Council Post: Brand Imperatives In Modern Commerce

Modern commerce is creating a democratized battleground in the fight for consumer loyalty. The implications for brands are unprecedented — they are now faced with trying to meet customer needs while balancing new complexities in their marketing, commerce channels, supply chains and operations.

According to a note from Morgan Stanley, reported by Business Insider (paywall), the growth of e-commerce in 2020 alone could prove to be a tailwind for all platforms: “Stepping back, we think 2020 will be a year in which we pulled forward about ~2 years of e-commerce penetration.”

Since late March, key marketplaces and carriers have had little choice but to change their services and processes. UPS, for example, added peak surcharges, and sellers everywhere have had to shift their Amazon Prime Day plans — typically a summer boon for thousands of direct-to-consumer brands — from July to sometime later this year.

Looking ahead, overall commerce challenges associated with the general growth in e-commerce as consumers seek a more convenient lifestyle, and the arrival and potential extended future of a work-from-home situation, will continue to present new dynamics and choices for consumers.

The increase in channel options is driven by consumer preferences, and this presents a challenge both resource-wise and economically for brands trying to compete and succeed in modern commerce. And, as consumers have more channel choices, brands do as well.

According to GlobalWebIndex’s July survey on Covid-19’s impact on consumers, more than one-third (36%) of U.S. respondents said they will shop online more frequently after the pandemic is over. 

This leaves brands with a lot of questions: Should they focus commerce efforts purely online, or should they diversify in-store partnerships via marketplaces? How do these choices impact brands’ supply chains and operations? How can brands effectively and cost-efficiently manage the complexities of fulfillment and omnichannel sales?

The brands that will thrive in this new era of modern commerce will meet the customer where they are and offer a full understanding of consumers’ purchase intentions and needs. As the CEO of an end-to-end e-commerce technology company, I believe this will mean that companies must prioritize: 

• Vertical integration: If supply and demand, the two most critical pieces of a brand’s business, aren’t integrated to work in lockstep, brands can expect disconnected operations, lost opportunities and, worse, a poor customer experience. To help with this, brands can consider enlisting partners to manage e-commerce or wholesale supply processes. Brands should also execute a marketplace sales strategy, which a marketing agency can also help with.

• Data and insights: With so much data at our fingertips now, identifying, accessing and analyzing the right data and knowing how to apply it for impactful results is critical. From crafting a brand’s marketplace strategy to inventory planning and testing packaging, insights from across all channels power data-driven decisions to help modern businesses thrive in a modern commerce world.

• Marketplace strategy: Like consumers, brands have options as well. They are able to sell on their own sites and Amazon but might want to consider expanding to other retailers, such as Walmart Marketplace, and potentially those with physical footprints, such as Target, Costco, Home Depot and more. Or, the reverse might be true if a brand is a traditional consumer packaged goods company with little to no e-commerce footprint. Either way, having a well-thought-out e-commerce marketplace strategy will be key. 

• Omnichannel fulfillment: Together with a comprehensive marketplace strategy is omnichannel order fulfillment. I recommend pooling inventory into one network because this helps ensure a brand’s inventory is ready and available to any and all desired channels. (Full disclosure: My company offers omnichannel fulfillment.) This centralization of a company’s product simplifies forecasting and replenishing supplies while affording brand transparency and visibility into sales and logistics across all channels. The ability to create redundancies in a company supply chain will ensure brands are able to move inventory to where it is needed and keep up with seasonal or unforeseen spikes in demand.

Let’s look at a real-world example: In 1995, a consumer would walk into their local grocery store to buy a bottle of ketchup. They would choose the brand they preferred, likely Heinz, which was an early leader in direct consumer marketing and advertising. The consumer would pay at the cash register on their way out the door. 

Fast forward 25 years. Modern commerce consumer choices have exploded. Consumers can now buy that same bottle of ketchup in that same grocery store or on Amazon, at Walmart, in bulk at Costco, or even online via Instacart. They might even be able to buy it directly from Heinz.com.

All of these choices bring large-scale complexity to the brand, which in this case is Heinz. Before modern commerce, it locked down its grocery store deal and managed its distributor. It had severe simplicity and a clear line of sight from production through shelf placement. Now, Heinz has to compete on price and manage shelf space, distribution and supply chain pressures in every commerce channel. Along the way, there are exponential questions asked and decisions that need to be made in near-real time in order to ensure a seamless customer experience, many of which are out of the brand’s direct control without real-time data, insights and 360-degree oversight.

This won’t get easier for brands, but understanding the challenges that need to be considered is the ideal place to start.

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