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Beyond Amazon: D2C As A Competitive Channel

CPGs need to start considering how to evolve past reliance on other marketplaces as their primary channel of online distribution.

Consumer Products companies have long relied on Amazon as a third-party digital partner, leveraging the e-commerce marketplace as an additional channel for fulfillment, expanded consumer reach and distribution opportunities outside of brick-and-mortar.

Now, U.S. lawmakers are calling on Amazon CEO Jeff Bezos to testify following a Wall Street Journal report that claims employees of the e-commerce giant leveraged independent third-party seller data to develop its own competing white-label products sold as Amazon brands. 

This latest development continues the conversation on how Amazon uses third-party seller data to inform its own product and promotion strategies, both as a platform for merchants and as an independent retailer with more than 70 private-label brands. The House of Representatives has been inquiring over Amazon’s data practices as part of broader antitrust investigations into big tech since 2019.

Regardless of the outcome of the Amazon investigation, digital commerce is continuing to play a more decisive role when remaining competitive. As third-party use of seller data is thrust into the political arena, CPGs need to start considering how to evolve past reliance on other marketplaces as their primary channel of online distribution. According to Scott Clarke, consumer products industry lead, Publicis Sapient EMEA/APAC, direct-to-consumer models allow CPGs to take back control over their brand, their products, and the complete customer journey in a way that is more accessible than ever before.

 “CPG companies who decide to go direct-to-consumer typically do so for the purpose of regaining brand identity and control, the ability to gain direct access to first-party data and the ability to shape and personalize the end-to-end consumer experience,” Clarke said.  

Taking the competitive edge with D2C

Direct-to-consumer models have already shown growing promise for CPGs over the next several years, with high-growth projections estimating almost double market penetration (from 11 percent currently to 15-20 percent) by 2024. The COVID-19 pandemic put further pressure on CPGs to accelerate these efforts in response to increasing digital demand.

While the path to D2C may look different depending on unique goals and readiness, developing a direct channel to connect with consumers allows CPGs to act more independently in a number of ways:

Direct access to first-party data: D2C channels open up new pathways to harnessing owned, first-party data that third-party channels can’t typically access, decreasing the need to rely solely on partners for data acquisition. Increased visibility and deeper insights into consumer preferences, purchasing habits and levels of engagement with content allow CPGs to understand their customers in a way that’s unique and relevant to their brand. Companies can leverage first-party insights alongside second-and- third-party data for a more holistic view, allowing for optimization at every stage of the customer journey.

Benefits of D2C

Benefits of D2C

Direct access to first-party data: Increased visibility and deeper insights into consumer preferences, purchasing habits and levels of engagement.

Personalized consumer experiences: CPGs can create more personalized consumer experiences.

Meaningful value creation: Personalization is centered on providing intrinsic value to a customer. 

Control over brand positioning: CPGs have full control over the entire shopping experience and how a consumer interacts with their brand without limitation or standards set by third-party partners. 

Curated online marketplaces: The emergence of curated online marketplaces may serve as a more powerful alternative for differentiation and discoverability outside of larger e-commerce partners. 


    

“CPG companies who decide to go direct-to-consumer typically do so for the purpose of regaining brand identity and control, the ability to gain direct access to first-party data, and the ability to shape and personalize the end-to-end consumer experience.”
Scott Clarke, Consumer Products Industry Lead, EMEA/APAC

Personalized consumer experiences: Greater access to first-party data empowers CPGs to create more personalized consumer experiences tailored to individual preference. Subscription services, for example, put the power directly into the hands of the shopper, with the ability to customize what they buy and how they buy it on an ongoing basis, removing the need to shop elsewhere through reliable service they can count on. As an “always-on” revenue stream, CPGs can leverage D2C to learn continuously more about the customer, opening up opportunities to strengthen relationships with improved experiences, better product suggestions and curated offers that anticipate need and strengthen brand loyalty.

Meaningful value creation: Personalization is centered on providing intrinsic value to a customer, moving beyond just the items they’re looking for and the convenience of buying online – but their experience with the brand as a whole. Going direct gives CPGs the freedom to create new offerings via curation, bundling, pricing and promotion that’s exclusive to their brand and tailored to different audiences – something that may not always be achievable while working under the parameters of third-party partners. Further, including engaging content on a D2C website can create a new value channel by becoming a trusted resource for consumers through education, how-tos, recipes, and other materials meant to inspire and delight, while keeping brand top-of-mind.

Control over brand positioning: D2C is an owned channel, meaning that CPGs have full control over the entire shopping experience and how a consumer interacts with their brand – without limitation or standards set by third-party partners. This type of environment allows for more experimentation when creating new value for consumers, while giving CPGs greater control over featuring new products or messaging. In this environment, CPGs can move quickly, learning from consumer habits and optimizing processes in a more agile way.

Curated online marketplaces: Looking ahead, the emergence of curated online marketplaces – or marketplaces that aggregate brands that share similar traits, products or value offerings – may serve as a more powerful alternative for differentiation and discoverability outside of larger e-commerce partners. For example, a marketplace that specifically caters to organic or vegan food could attract shoppers with specific dietary preferences, while providing CPGs with an elevated platform to highlight their products.

Direct differentiation

CPGs have already faced an uphill battle when it comes to standing out among a crowded digital market. Embracing direct-to-consumer models give CPGs more direct access to data and the freedom to create entirely new, brand-unique experiences alongside existing revenue streams – paving the way for growth outside of third-party walls and creating new paths to innovation.