PepsiCo launches direct-to-consumer offerings, 'an additional choice beyond retailers'

Gibu Thomas, PepsiCo SVP & Head of eCommerce, joins Yahoo Finance to discuss Pepsico's new direct-to-consumer offerings, including the launch of PantryShop.com and Snacks.com.

Video Transcript

BRIAN SOZZI: PepsiCo is appealing straight to the consumer with news it announced this morning. The company has launched two new websites today that will give you all the food you need to support your new work-from-home snacking habits. And believe you me, there are a lot of snacking habits going on here.

Joining us to discuss is Gibu Thomas, PepsiCo's Senior Vice President and Head of E-commerce. Gibu, good to see you this morning. Walk us through exactly what you did. Two new website launches. Why did you pull this off?

GIBU THOMAS: Good morning, Brian. As this crisis unfolded, we heard from our consumers that, you know, obviously they find our products, our brands to be well loved, and it's providing sources of comfort for them. So we wanted to give them an additional choice beyond our incredible retail channel to access these products, and so we launched pantryshop.com, which is really catering to these new occasions that people have.

We're working from home, and if you're like me, we're home schooling, which is really fun-- working out from home. So we've created a set of bundles with our brands that consumers can have access to-- as well as snacks.com, which has a list of all the wonderful Frito-Lay snacks that they can order as well.

ALEXIS CHRISTOFOROUS: Gibu, when I heard this, I thought it was quite clever to go direct to consumer, but I'm curious what retailers who carry your products think about all this. I know you used to work at Walmart. They carry PepsiCo products big time. Are they a little upset? I mean, you're sort of competing with the folks who carry your products, in a way.

GIBU THOMAS: You know, not really just because our retail is so masked to them. They are not able to access the retail channel. And this is-- you know, these things, direct to consumer, at the end of the day, I think of it as complementary. It's going to be a tiny portion of our overall sales, so it's not really competitive as much as it's a platform for us to learn.

So for example, if we find that these bundles are actually valuable, a workout bundle that we create, it could inform our merchandising strategy in the store-- assortment strategy in the store. So I actually think of it as a complementary approach.

BRIAN SOZZI: Gibu, do you imagine-- I know working online, you're always tinkering. You're always trying to find the next big thing. But do you think subscriptions are something of interest as it pertains to these two sites?

GIBU THOMAS: You know, I think we will explore everything. I think our approach is to be consumer centric and just follow the consumer where they want to go. And if they find that some of these things-- obviously our brands are, you know, well suited for repeatable consumption. And if the consumer says hey, listen, I don't want to have to think about having to order it every single time. I want to have it as, you know, just set and forget. Absolutely we'll follow the consumer.

ALEXIS CHRISTOFOROUS: Gibu, I'm curious about logistics because you don't normally go direct to the consumer. What was that like to scale up, to say, OK, we're going to take these orders and then we're going to be able to ship directly to people's homes, businesses, whatever the case may be? How were you able to scale up so quickly?

GIBU THOMAS: Yeah that's a good question. You know, we have built over the past few years a set of capabilities that give us the ability to navigate this new consumer normal of shopping online. So we have end-to-end capabilities that we have built, both on, you know, the user-experience side, the digital-experiences side, as well as on the fulfillment side.

We have an incredible front-line workforce, obviously, that's serving our retail channel during this incredibly challenging time, but we also have capabilities by which we can ship directly to consumers nationwide and have the product reach them in an incredibly fast and convenient way.

BRIAN SOZZI: Gibu, how has the pandemic changed your thinking and approach to developing PepsiCo's e-commerce business? It's been growing fast. It gets mentioned here and there in the earnings calls, but I would imagine it's taking more of a center stage inside the company right now.

GIBU THOMAS: Yeah, absolutely. I think we've all seen kind of how much the role the channel has played during this pandemic. You know, there's research that says that the channel could have accelerated by as much as five years, and we're seeing that as well just in terms of how consumers are thinking of shopping online much more significantly.

And so we're investing heavily in the channel. It's been a great source of growth for us, and we'll continue to invest in the channel.

BRIAN SOZZI: All right, let's leave it there. Gibu Thomas, senior vice president and head of e-commerce at PepsiCo, good luck with the new sites.

GIBU THOMAS: Thanks.