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.