How does a $230 billion dollar corporation with thousands of products bundled under dozens of brands connect to billions of customers on a personal basis? Currently, with hundreds of mobile apps. But Athina Kanioura, chief strategy and transformation officer at PepsiCo, has a digital transformation plan to build a customized version of direct to consumer that works for PepsiCo, and reduce that number to just one.
Direct to consumer is a product sales channel that could be worth $213 billion by next year, according to eMarketer, and is growing at almost 17% per year. Nike alone took in almost $19 billion in 2022 through Nike Direct, and other big brands want a piece of this growing and highly lucrative pie. That includes PepsiCo, currently sitting at #46 on the Fortune 500 list.
“We’re talking about billions of consumers that engage with us,” Kanioura told me at Web Summit in Lisbon recently. “So what we are trying to do and we have been trying to do especially in the past two years is: can we bring all of those together to one consumer data platform?”
That consumer data platform will power engagement and interaction with end customers via a localized app that will offer the company’s entire portfolio of products. The goal is convenience for customers, cross-selling and upselling for Pepsi, and centralization of loyalty points and rewards programs.
Athina Kanioura, chief strategy and transformation officer at PepsiCo
But Kanioura is not building a traditional direct-to-consumer model, because PepsiCo is a much more complex beast than that.
Going full-on D2C would not only risk Pepsi’s relationships with local bottlers, distributors and retailers, it would also be virtually impossible to fulfill, thanks to the intricate web of production and distribution that the company relies on.
So while the app offers access to PepsiCo’s full portfolio of products, delivery will be largely via its existing go-to-market network. The app’s purpose, however, is a single point of contact with the company for loyalty rewards, a complete product selection, and direct, immediate connection.
“If you go to any online provider, let’s say Amazon as an example, right, you will find a select portfolio of PepsiCo, not find every SKU of PepsiCo,” Kanioura says. “If you go to a Walmart store or a Carrefour store, still you will find the core brands that you have, but not every brand of PepsiCo.”
Direct to consumer for PepsiCo, then, is about presenting the full breadth of the product selection that a customer might not find in one particular store, but could get in another. (As such, it’s also going to be an incentive for retailers to offer more of PepsiCo’s products, so they get recommended as a source when Pepsi fans look for a new product.)
It’s also about one place for loyalty rewards and—important for a company that sponsors most of the big sports leagues and many of the leading musical artists in the world—activation and awareness of Pepsi sponsorships, plus the opportunity to participate in them.
Something of this scale with this many distributor and retailer connections doesn’t get rolled out globally overnight. Mexico is going live now, Brazil is soon, but North America will have to wait until sometime in 2024.
“So, that is a connected global D2C ecosystem, so you will see much more cohesiveness when it comes to the D2C application and more commonalities in the UI, UX, and service experience,” Kanioura says. “Now, if you go to a different market, they will have a different D2C application. We’re trying to standardize that component, and link it with the WMS systems, inventory management systems for fulfillment purposes.”
Direct to consumer models help companies boost their brands, deliver unified customer experiences, personalize their services, improve customer loyalty, and increase profitability, according to e-commerce consultant Amit Samsukha.
That’s increasingly the case even in the food and beverage space, which has been late to ecommerce thanks to massive existing distribution via physical stores. That grew quickly during Covid, however—67% according to one measure in just a few months—and that growth is likely to stay … and grow.
If so, PepsiCo is positioning itself to ride that wave, one app install at a time.