The pressure for businesses to accelerate is building due to digital-online fundamental shifts. 

Businesses look at online and digital as an add-on to their existing business. 

However, it is foundational change – different skill sets, practices, leadership, risk profiles, and organisational restructures.

Retail, buying groups, and franchises face existential threats.

Traditional retail realises that to compete and grow in a digital world, they must look, think, act and communicate like successful Direct-to-Consumer (D.T.C.) businesses with a physical footprint. 

Not all D.T.C. brands are on a downward spiral. 

• Brooks, 
• True Classic (see yesterday’s newsletter)
• Steve Madden, 
• Under Armour has reported record sales revenue due to their D.T.C. businesses. 
• These are just some of the hundreds of thousands that have crossed the divide toward better performance, 

Canada Goose aims to generate 80% of its sales via its D.T.C. channel by 2028 – as it reduces its physical footprint. 

How to win – transformations that win – the steps of change are well-known and evidence-based. It requires significantly improving a business’s mindset and a commitment to significant organisational changes. 

Across

• Leadership approach,
• Strategy, 
• Communication – you are now a multimedia business, 
• Culture, 
• Investment – realignment – (significant step up in marketing budgets) change is often significantly more expensive than budgeted for, 
• Risk management, 

Win online by playing the ecosystem game.

 

The fundamental question is – which is more profitable and suited – a Marketplace business model or a D.T.C. model? 

It’s a highly challenging shift to tackle. The move requires businesses to tackle their core and deeply understand their ideal customer profiles. 

The danger is that many businesses end up with camels when they want thoroughbreds. 

 

Strategically some of the core questions include

• Why should your future ideal customers only buy from your business rather than your competitors?
• How does the business accelerate more trust, credibility and authority in an online world – the bar is rapidly moving upwards.
• What is the new proposed strategic direction and narrative? 
• Will it differentiate and deliver? (often, businesses go down the rabbit hole of having another 10,000 or 100,000 SKUs – more numbers to throw around – without delivering customer value)

The pandemic broke every offline habit. Every market in every country is transforming around the internet as the core. 

 

Over 60% of businesses will strategically fail to gain the benefits and cross successfully to the other side. 

Reimaging a better future is the key. Some strategic insights to consider

• Walmart was the world’s largest retailer – now Amazon. However, Walmart will also be one of the world’s largest advertising resellers – vastly more profitable. 
• Your suppliers are going direct to the public – how vulnerable is your business model to this rapid global trend? 
• Ankar, based in Shenzhen, has built a $2 billion phone accessory business on the Amazon Marketplace – going direct. 
• Amazon Marketplace is over 2x more revenue than all Shopify stores combined.
• A Chinese smartphone-only retailer Sheen (no physical stores), has overtaken all competitors in fast fashion – including H +M and Zara. 

It’s time to step up or step off. 

Which type of retailer are you? Can your business scale faster, be significantly more efficient and optimise to achieve best practices? 

Or differentiate and provide niche opportunities? 

Some more demand generation ideas for your business 

Regards 

David