Partner E-Commerce (eRetail) Pitfalls: Global Brand Commoditisation

Brands and retailers across the world are feeling the pressure of a changing marketplace. Technology explosion triggered an avalanche of market condition changes. Changing consumer behaviour, rise of new business models and competitors, regulatory changes and widening talent and skill gaps made obsolete everything from strategy to company culture in a single blow. Brands have reacted in a 'fight or flight' type of reflex reactions. Bankruptcies, acquisitions, reorganisations and frenetic digital & DTC channel capabilities developments are ripple effects of the same earthquake.

eCommerce / eRetail Ventures as Strategic Choices with Strategic Consequences

Consumers are changing how they discover, search, consume and dispose of services and products. This impacted everything from marketing budgets to sales channels and required internal capacities in both talent and technology. Falling foot traffic numbers in physical stores on one side and sparkling growth promises of online sales combined with FOM (fear of missing out) made brands jump-on the fastest e-commerce trains available to them. While fast changes do require fast responses and fast decision making, e-commerce environment ventures are strategic choices that require strategic thinking. Strategic decision(s) is any decision(s) which involves resource commitments that can't easily be undone and moves the company into a direction that is not easily reversible. Effects of strategic decisions cannot be easily undone either.

Whatever you’ll manage to sell online through your own online shop, it will never be as much as what you could sell through online retailers.

For companies who sell through retail partners, e-retail is probably the first place they started to work with e-commerce as a revenue driver. This makes perfect sense too. If one looks at the revenue perspective, most will agree that selling through e-retail network, either through bricks-and-clicks or pure-players, is where the e-commerce gold is. E-retailers have a larger financial capacity plus a stake in whether the products sell or not. Unlike marketplaces, they need to push the sell-out. E-retailers tend to have a lot of traffic because of all of the brands that are pushing their customers there. They also have client loyalty from the masses of people frequenting their physical locations which opens up omni-channel opportunities.

Jordan online flagship store on Footlocker.eu

One can argue that out of your 100% of online potential sales, e-retailers will account for at least 80% of the total, not less. Looking at D2C results of major brands like Nike, L'Oreal that seems to be true. Whatever you’ll manage to sell online through your own online shop, it will never be as much as what you could sell through online retailers. Competing with the Amazons of the world for traffic, marketing, fulfilment or customer service capabilities is very tough, to say the least. Your category buyers are already finding information online there and doing their shopping with those who dominate in respective categories.

However, with upsides of e-retailers, there are some serious and strategically important downsides that need to be addressed. If left untreated, they can cause long term damage both to your brand equity and top-line.

Brand Commoditisation in eCommerce / eRetail environments

Sales growth opportunities are there but what is the impact of e-retailers and their (lack) capacities / commitment to uphold your unique brand identity? Will you allow all of your previous years of investments into UNIQUE differentiators in presentation, distribution, and point of sale that set your brand apart from others, go down the drain with eCommerce / eRetail partner/technology standards? eCommerce / eRetail environments are in practice just big catalogs (most pretty ugly ones) that enable consumers to browse / search / compare offerings on standardised set of criteria.

How to offset this eRetailer's adverse effect on your brand presentation with other (digital) brand amplification points?

This is especially true for large engines and e-commerce players like Google and Amazon which can seriously harm brands as they reduce them to comparison based on features, functionalities and price, instead of your brand. Most often placing competitor offering right next to yours in form of suggestions based on search algorithms that are optimised for conversion / revenue growth (disregarding of which brand).

Growth promise created by technology is the promise of scalability. Scalability is built through technological standardisation. When it comes to presenting your brand on POS (eCommerce / Category Page / PDP) what happens to your unique differentiators? If these need to be forgone for the sake of sales growth, do you need to think how to offset this particular adverse effect on your brand presentation with other (digital) brand amplification points?

Digital Brand & Brand Elevation Across Partner eRetail Network

Increasingly the first impressions of your brand are digital impressions. This is true for current generation of customers. For those generations ahead digital brand experiences might account for majority of them. Brands exist to help consumers navigate among choices. Consumer choice has never been more plentiful than in age of virtually endless digital shelfs of e-commerce platforms. Scalability of digitised presentation and information distribution has brought the costs of adding or carrying another brand on e-commerce platforms to almost nothing, crowding the e-commerce as a distribution and sales channel. Endless virtual shelf coupled with virtually zero cost of carrying new products has created an overabundance of choice, increasing search costs (time & energy spent by consumers while looking for what they need). In addition, weak digital brands are easy pray for e-retailers with predatory incentives. However, despite the well argued need for brand amplification on eRetailer's digital properties, very few brands have a structured organisational capacity and knowhow to go beyond the basics of brand representation on e-commerce platforms - PDP imagery and product description.

However, despite the well argued need for brand amplification on eRetailer's digital properties, very few brands have a structured organisational capacity and know-how to go beyond the basics

Brand Page Element - History of Air Jordan on Footlocker.eu

For global organisations spanning multiple continents, infused with portfolio of both global, regional and local brands, intertwined together with complex matrix organisational structures, this is somewhat understandable. Just getting the basics right such as product images and product descriptions to enable basic digital brand presence across your partner network is an enormous effort. This is especially true for food manufacturers and majority of CPG companies which not only have an unenviable task, but also a legal requirement of providing digital consumers with local language relevant digitised version of labels and declarations. Enterprise level Product Information Management (PIM) softwares are in these cases a "must-have" while implementation of these support systems definitely constitutes into getting basic rights. As majority of CPG and food category purchase are often impulse, category need, performance and price driven, rather than brand storytelling or lifestyle choice inspired, the lack of digital branding it is somewhat understandable, but not justified. For all others industries such as apparel & fashion, jewellery and luxury goods, sporting goods, consumer electronics etc. not investing today into an advanced digital brand presence across e-retail partner network is a short sighted decision that will have long term prospects on both brand health as well as revenue growth.

Not investing today into an advanced digital brand presence across e-retail partner network is a short sighted decision that will have long term prospects on both brand health as well as revenue growth.

Elevating Global Digital Brand Across eRetail Network

Global brand as a marketing strategy is built around the idea of creation of a single global strategy that can be replicated in local markets. One story that can be literally and figuratively translated in multiple languages so that it will resonate and engage consumers around the globe. As it is based on a single global creative that needs to be replicated across markets, global brand campaign execution is a geographically dispersed organisational activity whose success requires brilliant implementation of materials conforming to established brand guidelines. Global brand management requires coordination among countries and the headquarters so that a clear image of the company and its offerings develop – the big picture.

The organisational complexity is nowhere more present than in global organisations that follow global brand as a marketing strategy with headquarter leading, global-to-local execution model. For a product launch campaign to be executed across the e-retail network, brand, marketing, creative teams needs to work with brand marketeers and e-retail account managers in headquarters, but also those across regions and within individual countries. The size and scope of the internal web of people that need to align to drive a branding campaign across e-retail partners will depend on size and complexity of the organisation, but in any case it will span departments, countries and potentially time-zones and continents.

The New Nike Free 5.0. (Women) Brand Campaign Page on JDsports.co.uk

Considering that for global brand organisations with multiple global brands, the network of retail partners with current or future e-retail capabilities counts in thousands, it is clear that biggest challenge and perhaps the biggest obstacle to organised brand elevation effort and system is the sheer number of retailers and corresponding number of touchpoints. However, with application of next sequence of tactics, which originate from supply chain management practice organising a systematic digital brand elevation support across e-retail network is more than possible within a medium term period.

1. CENTRALISE DIGITAL BRAND MANAGEMENT

Complex web of stakeholders and operations are better run centrally for alignment. With digital consumer crossing national borders with a single click, implementation of branding campaigns that entail localisation and adaptation of assets is easier done from a single point. Centralising digital brand management, especially operational digital brand creation / adaptation / localisation will save time and money while ensuring brand consistency and avoiding duplication of efforts and costs. Even though transfer of talent and budgets from country (money making) business units to headquarters will be met with

2. CLASSIFY E-RETAIL PARTNERS PER BUSINESS RELEVANT CRITERIA

Not all retail partners carry equal weight. Your digital brand elevation strategy should be built upon the business input of today, but also one of tomorrow. Revenue is often used to classify importance of partners, but aside of total revenue, there might be some retail partners for categories that are important for voice / strategic brand (re)positioning as they might add certain unique benefit to your overall business brand and e-retail goals. Those might range from authentic voice within a community, positioning of a category brand, or access to specific region, or even competitive positioning within a channel.

3. TIER THE DIGITAL BRANDING SUPPORT

Supply chain management tactics and customer service management methodologies are great place to look at to get inspiration on how to manage large volume of requests and stakeholders. One of possible answers is 'tiering' of support. Tiered support is a system that funnels customer queries into more defined levels (tiers), ensuring customer needs are defined properly at the outset, governed by a set of service criteria for each tier. For digital brand support of your retailers this means that not all of them will get the same level of support. This will help you focus your investments in terms of time, money and team effort on those e-retail partners that will really bring difference to your organisation.

4. ALIGN DIGITAL BRAND VISION FOR INDIVIDUAL CATEGORIES & BRANDS WITH E-RETAIL PARTNERS

Aligning goals and priorities with key e-retailers for individual categories and brands is an important if not crucial milestone to your digital brand elevation efforts. Making sure that your e-retail partners needs are taken into account as well as their organisational capacities and technical characteristics of e-commerce platforms they operate on. Take into account their digital evolution efforts and any roadmap as it may influence your choice and timing of brand support mechanism activation. For example, it won't make much sense investing into a dedicated brand page or brand environment on e-retailers's site if its pending replacement or upgrade. Likewise, as e-retailers are sell-out driven they mostly care about conversion, so they will need further lobbying and maybe even incentives to understand long-term mutual benefits to digital brand elevation efforts. They'll also need to provide a higher level of internal team support for inbound flow and management of branding materials. Since they usually have comparatively smaller team and brand / marketing talent availability which serves large and heterogenous number of partners, they might need additional help / co-investments into their operational capabilities - software systems that will help them achieve scale.

5. DIVERSIFY DIGITAL BRAND INVESTMENTS ACROSS TIME

Your brand elevation investment efforts should be spread so they ensure continuity of brand presence. "Blitzkrieg" type of efforts will achieve much in short time span, but they will also be short-lived. Taking into account the current dynamics of marketing environment change and understanding that managing brands over time - making sure brands remain relevant over time is key responsibility of brand managers, is paramount to strategic digital brand investments across e-retail environments. Aside of campaign level, seasonal level investments, make sure you create brand communication platforms on key e-retailers that will last beyond just couple of seasons. These co-owned communication platforms, such as dedicated shop-in-shops or online flagship stores at e-retail properties created with purpose of serving as evergreen destinations, provide a long term communication outlet for brand related content at points of sale that can be quickly leveraged in times of need.

6. CLOSE THE CAPACITY AND PROCESS GAP TO ENSURE SMOOTH EXECUTION

With speed of "Rise of Digital Brand Touchpoints" HQ teams are often under-capacitated to execute consistently across Countries, Partners, Devices and Dimensions. Formula for creating, executing and managing digital brand expressions becomes exponential (Countries x Partners x Languages x Devices x Dimensions = Digital Brand Consistency) and this is the part that feels overwhelming for most teams. However, speaking from experience, right technology solutions and organisational set ups with strategic preparation can easily remove friction and enable seamless centralised digital brand management and execution.

Air Superiority - Nike Air Max 2014 Brand Campaign Page on JDsports.co.uk

Operationalising the centralised execution of digital brand strategy through tiered production support of Nike’s wholesale.com partner accounts across Western Europe markets was the main role of SO DIGITAL. Successfully navigating the complex ecosystem of categories, products, brand, brand managers, brand directors, country managers, and retail account needs with array of digital brand products tailored to each account's specs within tight campaign launch timeframes was the main challenge of our position. High volume, high stakes, intense communication, coordination and alignment across vertical levels of organisation to successfully launch new product releases and support them with digital assets on time and on brand across 14 markets and across 50+ partners was our daily work context. In course of three years we’ve delivered on average 5-9 campaigns and product launches per week and continuously sustained premium branding excellence that established Nike as a dominant digital brand across online retailer partner network in Western Europe and EMEA region.

Nike SB Brand page on Size.co.uk.

While we have worked for all Nike product categories and category teams, total 10 of them, majority of work was done for key categories a such as Football, Running, Training, Basketball and key wholesale partners in EMEA such as JDsports, Footlocker and Intersport. All digital brand projects were implemented with e-commerce primary goal – conversion. Thus, no brand storytelling was allowed to reduce loading times and conversion which was limiting in terms of the amount of graphic layers and animation features possible.

Instead of being buried in endless chain of emails, brand professionals are able to perform all of their campaign execution related tasks in connection to other organisational levels within a simple and aesthetically pleasing interface

Closing the process gap of centralised digital brand elevation support strategy execution across e-retail network was the main role of our SO DIGITAL GLOBAL BRAND OPERATIONS EXCELLENCE PLATFORM. Leveraged by Nike Wholesale.com Digital Brand Department, our platform was used by brand professionals across organisational levels (EMEA-Country-Retailer) to simplify and speed up digital branding campaign launches and e-retailers digital branding support.

Instead of being buried in endless chain of emails, brand professionals are able to perform all of their campaign execution related tasks in connection to other organisational levels within a simple and aesthetically pleasing interface

Instead of being buried in endless chain of emails, brand professionals are able to perform all of their campaign execution related tasks in connection to other organisational levels within a simple and aesthetically pleasing interface. Platform is organised with a supply chain perspective and vertical and horizontal process visibility - meaning that all participants see the phases and action points that are time and role relevant with progress stage indicators. Given that the physical (assets) and information flows are centralised and shared among participants each organisational level has a visibility of the progress / stage of the campaign which removes excess emailing on alignment issues.

SO DIGITAL provides global brands with both technology solutions and scalable talent resources that help global brands and their headquarters achieve economies of scale and scope and reduce organisational complexity costs in global branding. Our solutions create organisational simplicity and deliver speed & efficiency in execution across markets by standardising and codifying branding operations. We establish clear roles and responsibilities and translate it to platform interface in shape of user levels. We secure process implementation by defining chain of actions with defined goals to be completed by each user level within a predefined time frames and other user action dependencies.

Once implemented SO DIGITAL platform(s) also can play a role cloud based Brand Excellence Hub : online assistance location to develop branding materials that conform to established brand guidelines; obtain immediate decisions on branding requests; deliver real-time information about various brand activities in the organisation; and offer online brand programmes and interactive training exercises in different languages to accommodate employee employees and partners throughout the world.

Contact us today for a no-commitment walk through of SO DIGITAL platform solutions implemented for clients like Nike EMEA and Uber EMEA.

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References :

Giovanni Ciampaglia "Where is the gold in E-commerce?" https://www.linkedin.com/pulse/where-gold-e-commerce-giovanni-ciampaglia/

Tony Hymes, "The 5 E-commerce Business Models" . https://tonyhymes.info/2018/03/05/the-5-e-commerce-business-models/

Boris Ziegler, "Why should your Brand be a Digital Brand?" https://www.linkedin.com/pulse/digital-brand-discussions-ii-why-should-your-boris-cigler-msci-/

Boris Ziegler," eRetail/eCommerce Myopia and Brand Commoditisation" https://www.linkedin.com/pulse/digital-myopia-brand-commoditisation-eretailecommerce-boris-ziegler/

Boris Ziegler, "What is a Digital Brand?" https://www.linkedin.com/pulse/digital-brand-discussions-i-boris-cigler-msci-/