RetailWire BrainTrust Comments:
Obviously they should start with small experiments and be very mindful of channel conflict. But in this day and age, it is essential to be the directly involved in the relationship with end users. Manufacturers can't trust retailers to manage all of the consumer touchpoints.
Engagement is mentioned twice in the story above, but that's just a small part of it (and a bit over-rated, I might add). The bigger benefit is getting a steady stream of consumer-level data in order to really understand what works. Of course, that will force brands to take on a very different set of analytic capabilities than they currently have, but it's about time that they take a deep plunge into this world that has been so foreign to most of them.
Peter Fader, Professor of Marketing, The Wharton School of the Univ. of Pennsylvania
Nike and Apple are lifestyle brands with high ticket aspirational products so they always come up as the examples but it's not really a fair comparison to somebody trying to sell butter and eggs. There's lots of room for online engagement and brand relationships certainly but asking consumers to go to a multitude of single focus websites to get their market basket of goods is a tough sell.
I believe we'll see the emergence of alternative shopping models and aggregation services that threaten the current retail model and I think the CPGs are smart to pilot out ahead of that so they can have more power in the negotiation (hello slotting allowances and trade promotion dollars) and that's the role direct to consumer sales should play for them in the current term.
Lisa Bradner, President, Geomentum
I hate to over-simplify this but I think it is actually quite a straight-forward equation.
It comes down to asking one basic question. "What is the best possible means of delivering your brand experience to the consumer?" If the answer is strictly online, then so be it. If the answer is through stores, then the brand has to ask itself if third-party retailers are positioned to deliver on that experience or if it's better done through company stores. The answer may be some combination of all three. It really depends on the brand.
In the end it comes down to delivering on the brand promise and meeting the consumer's expectations wherever that takes you.
Doug Stephens, President, Retail Prophet
I can tell you that the interest we are seeing from brands wanting to know more about their customers and not being held hostage by the high fees of the shopper marketing/loyalty programs from the retailers/grocers/drug stores is increasing daily.
Mark Johnson, President and CEO, Loyalty 360
It has become increasingly difficult for brands to reach consumers with their message and their offerings. Brands should open as many channels to the consumer as they can. Direct channels can be effective for some brands.
For many years, manufacturers have sought to cut out the middlemen in the sales process. This concept, called "disintermediation" can be extremely effective, under the right circumstances. It assumes that the intermediary such as a wholesaler, distributor, or retailer is performing a function that is unneeded or is inefficient.
Some brands can benefit from more direct channels, but often they simply trade one intermediary such as a mass retailer for another such as Amazon.
Ray Jones, Managing Director, Dechert-Hampe & Co.
Shoes and iPods are different than food. No single CPG company represents more than 11% of supermarket sales. It would be unlikely for them to be successful with a retail store due to the small range of products and backlash from retailers that would discontinue products.
What will work is for CPG companies banding together for online fulfillment of dry products. Many have regional brands which consumers that no longer live in the region want to buy. Many have low volume items with limited distribution that some consumers want. With FedEx and UPS creating home delivery networks, that would be a natural.
W. Frank Dell II, CMC, President, Dellmart & Company
For brand recognition, the web is a great tool. To sell every item directly to consumers, NO. If consumers at Supervalu had information overload and thought it was messy to sort through lots of different promotions in the middle of the store, just think of the clutter and confusion if every brand was communicating directly to every consumer!!! Which consumers want that?
Camille Schuster, President, Global Collaborations, Inc.
Technology is bringing the marketer and the user ever closer. Eventually, there will be a one-on-one relationship. From that point, it is only a click away to buy the product.
There is no great need for CPG companies to build infrastructure to service an online business. A third-party operator could easily do it without the cost of dealing with a retailer. It becomes a natural extension for a 3PL company. And, the financial return of direct sales also cannot be ignored. It could increase the companies' bottom lines by two or three times.
Consider that Walmart does not see Target as their most serious competitor. They see Amazon as their biggest competitive challenge. Be assured, their concern is not that Amazon is going to build stores.
Gene Detroyer, Entrepreneur, Advisor, Consultant, Counselor, Independent
All of the arguments for brands to race into online retailing are absolutely right on--the sooner the better. Maybe they can learn a thing or two about actually selling to shoppers, as Amazon does, rather than setting a static wall of merchandise, and hope the shopper strikes, like bricks-and-mortar retailers are wont to do. The static wall is what brands, being remote from actual retail experience, have come to think of as the natural way to sell. More than a few have recognized that their retail partners are very deficient in shopper understanding. What they seem slow to figure out is that Amazon knows how to do it right--at least as far as retail TECHNIQUE is concerned.
This doesn't mean that the Convergence of Online, Mobile and Bricks-and-mortar (COMB) won't be immeasurably blessed by the energy and expertise of the brands in reading the minds of shoppers. As retailers have increasingly asserted their ownership of shoppers, I have observed that "the brands will rise again!" By this I mean simply that with the unfettered access to shoppers that is coming, at least a few leading brands will leap over all channel obstructions to conduct their own business with THEIR customers, just possibly in partnership with a suite of like-minded but non-competitive brands. More than one of these brand suites are easily probable.
Herb Sorensen, ScientificAdvisor, TNS Global Retail & Shopper Practice
Read the entire story and RetailWire discussion at:
http://www.retailwire.com/discussions/sngl_discussion.cfm/14682
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Is it time for brands to take greater control of the brand experience by selling directly to consumers either online and/or in stores? Are there lessons for all brands from the experience of others such as the Apple Store, Niketown, Procter & Gamble, etc.? Let us know your thoughts at the Feedback button below.
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