PepsiCo`s Foray into the DTC Channel: Is Digital Commerce Becoming Mainstream for Brands?

Case Code: CLIT013 Case Length: 5 Pages Period: 2020-2021 Pub Date: 2022 Teaching Note: Available

Price: Rs.300 Organization: PepsiCo, Inc. Industry: Food & Beverage Countries: United States Themes: E-Business Strategy, E-Business Operations, Consumer Behavior,RetailTech

Abstract

The caselet “PepsiCo’s Foray into the DTC Channel: Is Digital Commerce Becoming Mainstream for Brands?” discusses the various factors that led to multinational Food and Beverage Corporation, PepsiCo, Inc. (PepsiCo) making a foray into the Direct-to-Customers (DTC) space in the US, during the COVID-19 pandemic, which saw wide-scale lockdowns. The two DTC websites – PantryShop.com and Snacks.com – focused sharply on meeting consumers’ needs, rather than selling specific products or brands. The case documents how PepsiCo, which had been heavily dependent on brick-and-mortar retail sales, had shifted its focus over the past few years to the e-commerce space following changing retail trends. So, are well-established brands all set to leverage the digital commerce space to derive business benefits, or is it just a temporary jaunt to beat the unprecedented circumstances caused by the pandemic?

Issues

• Scrutinize the massive consumer shift to digital channels triggered by the pandemic.
• Analyze the requirements of starting an e-commerce venture for a Consumer-Packaged Goods (CPG) brand.
• Design a new distribution channel.
• Understand the various business models in e-commerce.
• Appreciate the customer-centric capabilities needed for success in the DTC channel.
• Examine the benefits and limitations of e-commerce for popular brands.

Introduction

On October 1, 2020, US-based multinational food and beverage corporation, PepsiCo, Inc. (PepsiCo) reported that its e-commerce sales had almost doubled during Q3 2020 in comparison to Q3 2019. The company said that in Q3 2020, its total revenue had grown by 5.3% to US$ 18.09 billion, led by a huge increase in its Direct-to-Customers (DTC) business driven by its two new websites – PantryShop.com and Snacks.com. PepsiCo’s revenues beat analysts’ expectations, which were at US$ 17.23 billion. The company’s earnings per share (EPS) hit a high of US$ 1.66 in Q3 2020, exceeding the US$ 1.49 that analysts had predicted..

Keywords

E-business;Retail Technology;Consumer Behavior; Economics and Business Environment; Sales and Distribution Management;Strategic Management; Direct to Customer (DTC); Digital Commerce; Consumer Packaged Goods Industry; Pandemic Management;Customer-centric; Distribution Channel Design; Consumers’ needs; End-to-end IT capabilities; Specialized Product Packs

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