The Secrets of DTC Success

What’s the holy grail of DTC? Put simply: It's all about connecting the data. A recent webinar digging into the consumer goods companies pivoting into direct-to-consumer explored the technologies, tools and tricks of the most successful brands, including what makes the digital natives just so special. Read on for an edited transcript and all of the presentation slides, and learn why done is better than perfect, but personal wins all. Lisa Johnston: Hello everyone. Welcome to “Consumer Data Goldmine: DTC's True Role in Innovation and Engagement.” My name is Lisa Johnston, and I'm the managing editor of CGT. I'm excited to welcome our two guests today: Shelly Kramer of Futurum Research, and David McCarty of Treasure Data. Shelly is the founding partner and lead analyst at Futurum Research, a research and analyst firm focusing on the technology sector. She's also the founder of Futurum sister company, V3 Broadsuite, a marketing consulting agency and Broadsuite Media Group. Shelly, welcome. David McCarty has over 30 years of experience in the CPG industry, consulting with CPG and retail clients to develop and implement strategic digital transformation initiatives. David's areas of focus include marketing, trade promotions, e-commerce, new product innovation, and supply chain. His passion and motivation are driven by helping his clients leverage innovative technology to drive profitable growth. David, welcome. Thank you for joining us. This webinar is an extension of “Making the Pivot to DTC,” a recently published special report by CGT. The fact of the matter is DTC is hardly a new thing. Consumer goods companies have been long interested in DTC, but there have always been complications surrounding logistics, channel conflict, and corporate buy-in. For most brands, the large ones especially, they've really just been experimenting with DTC, if that at all. In fact, when CGT looked at DTC back in 2017, consumer goods participation was described as a slow burn. But of course, thanks to COVID, the channel's now on fire and it's driving growth across the entire consumer goods industry. As part of the special report, CGT conducted a snapshot survey of CG executives to gauge their experiences, and as you can see on the slide, we found that 40% of the executives we communicated with experienced 75% growth in DTC sales in the last 12 months. Now, this also aligns with the analysts we spoke with for the report, one of whom, Marshal Cohen of the NPD Group, noted to us that DTC is proportionally selling at a higher growth rate than the total market, and this isn't to just for consumer goods, but for almost every industry they track. Obviously, consumer behavior has shifted dramatically during the pandemic to online. David and Shelly, I want to bring you in right now. David, can you start us off, and then Shelly follow up. What are your thoughts on whether the focus on DTC is a temporary COVID response versus a lasting shift in consumer buying behavior? David McCarty: Thanks, Lisa. I think, in many regards, it depends on the product category and the brand, right? It's hard to paint with a broad brush. But I do think that we have seen that it's going to be more of a lasting effect. I think that consumers buying journey behavior has changed, and I think people enjoy the ability to buy online and go direct to the brands that they know and love. I think if we look at some of the investments that a lot of the CG companies are making, they also believe that it's going to be a lasting effect. Of course, it spans across a number of different dimensions about the strength of the brand and so on so forth. But in one extreme, you can take a look at what Nike's doing, right? They have really, really doubled down on direct-to-consumer, and I think they're looking at close to 50% of their revenue coming from DTC over the next few years. Maybe on the further edge. I think it's going to be definitely a lasting effect. Another data point that I found interesting that I saw the other day is that Shopify is actually now reached about 40% of the sales volume of Amazon's e-marketplace. Shopify allows brands to go direct-to-consumer, and as the commerce and shopping cart platform. I think that they hit, in 2020, close to $120 billion of business, which is about 40% of Amazon's e-marketplace fit. I think that, again, shows kind of a stickiness, if you will, to this new behavior from consumers. Johnston: Nike's a great example. Shelly, can you follow up with some thoughts? Shelly Kramer: Sure. You mentioned that you felt like what CPG companies, their transition to DTC and I wish we could add a few more acronyms in there, this would make this conversation even more exciting, but that their behavior was like a slow burn. My feelings on that is slow burn at your own risk, because you're going to get your lunch eaten, and that's what's happening right now, I think. I look at this from two different angles. One is as a consumer, the primary consumer, the family of four, which is very common, right? I look at it as a marketing brand strategist and as an analyst. From a consumer standpoint, this shift for me to buy DTC products is not new. I've been doing it for years. I've been discovering products on my own for years because those products know where I am, they knew who I am, they know that they want my money, and they know how to reach me, okay? You have that, that's already been happening. It's like a shift of people. People who have to think about buying things from Amazon, that's a behavior, right? I want what I want when I want it, and here's where I go to get it. Or here's where I am on Instagram, on TikTok, on Facebook, and something slides in front of my field of vision, I want this, I'm going to buy it. Thank you, Shopify, for making it easy. I think that there are two different ways to look at it, but this is not from a consumer standpoint, this is not for many of us, and oh, aha, the pandemic caused us to buy DTC things. It's like a, yeah, hello, of course, we're doing this. Of course, we want you to make this easier for us. By the way, pandemic or not, the last time I went to Target or Walmart or some other big box retailer where I would maybe discover these products, even pre-pandemic, was as little as humanly possible. If you're a consumer goods company and you're relying on customer foot traffic in any location, pre-pandemic, for product discovery, I think that that's really tricky and that's not the best strategy. Because for a lot of us, too, when we go to physical retail locations, we are there for what we want. We're not wandering up and down every aisle trying to find something, and oh, by the way, we're not watching TV. If we don't happen to see an ad for a product that we want, oh, wait, next time I go to Target, I'll get that. We're not sitting around waiting for that. I think there's so many variables in there and so many nuances. One is this really isn't as new as we think it is. Two is that, absolutely, the pandemic sped it up and it really has forced CPG companies to realize we better get our acts together. Johnston: Well, on the note of getting their acts together and also slow burn at your own risk, certainly there's a host of challenges for DTC. Keeping the right balance between challenges has always been an obstacle for consumer goods companies that sell the mix of brick and mortar and direct sales. This was a concern even before the rise of DTC. But as you said, ultimately though, consumers, they want to buy where they want to buy, and so brands need to be available to sell wherever that is. For the smaller brands, though, the challenges are it's crowded out there, right? There's a real risk of getting drowned out. Whereas for the larger brands, what we're finding and what we're hearing is that they can't just dive in. They don't have experience in the channel for one thing, and they don't have the agility. Essentially, the larger companies are saddled with these embedded systems and processes that's making it more difficult for them to experiment, and experimenting with DTCs is what DTC is all about. David, one of the things we talked about is companies are resistant to pivoting to DTC because they think consumers, they won't want to go to a brand site to purchase, that retail exists for a reason to make it easier for shoppers to make all their purchases in one place. I know you said you can't remember the last time you went into a Target. I want to hear more about that. But, David, to your point, what are some of the reasons for CGs to look beyond this potential challenge? McCarty: Well, we all have heard those excuses, for lack of a better term, right? But I think, Shelly, you did a great job of explaining why those aren't really excuses anymore. In terms of experiential and being able to experiment and being able to find these new brands that you may know or love, people are doing that online. They're not really wandering in brick and mortar anymore to do that. I think that's really not a valid excuse anymore. The second is, I think, for a long time, it was a pretty heavy lift from a technology perspective to even experiment on DTC perspective. I think a lot of those barriers have been lifted as well. We saw that last year in terms of how quickly a number of consumer goods manufacturers were able to stand up their DTC sites in a very, very rapid fashion. I think that there really isn't those old rationale for not getting into it. Now, in terms of the excuse, if you will, of, well, people don't want to come to my brand website, I'm not sure that's true anymore. People do want to engage with brands. They want to feel like they're part of a brand, and have that emotional connection. Not good enough for all brands. That's where I think it comes to having to really know who your consumers are. Not everyone is going to treat a certain brand the same way. But if you know those consumers, the ones that can be the brand enthusiasts, the brand loyalists and can engage with them, they absolutely want to come to your sight. If you can begin providing an additional value proposition, right? Maybe it's the ability co-create a new flavor or co-create a new product, or maybe it's an ability to get some sort of special bundle or some sort of unique product packaging that has a value for the consumer, I think consumers are willing to come to those sites and do the shopping at a specific brand location. Johnston: Shelly, it sounds like I heard a little bit of a chuckle on the brand value proposition. Do you want to build on that? Kramer: Yeah. I think it's interesting, and I do you feel like there's a lot of legacy thinking out there. There's a lot of legacy infrastructure out there, I get that. In my work, I'm immersed in digital transformation all day, every day. Every excuse, whether it's from a CPG company or some other company that is dealing with this is the way we've always done it and change is hard, okay, get over it. Truly and really, the path forward is change and it's agility and it's technology and the right technology and the right technology partners, and a culture of innovation and a culture of change. Technology alone is not the solution. People are the solution. Again, primary consumer for a family of four, across the board, look at the women around you. My number one problem in life is time. I don't have any. I'm a working mom, I have twin teenagers, I have an elder parent that I care for, I have a husband who travels 80% of the time pre-pandemic, I have zero time. If you want my money, make it easy for me to give it to you. I don't have time to go to a store. By the way, again, this was pre-pandemic. I didn't have time to go to a store. I mentioned 15-year-old twin high school freshmen, I cannot tell you how many times I get a link from them, "Mom, would you please buy me this? Mom, will you please buy me this? Mom, will you please buy me this?" That they are finding in their online experiences, right? Never mind a mature woman, primary consumer, look at this next generation of consumers who are incredibly savvy when it comes to navigating the web and devices. I mentioned Target. I don't have anything against Target. I've given Target thousands and thousands of dollars over the course of my lifetime. But I do believe that from a discovery standpoint, relying on customers going to physical retail locations and believing that a vast number of consumers prefer that is a misstep. The other part of this equation is that personalization, that customer experience, that relationship that you have directly with a customer, that when you're a DTC brand and you're doing that, that's more valuable than anything. I know who she is, what she bought, when she bought it, when she's probably going to run out and need more, how I can reward her for her loyalty, how I can inspire her to tell more people about how much she loves our products. By the way, you don't have that connection. I've never gotten a message from Walmart telling me — it was, by the way, one of the most sophisticated retailers in the world, right? — But telling me, "Hey, Shell, you bought some of this, and chances are good you ran out. Would you like some more?" You know what I'm saying? Retailers don't have those relationships with us. DTC brands do and that's really where the data, the connection, and all of that is so very powerful. Johnston: Just building a little bit more on the challenges, for the culture challenge, you're saying, well, you just have to get over it. But when the CG executives that we pulled in our Snapshot Survey, limited resources are definitely a challenge for some of them. This translates in different ways, and you can see that a quarter of them cited culture as a significant challenge. David, much of the focus on DTC is on the required technical capabilities that are needed to enable a DTC channel. But the need for the right people and resources is also highlighted. I'd like to get your thoughts on that. McCarty: Yeah. I think, Shelly, brought up a point a few minutes ago about, from an excuse standpoint, you got to also find the right partners, right? Because maybe resource constraints. It's about finding people that can get in the boat with you and help you on this journey. One of the things that we found with our customers, and the ones that are the most successful, that if you think about the roles and the personas and the people that you need to have to drive success, if you will, not only for DTC, but just broadly from a digital engagement, digital transformation with consumers, there's really three ecosystems. There's a data ecosystem, there's an AI and insights ecosystem, and there's an engagement ecosystem. You really need to ensure that you have capabilities and skills and resources in each one of those three areas, and it's hard, right? Because those are different skill sets you need on the engagement side, you need your marketers, and your brand managers, etc. AI and insights, you need data scientists, as an example. On the data side, you need people that can understand how to integrate this information and data that comes from all these different sources and bring that all together. Making sure that you have the skills in those three areas, or partner to get them, and then ensuring that you have a platform, back to the technology side, that can support all three of those ecosystems is really important. Because, to your point, it is not just the technology, it's that age-old people, process and technology, right? Kramer: Right. McCarty: I think people get a little bit ... It's a shiny object, right? Technology, technology, technology. But if you don't get the process right, and that gets back to the culture, right? That we talked about, as well as the people right, you're going to struggle. You have to look at each one of those, I think, equally. I do think sometimes technology gets a little bit too much of the attention. If you don't solve the other two, you will struggle. Johnston: Let's talk about some of the brands that are getting this right or that have recently entered. Our first example, it's one of the larger brands that recently moved into DTC just a few months ago during the pandemic. Bimbo Bakeries USA launched their DTC site in just three months. In addition to leveraging this consumer data, they're expecting it's going to even improve their retail relationships as they use the data to create higher quality products to sell on retail shelves. Now, of course, this company had the benefit of leveraging their pre-existing manufacturing sites and their very large distribution routes. Shelly, some of the analysts we spoke with said consumers are expecting brands to directly engage with them. I'm curious, would you agree or disagree with that? Kramer: 100%. 100%. Consumers very much feel a connection. When you reward them, and this stuff is so easy to do, really. I realize when I say things like get over it or this is easy to do, I think that part of any shift, part of any embracing transformation is all about what David said. Working with smart partners, you don't need to reinvent the wheel. You can't do everything yourself. Don't expect to do everything yourself. But I could tell you the things that I have bought when I have got ... Sometimes I get a personal note from whoever it was. I can't remember. I bought a Mirror, the workout thing. The Mirror, not cheap at all. When it showed up, it comes with white glove delivery and they set it up, and it's so great. I got a personalized note from the founder of the company. By the way, the Mirror has been purchased by lululemon in the last year.Trust me, I know the CEO of this company is not sitting here handwriting notes at 10:00 every night to every customer of the Mirror, but I will also tell you that it was a personal touch that was appreciated as a consumer and as a brand strategist, and it's like, "You get this. You get this." I buy my dog food from The Farmer's Dog. It's just little touches like this. Just the packaging. The packaging comes with “This is my dog ... This is Flynn's food” and little notes in the packaging and a nod to sustainability. Everything is packed. I love opening the box so much because I'm so impressed by the steps that the brand has taken to have a relationship with me and to show that they care about what I care about, which is my dog. This is human behavior. As marketers, this stuff isn't rocket science. It's human behavior. How do we touch their hearts? How do we make them love being our customer? It's those little personalization steps. That's really to your point, David. Whether it's your CDP or any CDP, this is the time of the customer data platform. You must have and be using a customer data platform, and there are lots of options out there. Like your point, David, about technology, buying a technology solution is not always the best path. It's really evaluating the solutions, and really looking hard at what kind of expertise and support are we getting with this solution? What other customers work with this? Is it connected through the entire organization or is it just something that's just marketing or whatever? There are those nuances there. But I think that it's really exciting times for CPG companies in the ability to really understand the beauty of direct-to-consumer, and how much value that can deliver to you, if you embrace that and also understand that data and connecting that data throughout the organization is really your holy grail. Johnston: Then, let me follow up with that. I'd like to hear from you, and then also from David. For brands that are inexperienced in developing these types of relationships that are obviously so important, what can you advise them? Kramer: I think that everything starts with ... I feel like this is just sort of marketing 101, but it starts with embracing a consumer-centric focus, and to step back from, "We want to sell a whole bunch of this," to, "Who's our customer? What does she care about? What does he care about? What are their challenges? What little things can we do?" I will tell you this, I've been implementing and strategizing and concepting personal touches for my clients for 25 years. Again, this is not new. Some adding a personal touch to something, it's not something that I just dreamed up or some brand has dreamed up. But it's just really starting with when that package shows up at her door, what do we want to happen? Think about the unboxing. Oh, by the way, how many people today capture the unboxing of things on video and share it on their social channels? Because they're excited like, "Oh my gosh. I'm so excited to be trying this out." That's advertising for you. That's user-generated content that is magical, right? It's really stepping back and thinking about what do we want to have happen from the moment our mocks shows up at someone's door? How can we make that experience a magical one? Then you have the power of an excited customer and a happy customer, and a customer who recruits other customers for you without you even asking them to. Those are the things that I think make this such an important thing. By the way, you can do these things no matter what size your company is. I've worked with lots of small startup companies who've enlisted the help of micro influencers throughout the country, throughout the world, to help with product launch. We see this all the time, right? More and more and more of it. These days, Instagram influencers and TikTok influences are getting agents. This is huge. It's like, regardless of the size of your company, it's really thinking about marketing 101. Who's our customer? Where are they? How can we reach them? What kind of messaging will resonate? What kind of influencer network can we build to help us reach that customer base? How can we incentivize them? Those are pretty standard questions, and not really all that difficult to do. Johnston: David, do you have anything you can build on that? McCarty: Well, I think, Shelly, you hit the nail on the head with that. I think the only thing I would say getting back to what you said is, at the end of day, it's knowing your customer, your consumer, which requires data. That always seems to come back to the data, right? But there's one other thing, I think, and I'd love to get your take on this as well, is I think it's important for companies not to let perfection be the enemy of the good, right? Just get started. You can navel gaze your way into doing nothing, and the time for action is now be agile, really grab on to this and jump in the deep end of the pool. Even if you don't feel like you're ready, you are ready because it's your [crosstalk 00:27:03] It's kind of 101, right? Just go back to the basics, and just do those. But don't let perfection be the enemy of the good. You want to make this an iterative process and you'll get better. I think if you're genuine about it, the consumers will know that, right? You've got to have to be authentic and genuine when you do this. Kramer: Such an important point for any transformation, David. It really is. To your point about data, I will not be able to remember the brand. But this is something that's happened probably five or six years ago. I have a good friend who's a researcher. She's really, really adept at understanding social graphics, and she's worked with very, very large brands over the course of the last decade, helping them understand who their customers are and harnessing data and things like that. She has had clients who have actually discovered a need for new products from existing customers talking about this in social. "This is so great, but I wish.” “This is really cool. I'd love a blueberry flavor," or whatever. The data is so, so, so important in every aspect of the journey, especially or and as it relates to product refinement, new product development and all that sort of thing. I think sometimes we forget about that when we're talking about how to sell more stuff to more people. We're thinking about who our customers are and loyalty and stuff like that. But the other part of the equation is so very cool. Plus, it also allows you to pivot very quickly. You know what I'm saying? You come out with some flavor or something that just doesn't hit the mark, you can see that super fast and transition. I think that that's really the personification of our business landscape today. I don't care what business you're in or what industry you're in. It is doesn't have to be perfect, get it out there fast, pay attention to the data, tweak it as you go and be real about it. Johnston: Let's talk about some of those examples then, the companies that are getting it right. David, I know you mentioned Nike. Shelly, you didn't name a brand right now, but someone's doing something very exciting and innovative. In the report, we highlighted an SMB known as Prose. They're a haircare brand that's leveraging technology with that direct personalization. They have a 25-question consultation that analyzes more than 85 data points. They can create a personalized formula in hair routine, which they're also improving over time so they can keep capturing those repeat sales. David, you mentioned Nike, but are there any other DTC brands you know that you feel are really getting things right? I'm going to award some bonus points if they're large CG brand versus an SMB. But SMB would still qualify. McCarty: Yeah. I guess, before I answer that question, I just want to step back a little bit. If you look broadly, I think the companies that are being innovators and getting it right are those that are thinking of how to drive additional value to the end consumer through DC channel, right? It's not about selling the same product that I can get, say, at Kroger or Walmart. It's a special flavor bundle pack or something that's unique and valuable then to the consumer. But in terms of an example company, I've been pretty impressed with what Clorox. I guess I get bonus points because they're a big company. What Clorox had been able to do, right? I've always thought Clorox, I always use the term, punches above their weight, right? In terms of a lot of their capabilities. They have a number of brands that they either organically grown themselves or have required that they're leveraging as their ... It's a win-win. They take the DTC brands that maybe they acquire, they leverage the scale of Clorox to broaden them up, but they're using those learnings and to infuse knowledge into their more everyday brands. I think that ability for them to ... It's almost like they're playing big and playing small at the same time, which I think is a pretty unique mindset. I think that they're a good example of a company that ... I think they are on this journey, back to your point about a lot of this stuff was going on pre-COVID, right? Kramer: Right. McCarty: But I think they had put a number of capabilities in a team in place prior to 2020, and so they were at the ready and able to take advantage of a lot of the changes in the buyer journey that we saw last year. Kramer: I think smart companies are also paying attention to what's happening. Gigantic companies are paying attention to what's happening in the CPG or the DTC space. For instance, Snow Teeth Whitener. Have you heard of that? A little tray you put in your mouth, ultraviolet light. You used to go to the dentist to do this, pay $150 a time. Okay, so now you can pay $150, whatever, to Snow and buy this and do this teeth whitening at home. Okay, really cool. Well, I've noticed, on my trip to Walgreens recently that Colgate or Crest, I don't remember which major brand, has come out with a very similar product. What's cool about that is that for every consumer who is an early adopter, who buys this new product for whom price is no issue, there are other consumers who are like, "Yeah, that's pricey. Why would they pay $150 for that when I can go to Walgreens and buy that for 39.99?" I think that's the other thing that is happening here, is that smart CPG companies are really paying attention to the DTC landscape. Sometimes they're acquiring companies, but sometimes they're modeling their own product development and their own behavior. Because I'm pretty sure whoever was that came up with that product that's featured in Walgreens is actually probably also doing some advertising and some targeting, at least they should be advertising against Snow. I think there's some great opportunities there as well. Johnston: Thank you. I do want to go back to the tech. I know we've been saying throughout the conversation that tech can't solve everything. You can't throw tech at things and expect it to fix issues. But the fact of the matter is tech is powering a lot of this progress. You can see from the report. I'm not going to read you all the figures and you can see them on the screen, or as I said, you can go download the full report on consumergoods.com. But David, CDP was called that in particular as a technology companies plan to invest in. As a CDP solution provider, why do you think it garnered a top spot? McCarty: Well, I think there's probably a lot of reasons, but two that I think rise to the top. One is I think there's a realization that cookies are going away and there's privacy concerns, and there's issues of DMPs. I think that's elevating the need for a newer technology to address some of those gaps and those challenges. Then I think, going back to something we said just a few minutes ago, you have to know who your customer or your consumer is, which gets back to data. I think there's this recognition that the data, at the end of the day, is going to drive all of this. You need some sort of a platform to not only house the data, but be able to integrate, because this data is coming from all sorts of places, right? It's from your own website, it's from third parties, so on and so forth. You need a capability to integrate the data. But data by itself is worthless, right? The data has to drive some sort of insight, which then has to drive an action, getting back to the people element of this. I think there's a realization that you need a platform, because a platform doesn't provide that ability to span multiple groups of personas and use cases. Also, you want a platform that can pull in all of this disparate data and integrate it, enrich it. I think that's where a lot of the focus on CDP's coming from. Johnston: Shelly, as an analyst, you're familiar with a lot of the technologies on this list. Now, what would you say are some of the most important criteria when selecting a tech platform? Kramer: Well, I think it is understanding that a solution that the entire organization can access is really important. A CDP isn't a marketing solution. It touches all different parts of the organization. I was looking at some notes about challenges in the industry. We talk about David hit on some challenges, and one of them is when people rely too heavily on one data source, right? We've got data coming in from a lot of different sources. But I wanted to give you an example here. Think about a company like Anheuser-Busch InBev, okay? They're the parent company to over 500 beer brands across the globe. Okay? How do you sort through the consumer data from each individual brand? How do you find a thread? How do you connect the dots to those? How do you really get consumer insights when you have all of these companies umbrellaed under one brand? I think that those are the kinds of things. We think about these in abstract terms, but the reality is some of the largest CPG companies out there are managing many, many, many brands, and there's a whole lot of missed opportunities when you're not connecting those brands, you're not connecting the data from those brands. Because the reality of it is keeping an existing ... Again, marketing 101, keeping an existing customer happy is the fastest way to selling more stuff, right? Having the data that allows you to say, "Hey, Lisa, I know you just bought this. What about this? We think you might like this." It's complicated sometimes, but when you have the right data platform and you have the ability to analyze those insights and you have the ability to connect that data platform throughout the organization, that's really the key to success there. Johnston: David, it sounds like you want to build on that. McCarty: Yeah. I was going to build on something that Shelly said and talked about, it's not just for marketing. Oftentimes names of technology don't mean anything, but customer data platform actually does mean something. It's not called a marketing insight tool. It's called a customer data platform. Each one of those words means something. It's customer — for CG's consumer. Because consumer focused, its data. Not just some data, but all data. It's a platform. It's not a tool. It's a platform. I think you have to have that mindset to realize the real value of a CDP, is it's taking all of that data that allows you to know who your customer consumer is and provide it a platform to span the enterprise, back to Shelly's point that it needs to be used, not just by the market tiers, but back to the new product development point that Shelly was making. There's so much value in that data to get ahead of trends, to understand insights, to understand what your enthusiasts of your brand are talking about, so that that can then drive in new product innovate, extensions, whatever. I think that's a really, really important point. Johnston: Okay. We're nearing near the end of our presentation, and you can see the key takeaways from our report here. I think one that particularly those stands out and reinforces what we've been talking about those, the notion that the brands that are succeeding are the ones that are adjusting their — it says their products, but it's also their processes and their marketing — to match the lifestyle of the consumer needs and not the other way around. That's certainly the ones that are being successful during the pandemic have really taken this to heart. I would like to dive into questions. You can see this picture was courtesy of Shelly and The Farmer's Dog and her experiences. David, I'm going to point this one to you. We have one. How are the retailers reacting to the consumer data? Are they now viewing CPG manufacturers as competitors? McCarty: That's a great question. One could argue that there's been that tension, shall we say, for years, right? Even looking from a private label perspective, retailers have been manufacturers for a long, long time. I think that tension has always existed, and it's going to continue to exist. I think that there's two things to consider as a consumer goods manufacturer. One is, if you view your deep sea efforts as not just a sales channel, but an engagement channel and as a way of capturing data, that then changes a bit of the dynamic in your discussions with the retailer because there's still going to be some channel conflict, right? That's going to be natural. But if you're using it as a way of capturing insights to better know your consumer, and then being able to share those insights back to your retail partners, it's a win-win for everybody. The other piece is I think if the CGs look at what the products they offer to be unique, unique bundling, unique flavors, unique whatever, that then also helps avoid some of that channel conflict because it's an extension of the brand. It's not just a replacement of a given channel. But there is always going to be that tension, and I don't think there's any way of — you don't want to hide from it, but I think you can build it out as being a win-win scenario. Actually a win-win-win, right? The consumer wins, the retailer can win, and the CG can win. Kramer: Right. Absolutely. Johnston: Absolutely. Shelly, what are some ways that consumer goods leaders can get corporate buy-in when it comes to prioritizing DTC investments? Kramer: I think that's an easy one. Do some homework and look at the data. We developed our reporting in partnership with Treasure Data that was published recently, and one of the data points that we spoke to was that the value of moving toward DTC has proven to be 1.4 to 1.7 times the direct revenue gate. The proof is there. You do not have to look hard at all to find it. The categories that are really, really popping with regard to direct-to-consumer stuff are things that all retailers, many retailers, do. Things like intimate apparel, food and beverage, food delivery, right? Kramer: Who hasn't experimented with food delivery? A company like Misfits Market, which is a produce delivery company, averages 723,000 monthly visits to its website. When you think about the value there. I looked at some research recently published from Similarweb, and they did a study on 250 DTC brands to watch, and these companies were seeing 10,000 minimum monthly web visits, and 77% quarter over quarter. Quarter over quarter average growth. Johnston: Wow. Kramer: Those are big numbers. When you think about what it is we sell, who our customers are, and the other thing that I think is important is that when customers develop a relationship with a brand, they have a relationship with a brand and they get excited to see that brand at retail. One of my daughters and I popped into a Sephora store this last weekend, and there's a makeup brand that I discovered through probably my Instagram feed, and bought and loved and have told 20 people they need to buy it. The brand is just exploding. I walked into Sephora that day and I saw it right there, and I'm like, "Oh, this is so awesome." Not that I won't still buy it online if I want to, but it made me feel like Sephora understood my relationship with this product and they know that I love it, so they're carrying it. That's how consumers think. When you think about the value proposition for you as a reseller, as a retailer, and how to better serve your customers, that's really the answer. Johnston: Great. Well, thank you. We're nearing the end of our time. David, can you leave our audience with some best practices for brands looking to get started or further maximize their DTC journey? McCarty: Yeah, sure. I think that there's probably three things to think about. One is don't forget that it's the data. It is about the engagement and maybe selling stuff, right? But it's knowing your consumer. It's being able to use this data to better build that relationship. If you think about it in those terms, I think that's really, really important. The second is think broadly about the value proposition. Shelly, you gave a lot of great examples in terms of product development. Could you be using this data to do more granular demand sensing as an example? Because you know where these people live, you're shipping to them. You know where they're buying from that. That's demand sensing at its finest, right? There's all these other use cases above and beyond just the revenue that you have, that I think is really important as you build that business case. Back to your earlier question, Lisa, about how from a corporate standpoint to build that, that's where that 1.4 to 1.7 number that Shelly mentioned comes from. It's these other use cases above and beyond that are so important. Think broadly about the use cases. Then the last is, back to the point I made before, don't let perfection be the enemy of the good. Get started, experiment, use agile methodologies, iterate on this. But it's important, and Shelly you mentioned this, it's really important. You need to learn. It's not about just throwing something out there same time. It's about watching, observing, collecting information, and then making changes so that it gets better over time. Kramer: And you're never done. Johnston: I think “and you're never done” are great words to leave us with today. I'm afraid that's all the time we have for today. As a reminder, you can read the full report on ConsumerGoods.com. I'd also like to thank Treasure Data for sponsoring today's webinar. Finally, thank you to our attendees for giving us your time today. We hope you found it as valuable as I did. Have a great rest of your day.

Related Topics