E-commerce drives brands to reinvent themselves
Updated: Jul 7, 2020
For a long time, brands have lagged behind e-commerce in GCC. Driven by e-merchants and new consumption patterns, brands are integrating this new channel into their distribution strategy properly. Brands are moving from a logic of undergone approaches to active online plans as they understand the many opportunities that e-commerce can offer them. They have regained control of their online sales strategy. However, not all brands are evolving at the same speed. There are significant differences in maturity in supply chain management, content strategy, pricing, product and offers. Today, there are three main maturity profiles:
- First movers: brands that have invested in e-commerce from the very beginning and on several fronts. - Fast followers: brands that have invested carefully but surely in digital by choosing their battles. - Late movers: brands that have little or no investment in digital: they have not yet understood the opportunity it represents, or are afraid to take the plunge.
These differences in maturity can be explained in particular by the investment capacity, both financial and human, required for this transformation, the acquisition of new talent that is rare and difficult to retain, or the resistance of certain parts of the company to this transformation (supply chain, technologies, etc.).
Today, e-commerce is no longer seen as a risk by brands, but rather as an unavoidable channel to integrate into broader strategies to offer a consistent omnichannel experience. However, meanwhile, major retailer platforms and pure players have established themselves as e-commerce references, capturing both the demand side with their customers as well as the offer side with their e-merchants. The brands face a dilemma, between the temptation of D2C (direct to customer) and the scale opportunity offered by large marketplaces.
The attraction of direct to consumer (D2C)? Most brands are exploring D2C. Indeed, half of the retail brands in the GCC indicated that launching or accelerating their D2C strategy is among their priority projects according to a recent study by McKinsey. Besides, 63% of them say that starting their online store is the best way for a brand to succeed in its e-commerce strategy. But D2C and brands online stores are creating a new business and economic model with multiple complexities. In addition to the new digital and data resources to develop and logistics and supply chain to manage, brands are having difficulties in aligning these new streams with their physical and offline presence. Therefore, many prefer to keep these initiatives in independent organisational silos. Also, their websites face fierce competition from dominant online players and marketplaces that have more experience, resources and skills to succeed in this channel.
The opportunity of massive platforms? On the other side, brands feel behind with the pure players and massive retail platforms. Their products are, in most cases, present and traded through independent e-merchants. And they often lack visibility on what is happening on these platforms. Given this situation, some brands have decided to overlook this channel, although it is currently the most significant part of online shopping. At the same time, the high traffic of these platforms makes them a necessity. Major players have become the gateway to online purchasing. Ecommerce buyers are becoming more and more loyal to them, mainly because of the experience they offer. And if not capturing the sale themselves, they at least achieve an essential part of the conversion journey.
This is why brands should put the most significant effort to benefit as much as possible from these platforms, increase their digital presence, recruit customers into their brand and prevent losing existing customers. It is only once this presence is well established that a customer could willingly migrate to a D2C channel.
In conclusion, both D2C and platforms are essential in any e-commerce strategy. To succeed, brands should know how to manage both channels and their traditional physical sales, capitalise on each one's strengths, create synergies and mitigate weaknesses, starting small then growing to a holistic view.