PepsiCo’s Move Into DTC Is Both Sales Tactic and Consumer Research

The sites PantryShop.com and Snacks.com, which debuted Monday after progressing from concept to completion in under a month, are the company’s first major attempts at offering its many food and beverage products directly to consumers.

Adding another source of revenue is far from the only reason behind Pepsi’s two new platforms, however. The other primary justification is data.

While PepsiCo has no shortage of consumer insights from market research firms and retail partners, PantryShop.com and Snacks.com will provide information that can’t be found elsewhere, and through a channel owned by PepsiCo.

“What is different about this is we’re getting data on what people are doing versus what they say they will do,” said Gibu Thomas, PepsiCo’s head of ecommerce. “People are voting with their wallet, so we know exactly what resonates.”

The sites, Thomas added, will also allow the company to run thousands of experiments, such as what messaging works and what doesn’t. Those results will inform not only how the online platforms operate, but how the company thinks about messaging and merchandising in the offline world, too.

“The quality, fidelity and speed at which we get consumer feedback is just changed by having this direct touchpoint with the consumer,” Thomas said.

PantryShop.com, for example, offers seven product bundles defined by theme, such as Rise & Shine (Quaker oatmeal, Tropicana juice) and Workout & Recovery (Muscle Milk protein shakes, Gatorade whey protein bars). Which items get included in which bundle are based on PepsiCo’s knowledge of what consumers want, according to Thomas, but the specific groupings are likely to evolve with more time and understanding.

“Selling direct to consumers enables you to own the interface with the customer,” said Hugh Fletcher, head of thought leadership for EMEA and U.K. marketing at Wunderman Thompson Commerce. “This is vital because if you own the interface, you own the customer. If you own the customer, you own the data, and if you own the data, you own the future.”

The strategy isn’t entirely new. Beyond consumer demand and shopping patterns, controlling an ecommerce platform can reveal price-point sensitivities and richer information about basket sizes.

“It’s not uncommon for consumer packaged goods, if they have the capability, to go to direct to consumer,” said Vivien Azer, a managing director at financial services firm Cowen. “The risk is time, focus of the organization and perhaps a little bit of money.”

Generating revenue from the two sites, of course, is also part of the equation. PepsiCo hopes that moving quickly with the new initiative, while leveraging its well-known products and robust distribution network, will make for a unique combination.

But, again, Thomas stressed, the plan isn’t to reinvent how the company does business.

“Retail is obviously our primary way in which consumers will experience our brands and purchase our brands, and we don’t expect that to change at all,” he said. “This is more about providing complementary solutions.”

Last year, PepsiCo reported $67.2 billion in net revenue, with nearly $2 billion from ecommerce.