I was struck again this morning by the volume and tenor of mainstream news covering retail and ecommerce. Stories regarding the rise of Amazon and the end of retail are nothing new. What is striking about the latest stories is the ever faster pace at which the change is occuring; the massive, global scale of recent investments; and the positive feedback loop that is accelerating as companies innovate and consumers respond with ever greater dollars and expectations.
In a previous life, I was Head of Ecommerce for a 100+ year old performance running brand in Seattle. During the nine years of my tenure, I saw firsthand the challenges of building a fast-growing D2C ecommerce business within a “traditional” wholesale-focused brand. While my team lived and breathed things like conversion rates, ROAS goals, and service metrics like contacts per order… most of the company was focused on growing the wholesale side of business.
Many times I would say to myself…“If we were starting a new brand from scratch, we would never do it this way...”
Given the nature of the modern cloud stack, it is now practical to track unit-level revenue, costs, and margin as events occur -- comparing actuals to forecast moment-by-moment and acting in real time on the information. It’s also possible to align these unit economics with customer experience so that operations decisions can be made intentionally to balance profit today with customer LTV into the future. Let’s dig in to the details!
Digital-first consumer businesses — including Amazon and every D2C brand — walk a fine line between profitable orders and great customer experience. This balance creates a unique existential risk for D2C brands, by virtue of the scope and complexity of operations. There’s a lot going on in terms of variable costs, and endless ways to end up upside down on order profitability and customer LTV. We take a closer look at how to tackle the problem.
A 9-Part Guide to the Core Business Models Driving D2C Brands.
We wrap up our series with a look at the importance of halo or hero products that drive brand awareness and single-purchase customer LTV (also known as LCV) — and the power of (very retailer-like) product selection and cross-sell opportunities. Bonus! We’re including a ninth and critical strategy to the mix — one often confused in the industry with traditional retailing and pure-play ecommerce.
A 9-Part Guide to the Core Business Models Driving D2C Brands.
Last month we reviewed the first three of these D2C models — focusing on efficiency and price disruption, product differentiation, and brand social impact. This time, let’s dig into network effects, subscription models, and brand exclusivity. Here we go!
There’s a new revolution happening in retail, and direct-to-consumer brands are driving the change by taking a page directly from Amazon’s playbook. It has profound implications for urban landscapes as consumer buying behavior continues to shift from large format stores to showrooms, online commerce and doorstep delivery.
In the era of Uber and Airbnb, it’s no surprise that an entire venture-backed ecosystem is springing up to enable this hyper-local, hyper-elastic fulfillment and delivery capability. How can you leverage hyperelastic fulfillment in 2019 to provide more convenience and a better doorstep experience for your shoppers?
In September, we talked about innovative brands using predictive algorithms to transform customer experience. This month we evaluate the importance of real-time data processing toward the same end goal; to build customer equity (the number one driver of brand valuation) by creating transformative customer experience.
Using real-time data to inform predictive algorithms means more accurate modeling and forecasting. Here are a few use cases in direct-to-consumer commerce, from basic to complex.
Customer equity, the lifetime (including past and future) profit generated by a consumer, is the north star of every consumer brand. Brands that operate as retailers controlling the consumer relationship trade at high revenue multiples rather than low EBITDA or cash flow multiples. Without a handle on operational measures, brands risk disappointing customers even as we spend critical variable marketing dollars acquiring and retaining them.
Here we consider the key questions that brand leaders can use to drive greater customer equity, and in turn higher company valuations.
At age 25, ecommerce is adulting. Like rising stars climbing corporate ladders, brands today confront a relentless workload, steep learning curve, and the exacting standards that consumers expect and competitors embody. How is it that the pace of reinvention is accelerating, and the bar for success is rising so fast?
Innovative brands are applying predictive algorithms to transform customer experience, from pre-sale to doorstep delivery. Here we look at the underlying data capability that enables these use cases, and we review three specific examples currently live in the wild.
For marketers and data analysts already working to bridge the gap between first-party customer data and third-party anonymous audiences (for profile enrichment and lookalike prospecting), machine learning represents a new and exciting power tool. But as with any new approach, hype drives a disconnect between expectations and reality. And capitalizing on ML means rethinking the nature of customer identity and experience
Simply being first to market as a D2C brand is not enough.
“You’re bearing the cost of reinventing the wheel,” said Eric Best, CEO and founder of brand advisory firm SoundCommerce. “The value is acquiring the target customer and having a white space for brand development, and you establish a reputation as an innovator that you can build on.”
Here’s the playbook that has proven effective for original players in the direct-to-consumer market.
"The lines between the manufacturer brand and retailer will continue to blur -- and businesses seeking sustainable growth will inevitably focus on direct to consumer channels," says SoundCommerce CEO Eric Best.
For retailers looking to accelerate GMV growth, and for brands looking to augment the wholesale channel with direct consumer engagement, SoundCommerce provides strategic guidance and validation on approach, goals, budget, infrastructure investment, and unit economic goals.
Last week Eric Best was honored to be the keynote speaker kicking off this year’s Digital Marketing Summit at Fortive (NYSE:FTV). The three-day summit (designed and led by industry colleague Glen Hamilton) brought together digital commerce and marketing experts from industry with global company leadership from Fortive’s major operating businesses including Fluke, Tektronix, Setra, Matco Tools, Teletrac Navman, and Kollmorgen. Eric's theme for the day: delivering on new and great customer experiences starts with three strategic imperatives...