Consumer Packaged Goods Hit $10 Billion in Online Sales

1010data, a self-service data management and analytics platform, has released the results of its Online Consumer Packaged Goods (CPG) Industry Report. For the first time since 1010data began tracking the market, online CPG sales surpassed $10 billion. Many of the largest product categories within CPG, including health supplements, pet care and cosmetics, each generated more than $1 billion in sales, driven in large part by online subscription and pantry-box retail models that are growing rapidly due to ease of use and price savings.

Total CPG revenue in 2016 was $10.4 billion, up from $7.6 billion in 2015. The 2016 data showed a nearly even split in revenue between the first and second halves of the year, implying that consumers are more frequently buying CPG products online year-round and not just during the holiday season. Overall analysis shows that consumers are becoming more conscious of their shopping habits, whether for saving money or opting for eco-friendly products, and that CPG companies that invested in low-priced, natural products had big payoffs in 2016.

Other key findings from 1010data’s report include:

1010data’s report also notes that online CPG sales have grown twice as fast as total ecommerce sales, which had a 16 percent year over year growth rate in 2016. Reasons for CPG’s accelerated sales growth include the fact that more online retailers offer free two-day shipping and subscription options. As a result, consumers no longer have to wait for shipments of home staples like paper towels and dish soap.

“After the first half of 2016, 1010data estimated that CPG online sales in key CPG categories would reach $10 billion for the first time ever, and we were correct,” says Sandy Steier, CEO and co-founder of 1010data. “All indications are that there is no sign of slowing in the online CPG market. 1010data will to continue to track consumer behavior with high-quality, granular datasets that reveal meaningful insights about what markets are doing and why.”

1010data’s report also points to emerging trends for 2017, including the expansion of private label products in the CPG sector. As evidenced by Amazon and Walmart, brands will need to balance the dynamics of online retail partners that also have private labels. In addition, market fragmentation—in the form of unexpected competition for established brands—will emerge, given that the online market has lower barriers to entry than brick-and-mortar retailers and makes it much easier for new and “cult-following” brands to gain traction, Steier says. Finally, subscription models will continue to win over online consumers, with retailers that successfully execute on the subscription model gaining an advantage. Fast, free shipping combined with low prices and wide product assortments means more frictionless online shopping that will continue to drive growth for the CPG category.