Breaking Barriers: How CPG Companies are Driving Direct-to-Consumer Success

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As consumer preferences evolve, consumer packaged goods (CPG) companies are reshaping their business models to establish direct connections with customers. Direct-to-consumer (DTC) capabilities enable brands to deliver personalized experiences, premium products, health-focused innovations, and sustainable solutions. However, unlocking the full potential of DTC capabilities require CPG companies to overcome challenges in data accessibility, artificial intelligence (AI) implementation, and operational scalability, and all three of these challenges result from one overarching challenge: data fragmentation.

A Fragmented Data Landscape

In terms of data accessibility, CPG companies are challenged by fragmented customer data, which is stored across a variety of different repositories, such as transactional systems and social media platforms, which store the data in vastly different formats. Similarly, operational scalability is impacted by data that is fragmented across a variety of supply chain systems and Internet of Things (IoT) devices. 

AI can greatly support DTC models, enabling faster innovation in R&D, improved marketing personalization, and streamlined operations with real-time insights to enhance efficiency and sustainability, but fragmented data limits AI’s ability to provide actionable insights. In addition, though Generative AI (GenAI) has the potential to democratize insights by simplifying complex processes and enabling access through intuitive tools and real-time analysis, democratizing GenAI insights requires the implementation of clear data governance frameworks to prevent misuse, the fostering of transparency, to help users understand the logic and limitations of AI outputs, and regular audits with diverse datasets to mitigate bias and promote fairness. Each of these efforts are simply not possible when data is fragmented. 

Many CPG companies are leveraging cloud data lakehouses and other cloud data platforms to address these challenges. However, there will always be some data that is stored outside of the central repository, if only due to regulations that restrict data movement, or multicloud configurations, which some CPG companies leverage to take advantage of the best features of different cloud systems. 

For effective DTC capabilities, CPG companies need a way to seamlessly unify fragmented data, while also enabling strong data governance across the different systems.  

Logical Data Management for Advanced DTC Capabilities

Logical data management platforms leverage data virtualization to enable real-time, logical connections to data, regardless of where and how it is stored. In this way, logical data management platforms are essential for AI-driven DTC success, as they can seamlessly integrate data from silos like supply chains, customer interactions, social media, and IoT devices. Logical data management platforms provide unified data access without duplication, they enable real-time insights for personalization and inventory optimization, and they facilitate compliance with numerous privacy regulations, building consumer trust.

Logical data management platforms enable “AI-ready” data, which is clean, structured, and accessible, empowering intelligent decision-making by enabling precise consumer segmentation for personalization, accelerating R&D to address trends like premiumization and health, and driving sustainability by enabling the tracking of environmental metrics and optimizing supply chains. 

AI-ready data enables AI systems to deliver actionable insights by 

1. Empowering Personalization – AI-ready data enables precise consumer segmentation through personalized product recommendations and marketing.
2. Fueling Innovation – Unified, democratized data accelerates R&D, helping brands quickly respond to trends in premiumization, health, and wellness.
3. Driving Sustainability – AI-ready data enables AI applications to track environmental metrics and optimize supply chain operations for eco-friendly practices.

Spicing Up Success: How One CPG Giant Went Direct-To-Consumer with Data-Driven Precision

A global leader in spices and seasonings faced increasing pressure to adapt to changing consumer expectations. The rise of e-commerce, the growing demand for personalized experiences, and the increasing importance of sustainability, were reshaping the food industry. Traditionally reliant on retail partnerships, the company decided to establish a DTC channel to strengthen its customer relationships and diversify its revenue streams.

However, this transition posed significant challenges:

• Data Silos: Consumer data was fragmented across supply chains, retailers, and digital platforms, making it difficult to gain actionable insights.
• Personalization Limitations: The lack of unified data hindered the company’s ability to offer tailored recommendations and personalized marketing.
• Operational Complexity: Seamless inventory management, fulfilment, and sustainability tracking for DTC required real-time data access and advanced analytics, which the company lacked.

The company leveraged the Denodo Platform, a logical data management solution, to unify diverse data sources into a virtualized layer, enabling real-time, AI-ready insights for improved decision-making. This transformation integrated data from supply chains, loyalty programs, e-commerce, and social media, providing a comprehensive view of customer preferences. The platform supported real-time analytics for seamless DTC operations, AI-driven personalization for tailored recommendations and dynamic pricing, and detailed sustainability tracking to keep the company aligned with its eco-friendly goals.

The solution resulted in a double-figure percentage increase in average order values through a personalized “Create Your Own Blend” feature and an equally impressive reduction in stockouts, with real-time inventory visibility. The company achieved its sustainability goals by transitioning to 100% recyclable packaging and reducing logistics emissions. The DTC channel contributed a significant percentage of total revenue in its first year, with significant year-over-year growth. Direct access to customer data strengthened relationships through personalized campaigns and loyalty programs, fostering long-term brand loyalty.  This success underscored the importance of data and analytics in navigating the complexities of modern consumer demands. By leveraging the Denodo Platform, the company transformed fragmented data into actionable insights, enabling personalization, operational excellence, and sustainability in its DTC operations.

Packaging The Future: Your Next Move

As CPG companies embrace direct-to-consumer strategies, success hinges on the ability to responsibly leverage AI and democratized data. Logical data management is the foundation for enabling unified, AI-ready data that drives innovation, personalization, and sustainability.