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DTC challenges brands

News, 01 February 2017
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LONDON: Consumer goods brands are experimenting with direct-to-consumer opportunities, but most have yet to create sustainable value-generating initiatives, according to a new Warc report.

Toolkit 2017 notes how the growth of direct-to-consumer (DTC) retail has been enabled through apps, buy buttons and subscription services that cut out the traditional retailer middleman. (Readers can download a sample of this Toolkit chapter here.)

Amazon's Dash service is perhaps the best-known example of a connected button that can order an item directly, while various FMCG brands have explored the use of personalisation, convenience and exclusivity in their DTC approach.

But, says William Grobel, Senior Manager, Deloitte Digital, "you can't have buttons all over your home and consumers don't want to order products from multiple suppliers, all with different passwords and delivery times.

"The playing field remains firmly open," he added. "At some point it will converge."

Mondelez was one of the first to seriously explore this area as a way of closing the gap between shoppers encountering marketing messages and the chance to buy goods.

"Direct-to-consumer allows us to pursue single-item retailing as an occasion in itself and take our snacking categories and our brands into a new space that we wouldn't normally have done," explained Ganesh Kashyap, GM & Director, E-commerce, Asia, Middle East & Africa, Mondelez International.

Browsing for confectionery as a gift rather than as part of a supermarket shop is one example of single-item retailing, but Mondelez has also enabled consumers in China to personalise a box of Oreos to create something unique, and in Australia has leveraged DTC to tap into fundraising events.

Kashyap added that "direct-to-consumer is a concept – it's not a business model, and you don't have to go it alone".

And for a business more used to focusing on distribution, Mondelez has been forced to think like a speciality retailer: "What would be our assortment that's compelling enough for consumers to want to come to our store? How would we attract consumers to the storefront environment? Within the store how would we deliver the kind of experience that would drive repeat purchase as well as conversion?"

Finally, "you've got to sweat the logistics," he said.

Data sourced from Warc

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