The current crisis has disrupted retail and in a way, it has expedited the evolution of eCommerce. People that never shopped online are now dependent upon online shopping to get hold of groceries, toiletries, home appliances, clothes, or whatever they might need. With Amazon accounting for over 50% of online shopping in the US, CPG brands are not only feeling an opportunity but also the urge to explore and develop a direct to customer channel.
This direct relationship with end customers gives DTC an advantage over traditional CPGs. Think of beauty brands like Glossier or Kylie Cosmetics (in which giant Coty bought a $600m stake). The growth and success of these brands which have reached ‘cult status’ relies on the direct relationship they’ve built with their growing customer base. Plus it gives them the ability to enjoy significantly bigger profit margins than competing brands sold in stores or third-party sites, bypassing third parties, distributors, and resellers.
Learning to collect customer data
In order to succeed in their B2C operations, companies must embrace data from within. This means creating and orchestrating the right data stack, the right data ecosystem, and the right data processes. While customer data has been traditionally in the hands of retailers and distributors, this new environment means that CPG companies will need to equip their teams with a set of tools and a data stack.
companies must embrace data from within
At Rivery, we get requests from “traditional” CPG conglomerates trying to replicate agile data-driven models used by companies like our clients Resident Home, the parent company of mattress giant Nectar Sleep. Present at over 1,400 points of sale in the US, the company created a state-of-the-art infrastructure to leverage customer data and ensure direct sales through their site are a key pillar of business growth strategy.
The advantage of evolving a multi-brand portfolio
CPG companies that want to tap into DTC across multiple brands or products have the advantage of economies of scale. They will be able to use a similar data stack to replicate their data processes across their portfolio, saving them time, money, and energy if they can sync their efforts across divisions. Of course, it’s virtually impossible for a GPG giant to do an overnight data overhaul. However, it is essential for the pioneering data teams within these companies to look beyond their specific brand or product line and understand the ways that these new data-driven processes could help other teams or brands within the organization. When rolling our new data processes, choosing the right tools will make or break the chances of on-boarding new teams.
It’s already happening
At Rivery, we have been lucky to work with leading CPG including AB InBev and MARS. The way these companies are evolving and embracing customer data is outstanding. The data systems and the teams managing customer and marketing data first-hand is truly groundbreaking.
While traditionally insights were the domain of external agencies or limited to reports from partners further down the supply chain, companies are beginning to see (and reap) the benefits of investing in a data ecosystem and infrastructure which puts brand owners and managers on the driver’s seat. On the one hand, it gives them real-time or near real-time insights on their performance. On the other hand, the cloud has simplified the way in which all data can be centralized, orchestrated and shared across the wider team.
companies are reaping the benefits of investing in a data ecosystem which puts brand owners on the driver’s seat
Not just about data, but it’s a great starting point.
Of course it would be naive to say that the only challenge faced by CPG giants to evolve into sustainable DTC businesses is data. Their entire supply chain needs to adjust to this - from storage and warehousing of goods to packaging and delivering products to end consumers.
However, I do believe that the first and biggest hurdle for CPGs to overcome is data. Building a customer database takes time, and so does connecting and aligning the dozens of data sources that represent each customer touchpoint and interaction.
The time is now for CPGs to embrace change and connect with their customers like never before. I look forward to seeing how these companies evolve, and continue working with their teams to develop solutions for some of their toughest data challenges - with tools that create a winning data ecosystem, as their world-famous brands and products gear up for an exciting DTC journey.
It’s time for CPGs to embrace connect with their customers like never before.