A recent Lebensmittelzeitung article has highlighted the trend for consumer brands to sell their products via their own digital platforms. The results from a Institut für Handelsforschung (IFH) study mentioned in the article, state however that these brands remain cautious in their approach as DTC (direct-to-consumer) sales are set to stagnate and will continue to remain below online retail sales as a whole.
The article rightly differentiates progress by brand sector, with apparel brands such as Adidas being more willing to innovate. Toy brands such as the Danish toymaker Lego are having success in increasing engagement with its customers online by using short term promotions, offering exclusive product sets and customisation possibilities.
FMCG brand manufacturers however tend towards caution. As retail expert Kai Hudetz from the IFH points out, many of these brands are being forced to sell their products online at higher price points, rather than risk trouble with supermarket retailers. The confectionary brand Haribo is attempting to offset its higher online prices by offering exclusive product constellations such as mono flavor packets of its famous gummy bears.
In the article, German retail expert Professor Martin Fassnacht from Wirtschaftshochschule WHU agrees that retailers must get used to manufacturers wanting to sell their products on their own websites as a way of differentiating their brand identity, rather than as pure sales drivers. According to Kai Hudetz “A dedicated online presence only makes sense for really strong brands. In Germany at present there are only a few dozen of this type.”
In our view, this is not the end of the story. Customers´ paths to purchase are changing and forward-thinking consumer brands are uniquely placed to strengthen their competitive position by offering personalised customer experiences based on customer data. If they don’t, others will – think of Jessica Alba’s digitally native, direct-to-consumer venture, The Honest Company. Founded in 2011, this wellness brand of health and beauty products is now valued shy of 1 billion USD.
Here are some ways digital customer engagement can be used to strengthen brand identities in the face of challenges from the likes of Amazon where offline brand leadership doesn’t automatically translate to online success:
- Create loyalty programs based on specific customer needs: Procter & Gamble has used technology to remind parents when the time is right for them to join The Pampers Rewards program. The brand has seen a threefold increase in its conversion rate by taking this data driven approach, with targeted offers tailored to existing customers and new parents.
- Utilise online presence to create added value that mirrors brand values: A 2017 HBR article highlighted how Patagonia boosted customer loyalty through its “Worn Wear” website, where environmentally-conscious consumers can purchase secondhand clothing at a discount and swap their own used clothes for gift certificates.
- Adapt to changes in customer journeys and spending patterns: Consumers are not only being inspired to buy their grocery shopping online, but are now increasingly starting to shop directly from a host of digital channels, including social media platforms like Facebook & Pinterest, email, apps, Google searches. Indeed, an estimated 51% of all grocery purchases are digitally influenced. General Mills, which makes the breakfast cereal Cheerios, sends out daily emails and distributes content on social media to interested shoppers with recipes and meal suggestions. It also is starting to experiment with making that media shoppable so consumers can seamlessly click and add a product to their grocery basket at the retailer of their choice.
By applying the right analytic methods, data specialists can help identify the statistical framework that is most relevant for individual consumer brands, translating big data into insights and creating real operational value.
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About the author:
Cecilia Floridi is a Customer Management expert based in Düsseldorf, Germany. She is also the Managing Director of DataLab GmbH.