Think BR: Brands get closer to customers by opening up new channels
Brands want to take greater ownership of the customer relationship and are taking a more direct route, principally by communicating and trading with them online, explains Michael Ross, Director of eCommera.
Michael Ross, director, eCommera
The internet has sparked a revolution in the way brands communicate with, and now sell to their customers.
Traditionally, brands used only third party retail outlets or flagship stores, but the internet has enabled them to go direct and most are investigating the right mix of channels that will enable them to get closer.
Vicki Ebermann, ecommerce manager at Oettinger Davidoff Group, said: "I believe there are more possibilities for online sales than what has been achieved to date. This is because technology and the combination of technologies like social media with smartphones will drive integrated sales strategies.
"For example, you can have someone tweet that they are in your store buying your products to other people. The ability to generate sales through social media will grow as long as your customer experience is excellent."
A recent survey of 50 major European brands by research company Coleman Parkes found that nearly half of respondents have been trading online for three or more years, one quarter for one to two years, while five, or one in ten, have gone online only recently.
Despite the risk of upsetting retail partners and potentially having fewer physical outlets carrying products, brands are pushing ahead, determined to face the possible consequences as and when they arise.
The research shows that brands' multi-channel strategy for engaging directly with customers is dominated by flagship stores (56%) - physical and online - but with similar emphasis (52%) on using social media, principally Facebook.
An ecommerce manager from a major high value specialist apparel and accessory supplier said: "The potential to sell online is huge and will keep on increasing with the advancements in technology.
"The only area that needs to be watched are the various online distribution channels so that the brand does not become a common brand which can be found anywhere. We need to maintain our high-end focus and premium feel."
Another respondent said: "The main reason was to get more customers and also to expand our business. With online, we are not restricted to any country or region, now anybody can buy our products from anywhere in the world."
How have brands executed this strategy?
Execution strategy varies from brand to brand, depending largely on how brands currently manage technology. Some have extensive in-house teams that will operate alone, while others will outsource entirely, often due to a lack of the relevant skills and resources in-house. A common approach to start trading online quickly is to work with specialist ecommerce suppliers or consultancies.
The agency might develop the whole solution and even manage the ecommerce supply chain, from warehousing to fulfilment. They may then hand over management to the brand once they are ready to assume control, but keep control of specialist services such as data analysis.
In the research, a number of brands cited the importance of having in-house teams for sales pushes, while most tend to work with specialist partners for functions such as SEO and social media.
Whatever model they adopt, brands need to link web systems to inventory and merchandising, so that they always have a single view of their business performance across all channels.
One ecommerce manager in the research said: "We've set up a dedicated in-house team and invested with a partner to make the website, and have invested a huge amount on technology and design for the website and integration with the inventory."
Another said: "We have had a third party work with us and they have done a phenomenal job; when a person makes a purchase the product looks just as it would in the store and to personalise it a bit more there are a few suggestions that would go with the product that your looking to purchase, so they've done a great job. We did not have the in-house capability to do anything like that."
The challenges in executing an online/multichannel strategy
The challenges for brands are many and diverse. Among the biggest is working out how to best engage with customers and understand their needs via their online trading sites.
Brands have also been challenged with integration of new technologies with existing systems, fulfilment, filling internal skills gaps, understanding customer behaviour, managing the balance between direct and traditional sales, having the internal infrastructure in place, and senior team buy-in.
For some companies the foray into online trading was the first move into this channel and this created some challenges due mainly to a lack of knowledge and expertise within the business and indeed poor planning in what was required.
One respondent said: "We did a lot of sourcing and headhunting to find the right people and have them come over to our side for the technical aspect and for the customer services we had to increase the hiring of individuals who would be trained and would then do justice to any problems our customers might have faced online. Customer service people are hard to find."
"We brought in a very good and well known ecommerce platform as well as an ecommerce expert. We knew to execute the strategy was going to be time consuming, we gave it a rough period of three months and tracked the impact carefully."
One ecommerce manager said that the biggest challenge " … was understanding customer behaviour and meeting the needs of the customer through online when you are removed from them. Online is very different from in store."
How have brands overcome this challenge?
These challenges have been met in a variety of ways. Companies have focused on developing internal skills and recruiting skills to fill appropriate gaps, used complementary or new technology, undertaken competitor analysis and restructured their websites to make them more appealing and user friendly.
However, no single solution was dominant in the market, reflecting the challenges faced across the industry.
One brand said: "From start to finish there are many challenges to going online and a huge amounts of investment involved but once everything is in place the profits are worth every bit of time, effort and money invested."
One brand which expanded into China said: "We sourced out some people from China, and now have a team in China which we speak with every day. Management went there for more than a month; we increased our communication with them, understood how they work and overcame the challenge gradually. China is such an important market for us we needed that level of commitment."
Another brand commented: "We explained to our senior colleagues where the world has reached today and where technology has positioned some of the top brands worldwide, the important role technology has played for their profits, reports from the Internet and reassurance there will come a return on investment. We had to take them on the journey and show others have been doing it with luxury brands as well. It is not just a mass market issue."
Clearly, brands are faced with major challenges in engaging directly with their customers but have the ambition and the drive to do so. They recognise what needs to be done but can take heart that the emergence of best practice and performance benchmarks is helping them to avoid many of the pitfalls.
By following carefully thought-through plans and strategies, brands can take advantage of the benefits of online by owning the relationship with the customer, because one thing is for sure, in a world of choice it is the customer who has all the power.
Michael Ross, director, eCommera
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