The Direct-to-Consumer Paradox; What Should CPGs Do?

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Ecommerce has settled in for the long haul, which is great news for consumers.

But what about big brands?

With the luxury of near endless choice now available at the touch of a button (or even a voice command), there is less need for people to go to physical stores or to buy known brands.  Along with the explosion of drop shipping, the face of commerce has changed dramatically.

CPG companies are not immune from this shift. After having avoided selling direct-to-consumers (DTC) so as not to compete with their retail partners, many are rethinking their strategies.

For many CPG companies to survive – much less prosper – adding a DTC approach may be their only viable option.

Is DTC Right for All CPG Companies?

Before we describe how your CPG company could wade into the DTC waters, it’s best to first establish whether or not it’s a good idea.

As we’ll touch on below, taking a DTC approach doesn’t necessarily mean competing head-to-head with retailers.

The key to deciding how far to go is by first establishing what role a DTC channel must play. In short, does your company want this channel to help with:

  • Discovering Greater Insights and Innovation

  • Controlling the User Experience

  • Leveraging an Omnichannel Approach

  • Overtaking the Retailer

In the case of that fourth approach, it would mean competing directly with current retail partners.

Once you’ve established what your goal is for DTC, you can begin considering which strategy to adopt.

4 Ways CPG Companies Can Take a DTC Approach

The most obvious problem that a CPG manufacturer will run into when they go DTC is the conflict with their retail partners.

To succeed, these companies need to adopt certain strategies that have already proven to be effective in the world of DTC.

Fortunately, there are four direct-to-consumer approaches that many CPG companies have already adopted and found effective for their transition.

1. Discovering Greater Insights and Innovation

Arguably, one of the greatest opportunities for CPG companies looking to transition into DTC is to learn more about their end-users. This will allow them to create better products and nurture greater trust in their companies.

2. Controlling the User Experience

Research by Salesforce found that 75% of people expect a consistent experience from brands. If you want more control over your brand story, DTC marketing will allow you to communicate your message directly to customers.

3. Leveraging Omnichannel Marketing

Omnichannel retail may be the future, one in which companies engage with customers online before directing them to a brick-and-mortar environment to make their purchases. Manufacturers don’t necessarily need to go to war with retailers. By taking this approach, they can simply drive greater sales while growing their ecommerce footprint.

4. Overtaking the Retailer

Of course, for many CPG companies that first adopt omnichannel marketing, the natural next step will be overtaking retailers. Unless a product needs to be test-driven, tried on, or otherwise seen in-person, these companies will have very little reason to justify the overhead their retail-partners require.

Standing Still Is Not an Option

CPG manufacturers can no longer rely on retail partners to build up their audiences. Instead, they must look for long-term solutions, which guarantee their longevity and sustained success.

One thing these companies cannot do is simply keep up business as usual.

By engaging the market with a DTC approach, big manufacturers risk upsetting some retailers, but they also stand a lot to gain. Not only will they know more about their customers, but they can focus more on their brand story and engagement.

There are much larger profit margins to look forward to, as well.

5 Unique Benefits of Small Agencies for Big Brands

E29 Larkspur Office

E29 Larkspur Office

In recent years, there has been a major shift in the way companies outsource their marketing needs. More and more big brands are deciding to work with small agencies, which begs the question:

Why?

Just what can these smaller agencies offer that larger agencies with greater resources cannot?

Let’s find out.

5 Factors That Influence How Big Brands Choose Agencies

As agencies grow over time, there is a tendency for the quality of their work to suffer, and big brands suddenly find themselves pushed to the back of an ever-growing queue.

Here are some key benefits of small agencies that big brands should consider.

1. Small Agencies Are More Committed

Small agencies have fewer resources to attract big contracts.

When they get one worth having, they go above and beyond to deliver the goods. They are more passionate and more eager to please.

The CEO of Ten35, Ahmad Islam explains that you just don’t get that same level of focus from larger agencies.

2. Smaller Agencies Deliver Faster Results

In bigger operations, there is much more red tape to wade through. From various personnel and processes, to elongated chains of communication and approval.

For big brands who want a quick turnaround, dealing with large agencies can be frustrating. Turning your focus to work with smaller, more nimble agency teams is just the tonic.

In the digital age, staying agile is vital.

It’s important to adopt this concept in your marketing campaigns, and you will be more flexible to react to changes in the market with a smaller agency.

3. They Are More Transparent

Paid advertising is increasingly important nowadays. But just because businesses know they must invest in advertising doesn’t mean they are willing to hand over complete control of their finances, with no questions asked.

Forbes believes that transparency can help build better companies, and even big brands with deep pockets want to know their money is going to good use.

Smaller agencies are usually more transparent, making it easier to see the true return on investment (ROI) you are getting.

4. Cost Is More Reasonable

Big agencies tend to charge higher prices, without offering any added value. Once you’re on board, there’s no knowing who is actually working on your project, and if they are really “experts.”

Smaller agencies aren’t just transparent with their pricing, but also with the talent they have available. You may well meet the team before striking a deal, and can be more confident of the value for money you are getting.

5. They Are More Consistent

Typically, working with big agencies involves several points of contact. You might discuss options with one person, sign a contract with another, and then never hear from them again as you’re passed along the assembly line.

While large agencies have a higher turnover, small agencies tend to keep the same core team together for longer.

You have more chance of getting a dedicated team and constant point of contact this way, and over time, you’ll develop a relationship with the team.

It’s Better to Be a Big Fish in a Small Pond

One of the overarching benefits of small agencies, is that big brands will become their top priority. By choosing to work with a small team, you can receive all the time and attention your business needs.

You will form stronger ties with a small team, facilitating a better working relationship that delivers faster results, and a greater overall ROI for your investment.

Also, a smaller agency will grow to know your brand intimately. Their collaborative nature breeds greater productivity, which makes small agencies a greater asset for growing your business in the long-term.