By Robert Haslehurst, Chris Randall & Noor Abdel-Samed
When news broke earlier this year about Amazon.com’s courting some of the world’s biggest consumer packaged goods brands, it touched off a wave of speculation.
Was the e-commerce giant engaged in a long game to change the relationship between consumer goods makers and their brick-and-mortar retail partners?
Amazon’s outreach exposed a digital divide in the consumer products world. On one side is the growing interest of brands in direct-to-consumer models. On the other side are worries about conflict—not just with traditional distribution channels but also with retailers carrying the brand. We’ve identified seven tactics to bridge this gap:
- Understand how digital serves different consumer segments. Burberry maintains microsites where customers share snapshots of themselves in their own Burberry coats, and the luxury brand streams exclusive fashion shows for younger users of its mobile app.
- Use the right digital channels. A direct-to-consumer initiative can involve one platform or many. Longchamp bases its D2C efforts in China on the blockbuster WeChat app.
- Add value to the consumer. On Patagonia’s Worn Wear web site, environmentally conscious consumers can purchase secondhand clothing at a discount and trade their own used clothing for gift certificates.
- Look for measures that matter. Through its work with Google, L’Oréal discovered that ombré hair color was trending. The cosmetic company responded with a new product, and backed it up with a dedicated consumer marketing plan.
- Make room for new technologies. Home-goods seller Wayfair’s augmented-reality app lets customers evaluate virtual, full-scale 3D models of furniture and decor amid their own day-to-day surroundings.
- Keep the online conversation going. L’Oréal signed 15 social-media influencers to review the company’s offerings, record video tutorials and cover behind-the-scenes beauty events.
- Find a way to work with third-party retail channels. Despite concerns about losing the customer relationship, high-profile multibranded web sites are worth consideration. Prada sells its ready-to-wear outfits through third-party web sites in Europe, with plans to replicate its e-commerce success in Asia.
Robert Haslehurst is a managing director and partner, Chris Randall a managing director and partner, and Noor Abdel-Samed a principal, at LEK Consulting.