in 2010, only an estimated 6 percent of drugstore products sales were distributed through online channels. Major hurdles to growth for online sales of consumer products have been: expensive delivery, out-of-stock situations, and consumer sentiment towards wanting to see the product before making a purchase.
However, retailers are now offering: short delivery times of 1-2 days and even same-day options, convenient auto-replenish programs, and lower-cost shipping options for frequent shoppers, which are helping to eliminate many concerns that consumers have about purchasing tissue paper products and other essentials online. This has spurred fast growth in these consumer packaged goods product categories. In a recent study completed by comScore, online sales of consumer packaged goods were estimated to be on a 20 percent per year growth track.
IMPLICATIONS FOR THE TISSUE INDUSTRY
In addition, sales channels are overlapping between Away-from-Home and At-Home end uses. Small offices, traditional Away-from-Home customers and the average consumer can all purchase through similar sales channels online which may create an opportunity to reach more end-users with a product that caters to both Away-from-Home and At-Home customers.
Lindsay Gervais is a Consultant at Pöyry Management Consulting. Contact her at: [email protected]. This article originally appeared in TAPPI's Over the Wire electronic newsletter on August 13, 2013.
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