Brands Adopting an OmniChannel Approach Part 1: DTC Opportunities

Even before recent events changed retail online shopping patterns, significant trends were already in play, altering the landscape of brick and mortar stores, outlets, and malls.  Simply put, retail dynamics continue pointing towards more consolidations, restructurings, and inevitably reduced doors and square footage.  Branded product companies will need to adapt to these trends that could significantly limit the availability of outlets and venues that shoppers have to access their products and concentrate interactions into fewer retailers.  In part 1 of this series, we’ll look at the opportunities that brands have to leverage the technological advances in cloud-based software and platforms to extend their product visibility and reach. We’ll follow that up in part 2 with some of the Challenges they have in executing a DTC strategy.

Brands need to assess their traditional selling channels and evaluate the opportunity to incorporate a compelling business model that lets customers and brands work together, directly and online.  More to the point, how can brands maintain their market share, product, and pricing power in the face of a continually shrinking pool of retailers who control access to consumers and data creating super-retailers who can command significant concessions and restrict availability? 

DTC Advantages

With less reliance on third-parties and fewer limitations on branding and fulfillment, the Direct To Consumer (eCommerce) model provides advantages both for up-and-coming brands who need a straightforward path to entry into a market, as well as established brands who are compelled to grow their online presence to replace brick and mortar revenue streams while also establishing new and deeper relationships with their customers.

Traditional distribution channels are evolving, not disappearing.  Brands will continue to place a high degree of emphasis on their retail relationships but should consider them as only one aspect of an overall Omnichannel Experience Strategy.

Brands will be at different stages of maturity with respect to their digital capabilities, from startups to more mature companies that have invested in B2B platforms and digital brand building technologies.  Whatever their starting point and experience level, new digital tools and platforms combined with powerful data analytics are enabling brands to directly engage with customers, improve the shopping experience, and gain valuable data at every point along the path to purchase. They are now empowered to sell directly to consumers both locally and globally:

  • New Cloud sourced digital tools and platforms combined with powerful data analytics are enabling brands to develop their own DTC channels far more quickly and cost-effectively.

 

  • Brands are now empowered to sell direct, drive experiences, and forge meaningful customer relationships. Consumers want to invest in more than a product; they’re looking for an experience that connects them personally with the brand.  An online presence creates a greater platform to establish brand authenticity.

 

  • To be hyper-focused on customer experiences, brands need to own their customer data. CRM initiatives can be leveraged to refine their products and offerings to better meet consumer needs and expectations.  For established brands, DTC creates opportunities to trial broader and more differentiated product offerings.

 

  • Social media has transformed the way consumers and brands interact with one another. Every interaction with customers is transparent, direct, and memorable.  These digital tools provide effective and low-cost avenues to connect and engage with the people who buy and use their products.

 

  • Layering on advanced analytics further allows brands to proactively market, merchandise, promote and launch new products to satisfy their customers’ express and perceived expectations.

 

Digital technologies are enabling brands to reclaim the customer relationship and shift some of the balance of power away from retailers. They can expand their reach across the country or around the world and sell goods more profitably, and they can do it without making significant investments in infrastructure.  However, these opportunities come with some added complexity and challenges, not the least of which is the ongoing relationship with their retail suppliers.  Please take a look at Part 2 – DTC Challenges to discuss this and some other considerations associated with a DTC migration. 

Implementing These Ideas

While the solutions and some of the questions will be different by brand, we wanted to flag awareness of the issues, start a conversation, and offer help in whatever way makes sense for your situation.  If you are going through similar thought processes and would like to discuss planning and resource strategies, adding skills capacity, or would just like a sounding board, please connect with us. 

Written by Bill Melvin, VP of Retail

 Bill Melvin is a Retail specialist and a seasoned CIO with extensive executive and hands-on experience.  As VP of Retail for Cyber Group, Bill focuses on the transformational trends impacting our client’s operations, including the design and development of technical strategies, OmniChannel implementations, as well as strategic roadmap planning and execution.  

Give him a call to explore these ideas further!