CPGs: embrace direct-to-consumer e-commerce

The opening keynoter at the September 12 Evolution of Excellence conference had this advice on e-commerce for today’s CPG companies: Selling through Amazon is not the only way.

Capacity LLC's Jeff Kaiden at Frain Integration's Evolution of Excellence summit.
Capacity LLC's Jeff Kaiden at Frain Integration's Evolution of Excellence summit.

As in years past, Frain Integration and the Contract Packaging Association once again convened a day-long industry summit that brought together brand owners, suppliers, and contract packagers to discuss challenges and opportunities in an increasingly divergent marketplace. The opening keynoter was Jeff Kaiden, CEO of a 3PL company called Capacity LLC. A major theme of his remarks is that yes, Consumer Packaged Goods companies should redouble their efforts where selling through e-commerce is concerned. But he urges CPGs to look seriously and creatively at taking a more direct-to-consumer path than the path that many have taken so far, which is simply to reach e-commerce customers through Amazon.

He’s the first to admit that opting for an e-commerce channel other than Amazon, who practically invented e-commerce as we know it today, is not without its challenges. They own the space, and they’re tough. But by going through Amazon, “they get the margin, not the CPG,” said Kaiden.

One option is to take a more direct-to-consumer approach. “CPGs should put up their own Web site where consumers can find their products and then engage with a third-party logistics firm to handle fulfillment,” said Kaiden. Benefits to CPGs from a more direct approach to consumers include these:

• Improved margins

• More opportunities for sampling, both targeted and untargeted

• Better control over promotional events and special geographic test marketing

Attendees at the Frain conference were impressed by the portion of Kaiden’s presentation where he showed the level of automation his own 3PL firm, Capacity, has been able to bring to an e-commerce order fulfillment process. “Lighted-batch-cart” picking and “put-to-light” packaging technologies—where clever use of lighting helps pickers and placers visualize where items need to come from and where they need to go--have greatly reduced the amount of time required for Capacity employees to fulfill orders.

Showing great potential for even more efficiency are collaborative robot applications now being explored by Capacity, chiefly in the area of remarkable end-of-arm tooling designed by RightHand Robotics. These technologies will address the issue of boredom that inevitably rears its ugly head in any order-fulfillment operation. Kaiden also showed video of smart vision technology that obviates the need for bar codes and makes it possible to scan multiple items simultaneously thanks to item recognition algorithms originally developed for Israeli missiles.

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