Ecommerce is not profitable for manufacturers of consumer goods such as personal care items and groceries, but they must acknowledge that selling over the Internet is inevitable.
This was the view of Richard Goldstein, president and chief executive of consumer goods supplier Unilever US, during this week's Internet World conference in Chicago.
He said that IT has "profoundly" affected Unilever, which markets brands including Ragu, Mendadent P and I Can't Believe It's Not Butter, but does not believe the company could make any profit selling goods online using today's business models.
Goldstein pointed to companies such as Peapod, an online grocer which delivers customers' orders to their doors.
"With every order it takes it's losses increase. Low cost items and perishables are not ideal candidates for Fedex delivery," he said.
Nevertheless the Internet is crucial to the future success of consumer goods companies because it enables them to get closer to their customer, build longer lasting relationships and ensure their brands become part of their consumers' lives.
He said Unilever's Ragu range of pasta sauces was the first consumer packaged product to get its own Web site.
Goldstein explained: "The move was not driven by the need to appear trendy but because the consumer is online. But just being online will not build brand awareness. It's got to be entertaining."
For example, the Ragu site offers recipe tips while the Web site for I Can't Believe It's Not Butter runs a passion theme and features ideas on how to write love letters or 50 ways to please your lover, he continued.
Unilever is also examining ways of cross marketing its brands by offering links or creating joint initiatives. International brand centres are being set up in New York, Amsterdam and Singapore to explore new ways of using the Internet to attract and retain customers.
The company also has marketing relationships with MSN, AOL and @Home to increase brand awareness.
"We need to create brand awareness at the point of thought, not at the point of need," he said.
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