GUEST COMMENT Do brands need to become retailers to survive?
Although there has long been a traditional, symbiotic relationship between brands and the retailers that stock them, it has not always been an easy journey.
In recent years, the question of how a brand should sell its products to consumers has been complicated by the growing ease and power of online retail.
On one side, you have insurgents like DollarShaveClub, presenting such a challenge to the incumbents that they had no choice but to acquire it. On the other hand, top end brands are increasingly realising the power of using limited editions and special access to build strong communities around the growing range of new influencers.
As is often the case, it’s not quite as simple as it may first seem. Yes, the opportunity for a brand to distribute its own wares is enormous -- but with technology moving so fast, retailers may still have plenty to offer.
It’s all about roleplay
In the offline world, each player’s role made sense. Brands could invest everything in inspiring and reach consumers with their message, while retailers did the selling.
But online has not only changed distribution, it has changed the question for brands about what the compelling proposition is to their product.
Mach 3 Razors continued to advertise with big aspirational messages that you could have a face as smooth as Roger Federer. Meanwhile, Dollar Shave Club published a much richer YouTube video that emphasised not looks but convenience.
The subscription and the form of distribution was part of the product and brand itself. There was an existential reason you would not be dealing with a retailer as a middleman. This is a huge change.
If a brand realises it must make this transition, it needs to cover every touchpoint from brand storytelling to transactional and CRM. With this power, they can then start to understand the person that will ultimately buy their product.
Taking control of your brand
Take for example, cosmetics brand Clarins. The team chose to create a seamless global online retail offering and digital roadmap spanning more than 25 markets across Europe, Australasia and North America by selling direct to their customers.
Now not only did the global cosmetics brand retain its image of quality by being stocked in the world’s biggest department stores, it can also reach its customers directly, and on its own terms.
A project like this is more than just a small tweak. This is a genuinely transformative turnaround, of the kind difficult to bring about in such a huge enterprise.
It wasn’t easy. It wasn’t quick. But the shift in mentality will let them behave fundamentally differently into the future.
So will it be right for you?
Of course, this approach will not be relevant for all brands.
Newcomers, in particular, may benefit from the backing of big department stores. Take a new perfume brand that needs customers to smell the fragrance or a flashy digital gadget that might benefit from a demonstration.
Likewise, many luxury brands rely on high end third parties to sell their goods under a wholesale arrangement. This is true especially if they are based abroad and have little knowledge of local markets.
However, for those brands that can adopt this direct sales model, the transformation could alter their business model entirely and free up precious resource to be used elsewhere.Annabel Thorburn is director of consulting at eCommera