Sales of consumer packaged goods (CPGs)—consumables people regularly buy—used to be something store-based retailers could count on, even as online shopping soared.
As online retailers Amazon.com Inc. (No 1 in the Internet Retailer 2019 Top 1000) grabbed market share in other categories, it seemed safe to believe consumers would never buy many CPGs online. Such products—which include things like toothpaste, breakfast cereal, razor blades, shampoo and packaged food—were seen as items shoppers buy only as they needed them.
But the old assumptions are changing rapidly. That’s mainly because of the success of
digitally native upstart manufacturers—like Dollar Shave Club (No. 160), launched in 2011, and Harry’s Inc. (No. 197), which started in 2013—along with other online CPG sellers.
In addition to Dollar Shave Club and Harry’s, CPG retailers in the Top 1000 include The Honest Company Inc. (No. 135), a manufacturer of household goods and vitamins, and BarkBox (No. 212), a pet-supplies subscription service, each launched in 2011.
The 2019 Top 1000 ranking—which lists the top 1,000 online retailers based on online sales directly to consumers—includes a total of 34 CPG companies. Sales growth for those companies in 2018 was 17.9%, slightly below the 18.0% growth rate of the Top 1000 overall. Among those CPG companies, 18 are in the Food/Beverage product category, 14 sell Health/Beauty products and two are specialty retailers. By merchant type, 19 are consumer brand manufacturers, five are Catalog/Call Center retailers, one is a retail chain and nine are web-only retailers.
The largest CPG company in the 2019 Top 1000 (as measured by direct, online sales to consumers in 2018) is HelloFresh Group (No. 54 in the overall Top 1000), an online meal-kit company with 2018 web sales of more than $1 billion. Also included in the top five are cosmetics manufacturer L’Oréal S.A. (No. 94, based on direct-to-consumer sales only); Blue Apron Inc. (No. 97), a meal-kit company; Weight Watchers International Inc. (No. 107), which sells products related to weight loss; and beverage company Keurig Green Mountain Inc. (No. 134).
In September 2018, Weight Watchers changed its name to WW International Inc. and adopted a new tagline: “Wellness that Works.” In mid-2018, Keurig Green Mountain merged with Dr. Pepper Snapple Group to form Keurig Dr Pepper. Keurig Green Mountain’s rank does not reflect the merger.
The fastest-growing CPG manufacturer in the 2019 Top 1000 is CPG retailer Brandless Inc. (No. 973), with sales growing 150% in 2018. Brandless makes and sells an assortment of products under its own Brandless label. The second-fastest grower was BarkBox, which makes and sells pet products, followed by beauty brand Glossier Inc. (No. 404), HelloFresh Group (No. 54) and L’Oréal.
Procter & Gamble goes direct-to-consumer
Online sales growth of packaged consumables—and the slow response to it by major CPG companies—has created opportunities for upstart brands that sell on the web. It also has left the giants—like Procter & Gamble Co. (P&G), Nestle S.A. and The Kraft Heinz Co.—scrambling to catch up in the digital marketplace. And they are fighting back.
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