Analysis

Planning direct-to-consumer sales in 2022: Examples from Festival of Marketing virtual roundtable

 

At a Festival of Marketing virtual roundtable, marketers acknowledged direct-to-consumer sales could be a boon to brands as shopping behaviour shifts, but the offerings need to be relevant and add value for consumers.

With many of the new shopping behaviours that have arisen during the pandemic looking set to stay, brands are preparing for 2022 with plans to grow their online direct-to-consumer (DTC) sales.

 

During a virtual roundtable at the Festival of Marketing, sponsored by eBay Ads and held under the Chatham House rule, senior marketers debated how to make DTC business models engaging and accessible for consumers. As the participants concluded, perceptions of internet shopping as a whole have completely changed, as has the role of online marketplaces.

 

One global media director for a multinational FMCG manufacturer pointed out that many people switched to buying staple food products online at the outset of the pandemic and continue to do so. Consumers have become used to the convenience factor and are cooking more at different times of the day, particularly lunchtimes, because they are working at home more often.

 

The behavioural shift was borne out by the figures quoted by Marketing Week and Festival of Marketing editor-in-chief Russell Parsons. Moderating the debate, he pointed to Unilever’s statement that its eCommerce sales increased by 61% in 2020, and now account for 9% of its overall business.

 

A global head of media for a leading brewer agreed that DTC was being taken more seriously in his business. Half of its beer consumption in the UK was in pubs, clubs or restaurants, but the business had to respond to consumers wanting to buy more online.

 

Many people no longer want to carry heavy cases of beer when making a shopping trip, he said, and they welcome convenient home deliveries. However, he acknowledged that all brands needed to tread carefully when discussing growing their DTC sales, because it could put a strain on the relationship with retail customers, including the supermarkets.

 

“We need to be customer-focused as well as consumer-focused and mindful of the risks of competing with our retail customers when we sell direct to the consumer online,” he said.

 

Consumer shopping habits may have changed, but FMCG brands will have to work hard to engage and inspire existing and potential consumers.

 

A brand manager from a multinational snacks group said the key to getting DTC right is to ensure the shopping process is easy to use, accessible and relevant. This includes finding ways to maximise sales around key events such as Halloween, Christmas and Easter.

 

One of its solutions has been to work with specialist partners in the gifts market. However, there is a business challenge around the cost and value of supplying snacks in relatively small quantities online.

 

The FMCG media director agreed. She said brands need to persuade consumers to bulk-buy so that it is economically viable for the manufacturer. When it comes to pet food this is already happening because owners like to stock up.

 

Direct offerings

Harmony Murphy, UK general manager at eBay Ads, said the pandemic had led many lapsed users to return to its online marketplace.

 

“We have seen [consumers] coming back to the platform who had not used their accounts for years, sometimes 10 years,” she said. “There were spikes in categories such as bicycles, garden sheds and barbecues. Of course, things dropped back after the lockdowns, but now we are seeing more people research on eBay even if they do not always buy using the platform. They have become familiar with the user experience during the pandemic.”

 

Her colleague, eBay’s brand partnerships manager for FMCG, agreed that people have started to use the ecommerce platform in a different way. He reminded the panel how, during the lockdowns, important sectors such as hairdressers and gyms were closed and consumers had to go online to buy products and services they would usually purchase on the high street.

 

The panel also discussed the ongoing challenge of making people aware of what is available to buy directly from brands online.

 

The global head of media for the leading brewer said it was still important to drive people to pubs and restaurants, where they will have a better consumer experience. However, online can persuade consumers to take a first step to try a brand, which they subsequently purchase in a supermarket or order in a bar.

 

Shifting trends

Ultimately any DTC model will only work if the benefits are obvious to users. Murphy outlined how eBay partners with small businesses to help them make the most of what it offers. This includes sharing data and insight held by the platform, so sellers can react more quickly to fast-changing buyer behaviours.

 

This means there is less wastage and more relevancy when mass-marketing or macro-targeting, and it chimes with another reason that DTC more generally appeals to brands: the opportunity to collect valuable first-party data, allowing them to understand customers better and to address their preferences. As the FMCG media director acknowledged: “You need to look beyond the product and leverage data to add choice and personalisation. We know we have vegan customers, so why would they want to feed animal products to their pet?”

 

In this context of changing consumer behaviour and DTC sales, brands may need to adapt their marketing mix. The global head of media for the leading brewer said brands and agencies need to look outside of the London bubble. It is also crucial media agencies and advertising agencies work closer together.

 

He pointed out that this happens in other parts of the world, including in Asia, where there is a less of a divide between how clients and agencies think about traditional media and the role of digital in any marketing strategy, especially post-pandemic.

 

The panel also discussed the need to ensure brands match consumer values around topics such as sustainability when planning their ecommerce strategy.

 

Food brands, for example, are realising they need to be transparent throughout the supply chain. The challenge for marketers is meeting people’s expectations around sustainability while convincing consumers that they should pay more for products bought online that are kinder to the planet.

 

This is just one of the many trends brought about by the pandemic and the growth in ecommerce, which marketers now need to think about as they look to get closer to consumers and how they behave today. Through growing their DTC operations, both via marketplaces and their own channels, product manufacturers can develop a much better understanding of their consumers, as well as respond to the demand for new ways to buy.

Credit:marketingweek.com

 

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