In my last article I talked about the challenges facing brands and businesses as marketplaces become more commonplace and how curation is key. This time I would like to reflect on how to win as a brand.
In retail you can split brands into two categories: (1) brands moving to digital and (2) brands born digital. The (obvious) challenge today is that traditional retail brands are trying to stay relevant through higher digital presence, while the brands born digital are often focused on how to scale. In each camp we see clear win themes that everyone can learn from, that will contribute to achieving their broader goal.
Brands moving to digital can win by “pushing” the sale towards their own channels (while acquiring customers though others), allied to a strong multi-channel inventory strategy.
- Manage over-reliance on marketplaces: Marketplace participation remains attractive but betting the farm on a marketplace risks a compromised brand experience, increased competition on price and lower profitability than sales through owned channels.
- Embed data analytics to be innovative with loyalty: With the point above in mind, it’s important to find your customers and then create compelling ways to drive them to your own platforms where you are in full control the content and messaging.
- Pick brand partners carefully: The acceleration of social commerce and macro influencers can be a powerful means to reach defined target audiences quickly to accelerate growth, particularly with regard to younger consumers. However, this approach has the potential for brand erosion if not well-aligned – the potential for third party slip-ups carries a risk, and results can be more difficult to measure outside of your owned data ecosystem.
- Invest time in inventory management: Flexible inventory management is critical, as well as keeping customers (who are in some cases retailers/marketplaces) happy with the right inventory. Supply and demand planning by channel and customer therefore becomes the most important game to play, which means creating rock-solid partnerships with key suppliers is crucial.
- Move metrics to omni-market: Despite the marked uptick in ecommerce activity in the past 18 months, a physical presence remains important – for many “traditional” brands it represents a significant differentiator to their born-digital counterparts. Making the most of the physical alongside digital requires a defined investment strategy that should shift the ROI lens to be omni-market, rather than discrete channel-based metrics that have a narrow field of vision.
Brands born digital can win through tech-enabled curated product and personalization capabilities, as well as strategic partnerships to compete in traditional retail.
- Double down on brilliant basics: Born-digital operating models are leaner, faster and inherently analytically driven. While this enables personalized content to be derived and delivered much more easily than traditional retail, there are likely more challenges lying beneath the customer-facing surface in executing some of the “basics” brilliantly, such as supply and demand planning.
- Capitalize on deeper data insights: Consumers have elevated their expectations of a highly personalized brand experience, yet many players are struggling to harness the potential that this offers for increasing customer loyalty and propensity to purchase. To get ahead, it’s vital for born-digital brands to develop and maintain differentiated experiences across multiple customer journeys, using their data-driven make-up to curate effectively and deliver experiences that are carefully constructed from these insights.
- Stay lean: Compelling value propositions could be accomplished by technology partnerships. AI and machine learning solutions like Dataweave and Stylyze can assist attribution and curation for relevant and timely product recommendations, building out the personalized experiences mentioned above. SaaS (Software as a service) allows brands to keep moving at pace and reach greater levels of digital sophistication without the need for labor-intensive and costly proprietary development.
- Monitor marketing relentlessly: The huge marketing budgets of larger traditional retailers make it difficult for many born-digital brands to compete head-to-head. Given social promotion is such an important tactic for digital brands to create awareness, consistent analysis of the best areas to invest in marketing from an ROI standpoint is vital. High output and volume are also key to success, but content must still be laser-focused on the most receptive target audiences.
- Don’t take physical off the table: Born digital brands taking the leap into the “real” world marks a significant milestone and will unlikely be appropriate for every business. However, if the rationale to go into a physical space stacks up, consider starting small as a test-bed and perhaps leverage partnerships with traditional retailers in order to break new ground without breaking the bank.