How to Unlock Value From Direct-To-Consumer Platforms
There are many technology implementations that were well underway at a slow-and-steady pace until the global pandemic hit the consumer goods industry, forcing many brands to greatly accelerate their efforts. Pivoting to a direct-to-consumer (DTC) model is perhaps the most impacted as CGs jumped in with both feet in order to keep up with post-COVID demands. That is why we caught up with Publicis Sapient Managing Director Sabrina McPerson to find out how consumer goods companies can not only get DTC sites up and running, but also gain the most value from their investment.
CGT: With the urgency to get a direct-to-consumer site up and running, why is it critical to stop and craft a strategy first?
McPherson: Although the COVID-19 crisis created greater urgency to get direct-to-consumer sites up and running, it is still critical to stop and craft a leadership-approved strategy first to ensure the organization understands where to place its bets to deliver the highest value.
To succeed, organizations must secure leadership buy-in for DTC by clearly communicating the assessment of DTC as a new business model. A clear assessment goes beyond just new revenue generation, accounting for both direct and indirect benefits from owned channels, data collection, and personalized experiences.
Failing to understand and communicate the value drivers upfront will limit the projected size and scope that DTC can deliver and the likelihood for buy-in across the organization.
CGT: Why can't CG companies view DTC as just another sales channel?
McPherson: If CG companies view DTC as just another sales channel, DTC initiatives will continuously be deprioritized against initiatives for the existing retailer channels with large direct revenue (e.g., Amazon, Walmart). A lack of focus on building and maintaining unique DTC capabilities will slow its launch, limit agility, and provide low-quality consumer experiences.
To ensure an elevated focus, companies must view DTC as a new business model to incubate. Organizations should audit current capabilities in key areas like digital marketing, supply chain, customer service, finance, and technology to identify gaps and the cost to fill them. Then, CG companies should design an operating model for new DTC business with a focus on digital services.
The new DTC business model will lead to prioritized DTC opportunities, building unique DTC capabilities and realizing the associated benefits. The upside of realizing DTC as a new business model is substantial – one dollar earned through DTC can be worth more than one dollar earned through retail due to the value of first party data that can be acquired and leveraged through direct consumer engagement.
CGT: What’s one important best practice that will help CG companies achieve a faster and more seamless move into DTC?
McPherson: To achieve a faster and more seamless move into DTC, CG companies need to support DTC with a scalable technology stack. Without one, companies risk potential logjams from increased overhead and lack of data utilization.
A DTC platform unites processes, providing a foundation to scale and customize as organizations evolve their e-commerce business. A consolidated tech stack enables lower implementation and maintenance costs, faster integrations with other systems, and less complex data-sharing processes that ensure speed to market and rapid test-and-learn capabilities.
CG companies should use technology to make the most of their investments. To start, they must create a strategy that recognizes the full potential of what an ideal DTC model has to offer. Then, they can select platforms and technology that can scale and integrate across the business.
CGT: What role can partners play in ensuring the successful addition of a direct-to-consumer business?
McPherson: Partner expertise is critical for ensuring the successful addition of a direct-to-consumer business, with new capabilities that were not required for the traditional B2B2C business. Partners, like Publicis Sapient, bring significant knowledge in identifying and unlocking the value from DTC business offerings, with a multitude of projects that have helped CG companies transition from just selling through retailers to adding DTC models to the mix, which enables them to apply data for personalization in new ways.
Partners can help across the full lifecycle of standing up a DTC business – from identifying & quantifying the DTC value pools, developing the DTC strategy & investment case, and evaluating the DTC platforms, to building the DTC capability to capture the highest value pools. In addition to partners building capabilities, third-party logistics partners can fill gaps in experience and fulfil individual orders rather than investing in supply chain transformations.
With invested, knowledgeable partners, all phases of standing up and maintaining a DTC business can be accelerated.
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