CPG Partner Conversations: The Rise of Direct-to-Consumer in CPG with Peak

The COVID-19 pandemic created unprecedented disruption. In a matter of days, our world turned upside down. As shelter-in-place lockdowns, mask mandates, and social distancing rules took hold, new patterns of consumption quickly emerged. Arguably, no industry felt the pandemic’s dramatic impact more than consumer packaged goods (CPG). However, leaders are forging ahead with resilience, tenacity, and innovation. We’ve embarked on a series of conversations with executives from AWS Partners, to showcase their leadership and innovation in challenging times.

In the latest installment of our CPG Partner Conversations blog series, we’re chatting with Will Dutton, Director of Manufacturing at Peak, an AWS Retail Competency Partner that helps companies use their data to make faster, more consistent, and more accurate decisions than ever before.

AWS: Help our readers understand your vantage point. What’s the space you play in, and with what type of CPG executives does Peak interact?

Will Dutton: Peak is an Amazon Web Services (AWS) Advanced Partner with AWS Retail and Machine Learning Competencies. We help businesses—in industries like CPG, retail, and manufacturing—do great things with data by providing them with the technology and skillsets needed to compete and win in the Decision Intelligence era.

Peak’s Decision Intelligence offering, powered by AWS, helps leading CPG companies, including PepsiCo, use AI to better leverage their business-wide data, so they can consistently make great business decisions. We work with senior executives across the entire company—from plan, source, make, move, and market—so CPGs better understand their consumers, optimize their processes, and respond quickly to any challenges. In short, we help CPGs gain that all-important comprehensive view of their organizations by combining data siloed across departments. The results are agile decision-making capabilities, more working capital, lower costs, and revenue growth.

AWS: CPG companies have been managing through unprecedented disruption. What have been the biggest challenges for your customers?

Will Dutton: COVID-19 has made the past year or so very challenging for many CPGs in a number of ways. At the start of the pandemic, we saw the enormity of the situation through pictures in the media of empty supermarket shelves across the world.

In the last year, supply chains have been more volatile than ever before. Different products have been affected in different ways. Some saw a huge surge in demand, while others were left gathering dust in warehouses for months. This volatility and the changing macro environments, in addition to structural changes in supply and demand chains, have been difficult for many CPGs to work with. Additionally, many businesses have had to pivot to entirely different offerings, and we’ve seen a lot of them starting to pay closer attention to their ecommerce platforms and direct-to-consumer (DTC) channels.

AWS: How do you see CPG companies adjusting their current operating environments to changing market dynamics and consumer expectations?

Will Dutton: The pandemic accelerated an already-emerging trend in terms of DTC channel sales. The growth of new, agile businesses—those that offer quick and hassle-free delivery of everything from shaving foam to milk—has caused larger CPGs to begin developing their own digital DTC presence in a bid to defend against these challengers and grab market share. Some were forced to make this move because many brick-and-mortar stores were shut down—sometimes overnight. To continue growing their sales pipelines, they’ve had to explore new sales avenues.

We’ve seen leading CPG players like PepsiCo, Nestle, and Heinz all launch DTC ecommerce channels in the past year, and it’s obvious why. The benefits of a DTC presence speak for themselves. Companies have a platform to test new products, bundles, and strategies. They can also gather and keep first-party customer data that’s worth its weight in gold. And forward-thinking CPGs are using this data to create better products and serve their customers better.

AWS: The CPG industry is incredibly resilient. As you look toward the new normal, what roles do technology and the cloud play for CPGs? How do you see technology enhancing the way CPGs make, move, or market their products?

Will Dutton: I think CPGs can learn a lot from those data-centric retail businesses that are the kings of selling DTC. But, unlike retailers, CPGs looking to launch a DTC offering have an even more significant advantage: They’re essentially able to start from scratch. With no existing legacy systems to modernize, CPGs can build DTC capabilities that meet their specific needs.

By investing in the right technology now to do this in an agile and efficient way, they can leapfrog competitors and grab a huge chunk of market share in this new DTC CPG world, connecting the dots between their organization and leveraging business-wide data to maximize its full potential. What’s more, by getting it right, they can continue to outperform competitors for years to come.

Solutions like Amazon Personalize, together with Peak’s Customer Intelligence, will be key in helping these businesses succeed, offering ML-driven personalization that can help CPGs grow ecommerce revenues, rapidly identify more opportunities to improve sales via marketing, and fundamentally have a better understanding of the consumer.

AWS: With the current CPG industry disruption, how is your company innovating to respond to changes?

Will Dutton: For those CPGs who are embracing DTC and ecommerce, we’re helping them follow those best-in-class retail businesses that have achieved phenomenal success by introducing Decision Intelligence into their marketing mix. We’ve recently teamed with AWS to integrate Amazon Personalize into our system to launch the 21-Day Personalize Challenge, which gives quick insight into how machine learning can help businesses optimize their DTC marketing efforts in just three weeks.

Some of our areas of focus include helping CPGs find more ideal customers, increase average order values, and drive higher purchase frequencies—ultimately leading to revenue growth and profitability. All this is achieved through AI-powered, personalized marketing.

Recently, we’ve helped CMOstores.com, which sells building supplies and construction materials to traditional trade and non-trade customers, increase their click-to-transaction rate by 25% and increase overall revenue by 5%. Another customer of ours, Footasylum, has achieved a 28% uplift in email marketing revenue thanks to AI-driven, personalized communications.

AWS: There is much talk about a “new normal” going forward. What does this “new normal” look like to you, and how do you think the CPG industry will look three years from now?

Will Dutton: We’re seeing the emergence of two main themes: increasing complexity and a need to be more sustainable. From the demand side, CPGs have more sales channels, and they work with different types of customers—traditional retailers and consumers. They are also having to manage constantly changing consumer demand profiles.

From the supply side, there are new levels of complexity due to changes in the geopolitical landscape that can affect “long” supply chains, as well as the movement to “nearshoring” and an emphasis on building robust supply, given recent events. As a backdrop to all this, CPGs find they need to be more sustainable and reduce, or remove, CO2 emissions.

I think these new pressures will result in new organizational structures to deal with these two issues. Furthermore, there will be those that embrace these challenges and use new technologies to profit from them, and, unfortunately, those that ignore them and will struggle.

This is already happening in retail. We’re seeing businesses like ASOS, who has been data- and AI-centric from day one, thrive, while legacy brands struggle to adapt to the new world. CPGs, particularly those that are serious about doing DTC well, need to be looking at retail as an example of what’s possible when you get it right—and how bad it can be if you get it wrong.

AWS: What makes you excited for the future of CPG?

Will Dutton: We see CPGs placing more importance on what we call “the greater data ecosystem.” Today, you can make decisions based on data from your current systems, or by joining up a few previously siloed sources. However, there’s potential to go even further than this. The more data you have to play with, the more informed your decisions will be, and this is very exciting!

Imagine linking data from your supply chain systems with your customer’s ERP and logistics systems, as well as DTC consumer data. You could predict future demand and understand your customer’s stock levels in order to anticipate what yours should be. The possibilities are endless. I think we’re seeing the very beginning of this within the industry, and it will revolutionize how CPG companies compete and provide value to consumers.

AWS: Thanks for chatting with us, Will. We appreciate your insights and expertise.

We hope you enjoy our blog series. If you have questions for Will, Peak, or AWS, please leave a comment on this blog. To learn more about Peak, see the Peak website.