1. Go your own wayHow brands can take control of their
online consumer relationships.
2. The cost of ignoring online opportunities
Thanks to the wonders of modern technology, consumers are
spending a growing proportion of their life online. And whether
they’re actively buying an item, researching a potential purchase or
uploading a social media post about something they’ve just bought,
brands are always top of their mind - and at their fingertips.
But despite the gateway being wide open, most brands are missing the
opportunity to build a direct connection with consumers online. Instead,
they are letting online marketplaces such as Amazon and Alibaba, and big
data gatherers like Google, dictate their customer relationships.
An exclusive study of 1,000 shoppers by Digital River in summer 2014,
discovered a gulf between what today’s digitally driven consumers want from
their favourite brands, and what brands can currently provide to them.
In this report, we’ll look at the online consumer engagement opportunities
awaiting brands today. We’ll also address how those wanting to go direct
can overcome any apprehensions about launching a new direct-to-
consumer ecommerce strategy and take control of their digital destiny.
Go your own way: How brands can take control of their customer relationship online.
3. The online opportunity
of brands expect 10% of their
income to come from online
by 2015. However, only 18%
currently reach this target.
43%
The relationship between brands and
consumers has never been more complex,
thanks predominantly to the growing
influence of technology on shopping.
Consumers are engaging with brands
directly and indirectly through a number
of channels — from transactional
platforms such as stores, mobile devices,
ecommerce sites and online marketplaces,
to marketing communications like digital
signage, television, print advertising and,
again, mobile devices.
Of all sales channels, online is by far
the most important to both brands and
consumers. Our research revealed that
89% of shoppers visit a brand’s website
when shopping online. Retail analyst IGD
found that almost half (43%) of brands
expect 10% of their income to come from
online by 2015. However, only 18% currently
reach online sales target.
Go your own way: How brands can take control of their customer relationship online.
4. The cost of ignoring online opportunities
Why is online the most
important channel?
Consumer appetite lies at the heart of online retail’s explosion. Shoppers
have evolved in the way they want to gather and share information,
interact with brands and retailers, and ultimately purchase goods.
This has altered retailers’ most profitable sales and marketing channels,
leading to greater investment in:
• Ecommerce platforms
• Mobile marketing
• Optimised websites
• Social media
26% of 18-24 year olds view researching
brands on social media and through online
product reviews as important
Electronic items,
books, CDs, DVDs
and video games
are the most
popular items to buy
over the internet –
18% of people will
always buy these
items online, never
in-store.
Go your own way: How brands can take control of their customer relationship online.
5. Straight to the point (of purchase)
Though it might be obvious that consumers are hungrier
than ever to shop online, many brands wonder whether this
appetite is specifically for them; do consumers care who
they get their goods from, so long as they get a good deal?
Our survey discovered that consumers are keen to support
brands directly, but only if they are offered direct transactional
opportunities in a convenient manner for their digital lifestyles. For
example, 89% of people sometimes, often or always visit a brand’s
website when shopping online, yet 31% of people would definitely
change allegiance if they couldn’t buy an item directly online from
their preferred brand.
This demand for convenience isn’t just affecting those who don’t
go direct – our respondents also expressed frustrations with
brands that do offer direct ecommerce at present, but whose sites
are awkward, time consuming or inadequate to navigate.
of people who tried to buy online from their
favourite brands in the past 12 months
abandoned their journey before the point
of purchase. In these cases, the top four
reasons for failing to check-out were:
1. The product they wanted was out of stock
2. There was not enough product information
on the brand’s website
3. They wanted to try the item in-store
before buying
4. It was cheaper to buy the item from
another website
43%
31%of people would definitely
change allegiance
Go your own way: How brands can take control of their customer relationship online.
6. Who’s getting it right (and wrong)
at the moment?
Our research uncovered disparate success rates among brands already
selling direct to consumers, with the designer and luxury goods sector
in particular letting shoppers down. Here are some of the comments
respondents made about their online experiences of their favourite brands:
Straight to the point (of purchase)
“Cath Kidston has
offers that are much
cheaper than shops
that stock their items .
”
“Diesel seems to be
style over substance, it
could be much clearer.”
“Clinique’s website is easy to use, I can see what I want
and buy when I’m ready. ”
“Nokia’s phone prices
are always very inflated
compared to other sites.”
“Fred Perry has items available
before they’re in-store.”
“Black+Decker’s website is too busy and difficult to navigate.”
“Dell gives plenty
of options and
customisations.”
Go your own way: How brands can take control of their customer relationship online.
7. Opening the gateway
With the online opportunity clear, the major decision
brands face today is whether it’s necessary to sell
direct to consumers online.
Some brands feel a non-transactional website is sufficient at present,
but creating the ability to sell online would allow them to directly
manage their digital conversations with consumers, rather than sharing
them with competitors already selling their products online. Our study
illustrates this, as 78% of people said they would buy an item from
Amazon if they couldn’t buy it from the brand’s website, but only 22%
would try and buy the item from a brand’s retail store.
Selling direct also establishes opportunities to control key elements
of the retail process, such as price; our research revealed that 21% of
consumers always carry out a price comparison when shopping online,
while 49% expect to pay less when buying directly from a brand.
78%of people said they
would buy an item
from Amazon if they
couldn’t buy it from
the brand’s website
21% of consumers always carry out a price comparison
when shopping online
Go your own way: How brands can take control of their customer relationship online.
8. Straight to the point (of purchase)
Benefits of going direct:
Flexibility
visibility
inspiration
passion
knowledge
management
price
control
viable
competition
customer
insight
connected experience
fullcatalogue
testing new models
planning
forecasting
big data
Go your own way: How brands can take control of their customer relationship online.
9. For many brands, the dilemma is not whether it’s worth going
direct to consumers online, but how costly ignoring online
opportunities will prove. Not being able to buy a product from a
brand’s website can deter shoppers not only from purchasing
directly through another channel such as the store, but from
continuing to buy from that brand altogether.
The cost of ignoring online opportunities
That being said, for many brands
it’s not a case of ‘ifs’ or ‘buts’ – they
realise the long-term strength
of their business lies in fostering
direct consumer relationships.
However gathering the capacity
and resources to build a new
ecommerce channel, potentially
spanning multiple regions, is
another challenge altogether…
Go your own way: How brands can take control of their customer relationship online.
10. The cost of ignoring online opportunities
What are the challenges
of going global?
Trading online internationally is incredibly complex, with many
considerations to incorporate into the creation of an ecommerce channel
– from tax and fraud management and export and PCI compliance to
regional consumer variations such as multi-lingual marketing, product
appeal and preferred payment methods.
43% of people would
be put off buying
a brand’s product
through another
channel if they
couldn’t buy it through
their website.
Go your own way: How brands can take control of their customer relationship online.
11. The story so far
To shoulder the burden of establishing an effective
ecommerce presence, many brands have already
investigated alternative ways to go direct to consumers
without having to venture out alone.
For those who don’t have the budget or expertise to invest in
their own technology, until now, using a third party website
such as Amazon or Alibaba has seemed the most viable
option. However these are not without drawbacks; they can
be costly, risky and dilute the relationship between brand and
consumer. In some circumstances it can lead to a complete
loss of control over the brand relationship – after all, what’s
to stop a third party website advertising rival products on the
same page?
8common
reasons
why
brands aren’t doing direct ecommerce today
• Lack of online sales expertise compared
to retailers
• Limited direct to consumer insight
• Shortage of in-house resources and
expertise
• Gaps in partner network
• Disparate geographic presence
• Insufficient IT support
• Budget constraints
• No vision!
Go your own way: How brands can take control of their customer relationship online.
12. Fighting the Amazonian giants – the new way to go direct online
Thankfully there is now an alternative that enables brands
to retain complete control of consumer relationships while
removing the complexities of transacting online, potentially
across multiple markets: outsourcing.
Outsourcing the management of the commerce business
infrastructure is the most effective way for brands to establish
direct online access with consumers, without relinquishing
power in the process, and retain the focus on their core business.
The brand remains front and centre while the back-office
complexities and risks associated with running an international
ecommerce operation are shouldered by the provider.
Partnering with an ecommerce infrastructure provider offers
brands with all the benefits of an online marketplace – rapid
deployment, proven technology, expert support – whilst retaining
complete access to the consumer. This includes the data being
generated by direct online transactions, which can be used to
gain actionable insight.
As a global commerce expert, Digital River knows first-hand that,
for brands who want to engage directly with consumers online,
outsourcing is a means of maintaining or regaining control over
that relationship.
Here is a case study from HarperCollins that we’ve worked
with who’s done just that…
brands outsource their ecommerce strategy
• Expert consultancy
• Cutting-edge technology and solutions
• Cost-effective
• Low risk
• Flexible business model
(opex vs capex); low TCO; high ROI
• Quick time to launch
• Removes complexities of ecommerce
management (fraud, compliance, logistics, tax...)
• Ongoing external management
• Control and ownership of customer data generated
8popular
reasons
why
Go your own way: How brands can take control of their customer relationship online.
13. Case Study
HarperCollins
Publishing is one of the biggest battlegrounds for third party
marketplaces – Amazon in particular – in 2014. Many traditional
publishing houses have accused Amazon of bullying tactics to drive
down the prices of book sales, squeezing their profit margins and
restricting their resources for investing new talent and niche genres.
HarperCollins Publishers wanted to find a means of entering the
lucrative ebook sector without relying on third party platforms, so that
it could control the promotion and distribution of its content by timeless
authors such as C.S. Lewis at the same time as offering some of the
world’s most famous novels in a 21st century-friendly format.
Digital River provided HarperCollins with a bespoke plug-and-play
solution. In addition to establishing a new direct-to-consumer channel,
it also gave the publisher new flexibility in ways to go to market with
new literature. At the same time, Digital River’s commerce-as-a-service
infrastructure took care of the practicalities of ebook transactions,
such as global payment handling, fraud prevention, security, taxation,
compliance and order management.
Offering a direct to consumer option is another way in
which we can service our authors and let them engage
with their audiences in as many ways as possible.
Whether consumers want to make purchases from
a brick-and-mortar store, an online retailer, or from
an author brand site, we have a solution to meet their
needs and to make our authors’ products accessible to
them.
Chantal Restivo-Alessi,
Chief Digital Officer, HarperCollins.
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Go your own way: How brands can take control of their customer relationship online.