Many brands are reviewing their digital transformation strategy and considering their go to market strategy in lieu of the accelerated consumer shift to e-commerce. Since the start of lockdown, 53% of consumers say they have discovered new brands or retailers and will continue shopping online with them. Overall 48% of consumers are shopping online more frequently than before COVID-19 — making it important for brands to embrace e-commerce.
Direct to consumer has become a hot topic in the retail industry, seen by many as one of the most effective routes to delivering exceptional customer experience. Especially when many shoppers are still tentative to serve all their needs in-store, with 40% saying it’s become a less enjoyable experience than prior to COVID-19. Consumers are now more comfortable shopping on marketplaces or retail websites rather than physical stores. 67% of consumers said they feel comfortable shopping on online marketplaces, 58% said they feel the same about online retailer websites, whilst only 29% said the same about physical stores.
There are many things to consider when shifting focus to a direct to consumer strategy some of which are:
3) Inventory management
4) Retailer network
In this blog, we will explore the importance of a brand’s retailer network, offering best practices for brands to ensure they provide the best possible customer experience whilst supporting the retailer network that they have grown and established over time.
A brand’s retailer network is sometimes neglected by brands as they open up direct to consumer channels. This can often be to the detriment of a brands go-to-market strategy as channel harmony and retail network relationships are comprised. By going direct, retailers may perceive the brand’s new position to be threatening to their market share and present channel conflict.
What can be done to help mitigate this?
One effective way to be diplomatic in your approach to going D2C is to implement a ‘Where to Buy’ (WTB) solution that can refer qualified leads/traffic to your retailer network either from your website or other media assets, including social channels like Facebook or social media sites like Youtube.
You may be asking, why would a brand allocate advertising spend to acquire traffic only then to refer it elsewhere?
There are a number of reasons why brands are implementing this approach to going to direct with a WTB feature, namely to:
1) Protect retailer relationships
2) Provide greater consumer choice
3) Utilise valuable data insights
Let’s look at these in more detail.
Protect Retailer Relationships
Imagine a scenario where Brand A, decides to go direct to better serve their customers, however, has not consulted their long-standing retailer network, who have carried their products for a long period of time. Some retailers may feel isolated, as they now have more competition and cannot rely on the brand for support. Other retailers might see the brand’s decision to go direct as a slight on their relationship, as the brand enters their competitive landscape. This may lead to a retailer no longer carrying their product, undercutting the brand or promoting competitor products. All of which can have disastrous results on relationships and ultimately sales.
A brand’s retailer network is pivotal to success, and by suggesting to their prospective buyer’s other locations to purchase their product, retailers are sent highly qualified traffic more likely to convert.
By a brand directing traffic to its retailer network, the retailers feel supported and highly value the leads sent their way. This not only increases their sales potential, but also strengthens the bond they have with their brands.
A WTB solution can complement a direct approach by keeping the retailer network engaged, whilst also offering the brand peace of mind that their D2C approach won’t cannibalise their existing channels.
Provide Greater Consumer Choice
Consumer choice is probably the most important factor to consider at all times. Consumers are channel-agnostic and are showing increasing signs of decreasing brand loyalty.
When exploring a brand’s site, many consumers decide to make their purchase on a preferred retailer’s site due to a variety of factors like:
- Amazon offering enhanced delivery options such as same/next day
- Retailer promotional offers
- Existing customer account (payment, address details etc)
- Bulk purchases, and other items already in their basket
- Ability to collect in a local store
Amazon’s speed of fulfilment has re-defined delivery expectations, their incredible ability to pick, pack and ship orders at such a rapid speed blows many of their competitors out of the water. As consumers, we have become accustomed to this service and expect it wherever we shop.
Many consumers have an array of promotional codes, gift cards, bonus points accrued that go a long way in making the purchase of a chosen item more desirable. Price along with the speed of delivery sit high up on the consumer’s decision criteria.
Marketplaces like Amazon, have gained tremendous traction not just because of the array of goods on offer but mainly because of the ease of purchase. With one click I can buy a product on Amazon, safe in the knowledge that my preferred card has been debited again and my package is on route to my address. Consumers get turned off by the idea of having to create an account or even filling out guest account details.
It’s rare these days that a consumer will go to the shop or to a retailer’s site to make just one purchase. Having the ability to easily add other items to your basket on a retailer’s site creates many upsell opportunities. Just think about that bar of chocolate conveniently placed by the checkout that somehow made it into your shopping basket when you last nipped to the grocery store.
Some consumers have the desire to collect in-store. Perhaps they know they won’t be home for a delivery and don’t fancy the trip to the local pick up point. For a myriad of reasons, some consumers continue to want to collect in-store and by offering this option consumers are more likely to purchase. A Where to Buy solution can direct traffic to on and offline destinations.
Utilise Valuable Data Insights
Finally, in a data-driven world, brands should collate data wherever possible if it helps them to understand their customer or retailer network better. By sitting at the top of the path to purchase funnel, brands have the ability to track their consumers’ journey on their preferred partner’s site.
If as a brand you have selective distribution in place for your products, it’s important to track where your products materialise on the digital shelf. This can give a brand insight into where products display outside of an official distribution network but more importantly allows a brand to also enforce their MAP (Minimum Advertised Policy) with their network. By benchmarking competitive pricing strategies a brand is empowered when it comes to negotiating with their e-tailers.
This data can translate into measurable and actionable insights for both retailer and brand. By understanding the ‘lead value’ of the traffic you send to your retailers, you are in a better position to negotiate at the table for wholesale orders, rates and promotional activity. Brands can demonstrate the potential sales they have referred to their network with tangible data.
By offering the consumer choice, referring traffic to the brands preferred retailers and collecting quality data, a win-win situation is created for both retailer and brand.
No longer will a brand’s retailer network feel isolated and irked that the brand has gone direct, but they will be encouraged to see a brand that has considered all avenues, which in turn strengthens brand-retailer relationships.
If you would like to discover more about how a “Where to Buy” solution could help your Direct to Consumer strategy, you might enjoy reading more about the solution here or if you’re ready to discuss the next step, get in touch.
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ChannelAdvisor is working with hundreds of global brands, in more than 70 countries, to deliver highly qualified sales leads to over 2000 online retailers. We help brands make their content and campaigns shoppable, by connecting consumers directly to retailers who stock their products. Become a partner and join the ChannelAdvisor Retailer Network to benefit from a regular source of free, highly qualified sales leads from branded manufacturers.