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PepsiCo delivers snacks DTC: Covid-19 fad or long term ecommerce strategy?

PepsiCo recently launched two ecommerce websites (PantryShop.com and Snacks.com) to provide direct-to-consumer (DTC) options for its packaged goods brands. Mintel’s analysts debate this development…

Given the increase in the number and frequency of consumers turning to online grocery shopping to avoid going to stores during the COVID-19 pandemic, it seems like PepsiCo’s timing is perfect. Or is it?

Here Mintel’s retail, food, drink, and consumer experts weigh in and discuss whether or not the new sites meet consumers’ changing needs and behaviours – now and in the future; if there are opportunities for innovation; and what we can expect from the competitive landscape in the long term.

Katie Yackey, Analyst, Ecommerce, Mintel Reports US

Companies such as PepsiCo have kept a close eye on the DTC market, waiting to make their play as consumers’ interests in DTC brands continue to grow.

According to new research on direct-to-consumer retailing, more than two in five US consumers say they are shopping DTC more now than in 2019 and half of those who have not purchased from a DTC brand would be interested in doing so.

Furthermore, both sites tap into two of the key elements of ecommerce: PantryShop.com primarily leverages the convenience of ecommerce by offering consumers bundle packages, while Snacks.com focuses on personalisation by allowing consumers to customise their own snack box.

However, much like is seen in the streaming wars, too many DTC options – with their own site, subscription, and password to manage – overwhelms consumers making the experience less valuable and more complicated.

Further complicating things, the new sites do not provide consumers with a one-stop shopping experience for all their grocery needs.

While a first-time trial of PepsiCo’s new sites may be interesting, especially under stay-at-home orders, in the long term, it is highly unlikely consumers will seek out a site specifically for their snacking needs if they can bundle it with their normal grocery shopping habits.

Diana Smith, Associate Director, Retail and Apparel, Mintel Reports US

It’s a great time for PepsiCo to experiment with offering new forms of convenience to consumers. While both sites have merit, the proposition of buying individual types of items (eg snacks, breakfast foods) directly from a supplier runs counter to how consumers shop for groceries.

While they might be willing to test out these sites initially – especially now, while they are at home and continue to face challenges with out-of-stock items and long delivery time-frames – it’s likely they’ll see this as a novelty that will wear off once pre-COVID-19 shopping resumes and won’t ultimately adjust their shopping behaviours, especially if they have to pay delivery fees.

That said, the bundled approach via PantryShop.com based on various need states has merit as it more closely mirrors a one-stop-shop approach and consumers are stocking up more in light of COVID-19.

It’s likely we’ll see more brands offering bundled kits like this which could threaten mass merchants, club stores and traditional grocers. The idea could be strengthened by allowing consumers to customise their own bundles.

Snacks.com is fun and easy to use and is a great option for parents looking to keep their kids happy. A subscription option to receive replenishment boxes on an ongoing basis would be a nice extension of the offering….

Mintel: Read the full story HERE

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