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The direct-to-consumer conundrum (IRM52)

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Iain Devine, Commercial Director of Salmon discusses why brands should be unlocking the benefits of direct-to-consumer marketing whilst leveraging the expertise of their long-standing retail partners. It’s not a case of you’re in or you’re out.

Now more than ever before, brand manufacturers are starting to take control of their consumers’ experience and own their customer relationships. Using digital platforms and tools, they are unlocking new channels to drive increased engagement, revenue streams and profits. But despite this shift a multichannel approach is still paramount to brands’ success.

Last year was a turning point in the struggle between Amazon, retailers and FMCG/CPG manufacturers for control of the consumers’ shopping basket as Amazon continued to expand its offering, particularly in grocery. Outside footwear and apparel, FMCG/CPG manufacturers had been trialling ecommerce but were yet to make big inroads into the direct-to-consumer market. Roll on a year and this wake-up call has led to a substantial increase in the number of brand manufacturers selling online, with a recent Forrester and Digital River survey revealing that brand manufacturers are expecting their direct-to-consumer online channels to become their highest generators of sales within the next two years. As our world becomes increasing digital and brands reap the rewards of their ecommerce offering, it is no surprise that many are considering the prospect of selling directly to consumers.

Pursuing a digital offering is a logical decision based on brands’ desire to develop closer relationships with their customers but it is possible for them to enjoy a balance between selling via their own channels and maintaining good relationships with retailers. Even a brand who completely buys into a direct-to-consumer model is capable of servicing retailers and can continue to manage these relationships throughout the change process.

Take global cosmetic giant Estée Lauder who has traditionally sold through retail partners. Despite ramping up its online offering, which is proving to be a huge success, its primary focus still lies with distributing products through the likes of long term partners Boots, House of Fraser and John Lewis.

Brands should look to embrace the omnichannel environment without alienating retailers. In fact, a great brand site can actually provide retail partners with a lot of support. For example, if the site has a great user experience and helpful content, it’s a positive touch point in the multi-stage research process most consumers go through before making a purchase. The same survey reported that brands’ direct-to-consumer channels can enhance the effectiveness of retail channels, by for example, generating additional traffic to the retailers’ websites.

To make the omnichannel offering work seamlessly data must be collected from all platforms to ensure brands can gather insight into their customers’ buying habits. This means collating streams of information from the brand’s own ecommerce site as well as retailers’ channels. It is increasingly important to bring these data sources together to develop a single customer view which can provide an in-depth understanding of shoppers; whether it is transaction data on their last purchase, personal preferences or which devices they use for which stage of their shopping journey. And most importantly, it can be used to create a personalised experience, tailoring each customer’s experience, promotion or content depending on the outlet they are utilising – and measure the effectiveness of that messaging at growing sales.

Direct-to-consumer interaction is growing everywhere we look, facilitated by the rise of social media and mobile channels, and manufacturers must be taking advantage of every touch point with the customer. Brands should be looking to achieve a multichannel offering which serves their customers’ needs and strengthens customer loyalty. Equally, brands that are lagging behind from fear of change must combat this to ensure they remain successful online, deepening their relationships with their customers and maximising digital revenues. It’s not about innovation for innovation’s sake but rather creating the perfect blend to facilitate an excellent customer experience.
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