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Consumer Brands Have a Massive Opportunity to Grow Online Sales

Brenna Johnson
Senior Product Strategist

Why Being Late to eCommerce is Perfect Timing

Many branded manufacturers still don’t have a direct to consumer eCommerce program, but waiting has created a unique window of opportunity. These companies (think consumer goods manufacturers in apparel, housewares, and personal care) do the vast majority of their business through channel partners, with few having a meaningful direct-to-consumer online business.

It’s not that brands haven’t thought about entering direct to consumer commerce.  Many decision makers have had reservations because they are merchandise and marketing experts – but eCommerce novices. Being late to the eCommerce party due to channel conflict, lack of expertise, or lack of desire to take it on isn’t a bad thing. The great news for these companies is that they can take advantage of perfect timing of the market, arrival of new technologies, and maturity of eCommerce to hit the ground running.

No matter what stage their direct program is in, now is the perfect time for brands of all sizes to double-down on eCommerce. Here’s why:

Untapped opportunity – with a sweet spot in midsize

There is a huge amount of research being done online for branded goods, but very little transactional activity. Most branded sites were designed as marketing and informational vehicles – not with the goal of capturing direct sales. For this reason, Forrester states that branded manufacturers have the greatest growth opportunity.

The secret is out and brands - your competitors are likely investing here. Analysts predict that in the next 3 years, wholesale and manufacturing will ramp their eCommerce spend more than any other segment – including retail.  Additionally, smaller programs are seeing the greatest online growth. Forrester notes that the segments experiencing the most substantial YOY growth are small business (under $25MM online revenue) and midmarket (under $100MM online revenue). Whether it’s the shift in the industry, trajectory of budding programs, or having less legacy technology barriers to manage, midsize brands going direct to consumer are ripe for growth.

Light eCommerce baggage

Being green in eCommerce has its perks. Having fewer notions to shake is a good thing when the industry is smack-dab in the middle of transformation on multiple fronts.

Today, if you work on an eCommerce team for an established online / multichannel brand, you (and the industry) built the engine as the plane flew. Changes in technology, shifting consumer demands, and the acquisition of point solutions forced commerce professionals to cobble together a stack that has slowed their ability to innovate.  And this legacy approach is getting more expensive. Three years ago, merchants reported spending 5% of their web revenue on IT; that figure is now 9%. The reality is that many online merchants have had to turn their focus and resources to managing technology and keeping the lights on -- not getting to market quickly with experiences that win and keep customers.

While multichannel retailers deal with the complexity of mature commerce programs, brands have a unique opportunity to spend more time devoted to customers. With no (or few) brick and mortar stores to support, and the ability to leverage channel partners to fill supply chain and omnichannel gaps, brands are poised to focus on engaging consumers without as much hassle. Pricing strategy, shipping, and fulfillment are all critical but– if you offer a unique experience and can rely on existing channels in the meantime for volume business, it’s a win-win.

Brands moving in to eCommerce get to bypass the challenges that earlier-to-market programs uncovered, including fewer segmented internal groups. At midsized brands, a single group often owns the website content, marketing, and eCommerce. The opportunity to simplify teams and reduce the number of tools and developers means greater agility, less expense, and cleaner customer experiences.

Enter the technology that makes this possible: SaaS.

The playing field has been leveled.

The maturity of SaaS has arrived. Major technology firms (like Oracle) have put serious muscle behind SaaS applications and infrastructure to make enterprise technology more accessible. Until now, many brands were forced in to a self-fulfilling prophecies; purchasing digital commerce platforms built for SMB because of budget and resource constraints. When platforms couldn’t scale or innovate fast enough, brands couldn’t achieve their growth goals. 

Today there’s no more compromising. Companies of all sizes get to start fresh with scalable technology – all with a monthly subscription payment and small team.

The beauty of being late is using newer technology that sets firms free from managing the noise of infrastructure, security concerns, and painful integrations and upgrades. Brands can now focus on what matters: building a loyal base and growing their business.

Not only has SaaS arrived in a real way, but the consolidation of applications has too. The move towards platforms means that instead of stitching together point solutions, businesses of all sizes get a one-stop-shop experience for marketing, commerce, service, social, content, big data – and all the back office stuff too.  It’s the right approach for consumer brands that want to differentiate and grow their business – not become an IT shop devoted to custom development.

Younger consumers crave direct access

Going direct means owning the relationship with people who love your products – and speaking to them in a brand voice that retail partners simply can’t do.  If you can gain millennial mindshare as they come in to buying power, you’re going to be well positioned. Only 1% of millennials say that advertising would make them trust a brand; they value authenticity more than content.  And, they are spending with fewer brands. Forbes cites that 60% of millennials are often or always loyal to brands they buy from. So the sooner brands engage with millennials directly, the better.

SaaS allows companies to more easily meet these consumers where they are. Mobile is a massive area of opportunity to grow - with newbies to eCommerce getting to reap the benefits of Responsive Design. With legacy technology approaches, web retailers have 17 full-time mobile employees on average. This is yet another opportunity for emerging commerce programs to leapfrog others to market, effortlessly managing mobile with the same tools and headcount.

While the eCommerce world sheds it’s baggage and slowly moves to the maturing cloud, brands can grow alongside their channel partners. The opportunity is there, demand is there, and the technology stars have aligned. Well played.

 

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