Amazon has become a dominant force in the market, revolutionizing consumer behavior. What’s new is that Amazon is now expanding its reach into the consumer packaged goods (CPG) sector, typically dominated by physical stores. Instead of going to a store for a bag of chips, you can now order them in bulk through Amazon Prime. So, how can CPG companies increase their profits? The solution is straightforward: they need to embrace technology to compete.
Amazon’s advantage over traditional retail is its ability to track and analyze customer spending patterns. When you purchase an item, Amazon suggests related products based on your preferences. CPG companies struggle to gather detailed customer data without Amazon’s platform. They face a choice: adapt to Amazon’s model or continue operating blindly in physical stores. Some companies are utilizing artificial intelligence (AI) to level the playing field.
AI can help manage delivery logistics and customer demographics, empowering CPG firms to sell directly to consumers and maximize profits. Several brands have already adopted this approach with promising results. While this tech-driven competition between CPG producers and Amazon may pose challenges for brick-and-mortar stores, the rise of delivery services suggests that they are also adapting to the changing landscape.
