Should all brands sell directly to consumers online? How should brands work with online marketplaces? What does direct to consumer (DTC) mean for existing retail partner and distributor relationships?
Consumer-facing brands still have a lot of questions about their DTC digital engagement and commerce capabilities. But the opportunities are not “one size fits all.” To master their digital destiny, brands must understand the relative revenue opportunity of different digital commerce approaches and the value of their digital presence beyond direct revenue.
Forrester has updated a series of reports addressing various aspects of consumer-facing brands’ digital commerce strategies. An essentials report provides an overview of these reports for brands evaluating (or reevaluating) their DTC digital strategy.
All brands need a digital commerce strategy that:
Reflects the brand’s relative digital commerce opportunity.
All brands need to be engaging directly with consumers online. But all brands do not need to sell directly to consumers online. Some brands’ digital commerce strategies will prioritize direct-to-consumer sales via their own digital touchpoints. Others will focus on building joint business partnerships with retailers to drive indirect digital sales. However, geographic region and branded product type will change the relevance, projected sales volumes, and margins of each digital commerce approach.
Understands that the value of DTC goes beyond revenue.
The value of a brand’s direct-to-consumer digital presence goes beyond direct sales (and better margins). Many brands pursue DTC initiatives more for the value of the consumer insights than for revenue gains. Regardless of the digital revenue opportunity for different brand types, all brands must help customers find and purchase the products they want.
Shifts the dynamics of retail partner relationships.
Brands can now sell more of their products to an expanding universe of shoppers. But digital distribution has complicated the relationships among brands, retailers, and other channel partners. For some brands, channel conflict concerns prevent them from developing and maturing a direct digital presence and commerce capabilities. To succeed, digital business executives must change the dynamics of their retail partner relationships, moving from supplier to business partner.
Closely manages online marketplace presence.
Brand manufacturers are investing in online marketplaces, attracted by their fast growth, consumer reach, and regional prominence. But marketplaces also pose challenges — such as counterfeits, gray markets, a lack of consumer data, or the loss of control over product pricing and positioning (particularly in first-party relationships). For ubiquitous brands that want to broaden their consumer reach rapidly, online marketplaces can be a revenue-generating opportunity, but higher-exclusivity brands will find that online marketplaces work best within specialized and/or specific regional commerce landscapes.
For more detail, check out Forrester’s Essential Research For Brands That Are Evaluating Their Digital Commerce Strategies.
