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I chaired a wide-ranging discussion at DTC London on the 18th July on the topic of what direct-to-consumer brands can learn from bigger corporate brands.
On the panel we had:
- Mark Little – ex-DTC Director at Unilever
- Jean Phillippe Nier – Head of eCommerce, Kraft Heinz
- Janis Thomas – B2C Marketing Director, Deltatre. ex-Marketing Director, Birchbox
- Rachael Jones – Head of eCommerce, Seedlip
I mentioned that in In putting the panel together I’d put a post out on linkedin for female participants and was rather swamped with 90+ comments or suggestions. The post also received 15K views. Taking this to indicate that there is a greater need to provide platforms for female speakers I’ve subsequently put together a basic site for female eCommerce speakers at eCommerce-speakers.com that can be used by future event organisers. If you’d like to be included on the list of speakers get in touch via the site.
Some of the key themes from the panel were:
Challenges for larger corporates
How do bigger brands approach DTC? The panel discussed 3 ways: 1) incubation, i.e., growing a DTC proposition from scratch; 2) acceleration of existing business units; 3) acquisition of external businesses.
- Organically growing DTC propositions can be hard to execute correctly. One case study the panel mentioned was Unilever, which a few years ago set up what they called a “hatchhouse”, a centre of excellence for DTC, with talent brought in externally to the business. It has since been disbanded.
- There is a lot of hype around DTC at the moment. Evaluate whether it is right for your brand. For example, do customers really want to buy a bottle of ketchup via DTC?
- External acquisition is an approach many larger businesses are pursuing, with either pure plays or omnichannel organisations. Once the company has been acquired, though, a sensible approach is for the parent business to keep it at arm’s length. This can help the organisation maintain its culture and in many ways what made it successful in the first place. It can also help prevent the acquired company being swamped by requests for meetings and expertise from the larger business.
- Some businesses call these acquisitions “speedboat” companies, as the idea is that they’ll maintain accelerated growth. However, this can have cons as well as pros. Historically, acquiring companies often meant buying a smaller company and rolling it out across the world. These days it can be harder to roll them out across other markets, as the conditions in a secondary market can be very different. Challenges may range from existing local players – think Harry’s vs Unilever’s Dollar Shave Club in the UK – to the parent company not having the right talent and capability in other markets to support such a roll-out.
- Mindset – it may seem pretty basic, but a key change is shifting the mindset of the organisation. An approach being explored at the moment by many of the larger corporates is the Lean principles of learning fast and failing fast and, as part of this, embracing more risk. For anyone working in a start-up, it is the quickest way to learn, but for large corporates it can be harder to fully adopt the approach.
- Bigger brands have, however, little option other than to adapt how they do everything, from launching products to putting together their planning cycles. A rigid 12- to 24-month cycle which, believe it or not, many brands still have, doesn’t allow much flexibility.
- Recruiting talent is another imperative for adapting, but there is significant competition out there for talent these days, and larger brands are not always as appealing as they used to be. Do many graduates want to work for large, more cumbersome businesses rather than go for the other opportunities there are on the market?
What advice would the panel give to DTC brands on scaling?
- Skills and capabilities – often in a start-up / scale-up there are a greater number of generalist roles across multiple disciplines because there is more of an “all hands to the pump” mentality. As you get bigger, however, you need to consider whether functions like acquisition, UX and CX might benefit from specialist roles.
- “Grow properly but at pace” was a mantra one of the panellists’ organisations had adopted. It certainly is crucial to be agile and to grow at pace, but you need to do so with the right tools and processes in place. An example given was how, when one of the panellists joined their company, analytics wasn’t set up correctly and was double counting sales. Upgrading their ESP (email service provider) from Mailchimp to enable them to do automated emails felt as if it was ahead of where they needed to be at the time. It nevertheless paid dividends later, when the company was able to grow quickly and efficiently.
- Migrating from DTC to a wider set of distribution channels will get you more volume and, potentially, profit, but you need to balance that carefully with managing the customer conversation and relationship.
- Managing the shift in perception of your consumer and customer (retailer) relationships was deemed important, especially when you are no longer the little company both these sets of stakeholders were working with a few months ago.
- Media mix – a panellist said that, when you are small and growing, there is a temptation just to stick to Google and Facebook for performance media, with some PR thrown in. At some point, however, you need to evolve from using only performance media to embracing brand and a wider mix of channels.
- Measurement – attribution Is important for digital media but, depending on your size, consider marketing-mix modelling to measure ROI and profit across all your channels.
- Keep true to the origins of the company. This can be difficult, but one way a panellist’s organisation tackled the issue was by trying to ensure new hires were aligned to the business’s values.
- Think about what you do in-house and what you outsource. The panel discussed distribution as one example. If you are shipping 50 boxes, you will naturally do that in-house. Get to 50K and you’ll want to box them up at an external warehouse. Get to 50 million (on an Amazon scale) and you’ll need to think about the reduction in cost you’d get from in-housing again.
- Janis discussed how Birchbox did all their creative in-house and had no desire to change: it meant they could be highly reactive but also integrated for a consistent experience of who they are.
- The biggest issue in the discussion of diversity was the representation of non-white employees. All the panellists felt this was an issue in most organisations they’d come across.