D2C: Friend or Foe? – Co-opertition
15 December 2017
The Direct to Consumer (D2C) wave continues to gain power and momentum. That this represents something of a threat to retailers can’t be ignored – but it also represents opportunity, if retailers are brave enough to embrace change and rethink relationships.
Digital River were the hosts for ‘Ecommerce Accelerated’, an insightful and inspiring one-day conference. I joined a packed and expectant room halfway up the Shard on a misty mid-October day – but there was nothing unclear about the speakers who all brought a thoughtful amount of clarity to the presentations and panels.
The day featured huge global names like HTC and Adobe who have seen great success – and some quite unexpected incremental benefits – in going direct. This move makes perfect sense for the likes of Adobe who are software based, going direct allows digital updates whenever, and multiple subscription and payment options. But for other brands (ie those whose products aren’t solely digital) the move is far trickier.
This D2C momentum is understandable from the brands’ point of view. I’d say that the day as a whole seemed to identify three main drivers towards this move:
- A volatile market. The continuing fluctuations within the retail market and the failure of many retailers means that many brands no longer feel comfortable being solely beholden to a sector which is going through so much change, often at inconsistent and unpredictable rates of change.
- The Amazon factor. The seemingly unstoppable growth of Amazon as a megaplayer wanting to control all commerce can’t be ignored by brands and retailers alike. Amazon has proven time and again its ability to pretty much dictate pricing – Again, it’s about not wanting to be beholden.
- The digital imperative. The inestimable opportunity that digital technologies now offer, combined with the insatiable consumer appetite for mobile and social innovation, means that, at this juncture in time, not to capitalise on cementing the consumer relationship somehow seems slightly negligent.
(The ‘fun’ part of course comes in actually making the online offering happen. This is where many brands come unstuck, when the sheer scale and complexity of the various options needed across global markets in order to keep up with compliance, privacy, security, tax and localisation can suddenly be overwhelming. This is of course exactly where the likes of Digital River bring huge value – it’s not just about the shopping cart, it’s about taking full responsibility for the compliance, tax, cybersecurity and so forth. They are a powerful partner indeed.)
All of which might sound threatening in the extreme to traditional retailers and channels. But here’s the thing – for a start the considerations above were delivered “more in sorrow than in anger” – these brands are quite sensibly trying to safeguard their futures and not miss out on current trends.
There was no schadenfreude towards retailers on display at all – these brands are rightly grateful for how retailers have helped them get to where they have. Even Amazon has its benefits. I’d say mood was hopeful and inclusive – most of those speaking still seem to want some way to involve channels and resellers/retailers, if not least to offer their consumers choice. Samsung weren’t speaking but were put forward by one panel as a good example of a brand that offers everything (ie across all channels), their big thing being the “white gloves” services upsell (from bespoke installations upward) they can drive when selling direct.
HTC explicitly said that there are some items they don’t offer at all via their own channels. Others see the advantage in having limited editions or early-adopter specials available exclusively via their website but are happy to have everything else open to wider channels.
So, while I might not have the clearest idea of what the ideal new relationship between brand and retailer looks like in the near future, I am convinced that right now represents a fertile opportunity for retailers to rethink relationships and suggest new ways of working together. Retailers shouldn’t let this go by…