PepsiCo launches direct-to-consumer sites for its brands

Discussion
Source: pantryshop.com
May 12, 2020
George Anderson

If you’re a consumer who comes away unhappy from a shopping trip online or in a store because your local supermarket is out of stock of your favorite type of Lay’s potato chips, there may be hope for you. PepsiCo has announced the launch of two new direct-to-consumer websites — PantryShop.com and Snacks.com — to let you order some of the company’s favorite brands online and have them shipped directly to your home.

“Over the last few years, PepsiCo has been working to be a faster, stronger, better company, one that is laser focused on meeting consumer needs and winning in the marketplace. Investing in eCommerce and digital capabilities and talent has been — and will continue to be — a big part of that effort,” said Gibu Thomas, PepsiCo senior vice president & head of eCommerce, in a statement.

Both sites were completely developed in-house by PepsiCo in less than 30 days. The consumer packaged goods giant brought together teams across disciplines, including technology, insights, resources and inventory, to pull the program together.

PantryShop.com features bundled products from PepsiCo’s Gatorade, Quaker, SunChips and Tropicana brands in a variety of pantry kits: Everyday Pantry, Rise & Shine, Snacking, Hydration, Protein, Workout & Recovery and Family Favorites.

PepsiCo says the kits, which come in standard ($29.95) and family sizes ($49.95), have been “curated based on affinity research” designed to meet the realities of Americans staying at home to avoid transmission of the novel coronavirus. Delivery is provided at no additional charge.

Snacks.com gives consumers the option of mixing and matching chips, crackers, dips, nuts and more from PepsiCo’s Frito-Lay portfolio of brands, including Cheetos, Lay’s, Ruffles, Tostitos and others. Shoppers receive free shipping on orders of $15 or more. The vast majority of orders for both Snacks.com and PantryShop.com will arrive within two business days.

DISCUSSION QUESTIONS: Do you expect demand for PepsiCo’s PantryShop.com and Snacks.com to be strong in the short term and after the coronavirus pandemic has passed? Will other large CPG companies follow PepsiCo’s lead with their own sites?

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12 Comments on "PepsiCo launches direct-to-consumer sites for its brands"


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David Naumann
BrainTrust

Demand for sodas, sports drinks and snacks typically have a fairly steady demand and the demand should remain relatively constant after the pandemic. Other companies, even before the pandemic, have been making the move to direct-to-consumer websites – especially for products that are typically purchased on a weekly or monthly cycle. PepsiCo’s rapid response was impressive and we will see more manufacturers follow suit. I didn’t see an option on PepsiCo’s website for maintaining a recurring order, but that will likely be added soon so that customers can schedule routine orders for beverages and snacks they order regularly.

Phil Chang
BrainTrust

Buying patterns have changed. If and when COVID-19 passes, replacing commodity buying trips with online purchases is going to continue to be a trend. I think other CPG companies are going to be attracted to this model, but companies beware – this isn’t for the faint at heart.

There’s a lot more on the line than skipping the retailer. If you don’t have the right infrastructure and logistics for this, you risk squandering your brand equity.

Out-of-stocks, badly shipped product, and poor customer experience will sink brand equity faster than we can eat snacks right now.

Suresh Chaganti
BrainTrust

The direct-to-consumer channel will not add a meaningful amount of revenue in the short- to medium-term. But there is a more significant strategic play here. The first-party shopper insights they get are valuable and will help shape their traditional retail channel. In the absence of a robust direct channel, they are over reliant on market research studies and retailers to get such insights.

This is a good play to gain leverage with retailers.

Michael La Kier
BrainTrust

Beverages and snacks are key categories for at-home consumption regardless of the pandemic. During COVID-19 this will be an option and will likely do moderately well. After the pandemic there will be many more options; most shoppers buy based on convenience and want more one-stop shopping.

Gene Detroyer
BrainTrust

Actually, I am not sure that the demand will be strong in the short term. People have to discover it. However, once they do, demand will grow strongly.

Other CPG companies will follow and direct to consumer will be a significant factor in the future. It is easy. It is convenient and why not?

Ken Cassar
BrainTrust

During lockdown, I can see Pepsi’s DTC efforts bearing fruit, which MAY lead to some stickiness. Generally, though, wholesale will continue to be the vehicle for 99.999 percent of Pepsi’s sales, I believe.

Ananda Chakravarty
BrainTrust

Pepsi is smart to jump on this trend. According to eMarketer, D2C has been growing for the past five years and grew almost 18 percent YoY in 2019. Although it’s predicted to slow down a bit, there is still double digit growth expected in D2C. Companies like Pepsi will continue with high demand in grocery without D2C, but it provides a new avenue to sell and less reliance on the retailer. For other types of manufacturers, especially those not in a grocery or c-store distribution model, it becomes almost a necessity as their distribution networks have effectively been shut down during the pandemic and purchase orders have come to a standstill. We’ll see more suppliers resorting to their own commerce sites as D2C continues to grow, pandemic or not.

Ryan Grogman
BrainTrust

If combined with a strong marketing campaign, there will be small to moderate demand in the short-term. But more curious will be how this impacts their relationships with their distributors and wholesalers. What will be their pricing strategy, and how will that impact forecasting and buying on the part of the wholesalers/food and beverage retailers? Those relationships are a constant battle for buy quantities, prices and ultimately shelf-space, and a large DTC push may cost them some leverage.

Kevin Graff
BrainTrust

Another entry into the growing D2C market. Light bulbs re-order themselves direct from the manufacturer. Furnace filters do the same. The spotlight here is how brands are looking to move past the retailers and go direct to consumers. Once a consumer goes direct, the data flow to the brand and the brand now owns the relationship and can begin to leverage it. Nothing big here in the short term — but it’s a slippery slope to watch out for.

Shikha Jain
BrainTrust
Going DTC has a lot of benefits especially in the current environment and PepsiCo is one of the best positioned companies to do so. What is compelling about the offer is that they have applies best practices in their first attempt. For example, the bundles/kits encourage consumers to spend more than if they would have bought individual items. By offering a good and better option, they have eased the consumer decision making process. The second best practices employed mirror what typical DTC platforms do such as free shipping over $X and fast delivery times. The primary challenges that DTC platforms are facing right now are in fulfillment logistics, ability to scale quickly and the unprecedented levels of demand in essential industries. Given that PepsiCo is a global food and beverage giant means that they are well positioned against all these challenges. That’s during the pandemic. Post-pandemic, certain consumer segments that have gotten used to the convenience of “food boxes and meal kits” appearing at their doorstep at regular intervals will continue to maintain this behavior.… Read more »
Craig Sundstrom
Guest

The nature of impulse buys is just that … “I want it NOW” not “I want to order online for delivery from 3-48 hrs from now. And is there really a potato chip shortage?

Combined with the high (shipping)cost/value nature of their products, I don’t see this being a big winner.

STIQ Ltd
Guest
2 months 16 days ago

I heard about a consumer goods company that built a micro fulfilment centre in Illinois. May this be the one?

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