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DigitalRiverBrandsReport

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DigitalRiverBrandsReport

  1. 1. Go your own wayHow brands can take control of their online consumer relationships.
  2. 2. The cost of ignoring online opportunities Thanks to the wonders of modern technology, consumers are spending a growing proportion of their life online. And whether they’re actively buying an item, researching a potential purchase or uploading a social media post about something they’ve just bought, brands are always top of their mind - and at their fingertips. But despite the gateway being wide open, most brands are missing the opportunity to build a direct connection with consumers online. Instead, they are letting online marketplaces such as Amazon and Alibaba, and big data gatherers like Google, dictate their customer relationships. An exclusive study of 1,000 shoppers by Digital River in summer 2014, discovered a gulf between what today’s digitally driven consumers want from their favourite brands, and what brands can currently provide to them. In this report, we’ll look at the online consumer engagement opportunities awaiting brands today. We’ll also address how those wanting to go direct can overcome any apprehensions about launching a new direct-to- consumer ecommerce strategy and take control of their digital destiny. Go your own way: How brands can take control of their customer relationship online.
  3. 3. The online opportunity of brands expect 10% of their income to come from online by 2015. However, only 18% currently reach this target. 43% The relationship between brands and consumers has never been more complex, thanks predominantly to the growing influence of technology on shopping. Consumers are engaging with brands directly and indirectly through a number of channels — from transactional platforms such as stores, mobile devices, ecommerce sites and online marketplaces, to marketing communications like digital signage, television, print advertising and, again, mobile devices. Of all sales channels, online is by far the most important to both brands and consumers. Our research revealed that 89% of shoppers visit a brand’s website when shopping online. Retail analyst IGD found that almost half (43%) of brands expect 10% of their income to come from online by 2015. However, only 18% currently reach online sales target. Go your own way: How brands can take control of their customer relationship online.
  4. 4. The cost of ignoring online opportunities Why is online the most important channel? Consumer appetite lies at the heart of online retail’s explosion. Shoppers have evolved in the way they want to gather and share information, interact with brands and retailers, and ultimately purchase goods. This has altered retailers’ most profitable sales and marketing channels, leading to greater investment in: • Ecommerce platforms • Mobile marketing • Optimised websites • Social media 26% of 18-24 year olds view researching brands on social media and through online product reviews as important Electronic items, books, CDs, DVDs and video games are the most popular items to buy over the internet – 18% of people will always buy these items online, never in-store. Go your own way: How brands can take control of their customer relationship online.
  5. 5. Straight to the point (of purchase) Though it might be obvious that consumers are hungrier than ever to shop online, many brands wonder whether this appetite is specifically for them; do consumers care who they get their goods from, so long as they get a good deal? Our survey discovered that consumers are keen to support brands directly, but only if they are offered direct transactional opportunities in a convenient manner for their digital lifestyles. For example, 89% of people sometimes, often or always visit a brand’s website when shopping online, yet 31% of people would definitely change allegiance if they couldn’t buy an item directly online from their preferred brand. This demand for convenience isn’t just affecting those who don’t go direct – our respondents also expressed frustrations with brands that do offer direct ecommerce at present, but whose sites are awkward, time consuming or inadequate to navigate. of people who tried to buy online from their favourite brands in the past 12 months abandoned their journey before the point of purchase. In these cases, the top four reasons for failing to check-out were: 1. The product they wanted was out of stock 2. There was not enough product information on the brand’s website 3. They wanted to try the item in-store before buying 4. It was cheaper to buy the item from another website 43% 31%of people would definitely change allegiance Go your own way: How brands can take control of their customer relationship online.
  6. 6. Who’s getting it right (and wrong) at the moment? Our research uncovered disparate success rates among brands already selling direct to consumers, with the designer and luxury goods sector in particular letting shoppers down. Here are some of the comments respondents made about their online experiences of their favourite brands: Straight to the point (of purchase) “Cath Kidston has offers that are much cheaper than shops that stock their items . ” “Diesel seems to be style over substance, it could be much clearer.” “Clinique’s website is easy to use, I can see what I want and buy when I’m ready. ” “Nokia’s phone prices are always very inflated compared to other sites.” “Fred Perry has items available before they’re in-store.” “Black+Decker’s website is too busy and difficult to navigate.” “Dell gives plenty of options and customisations.” Go your own way: How brands can take control of their customer relationship online.
  7. 7. Opening the gateway With the online opportunity clear, the major decision brands face today is whether it’s necessary to sell direct to consumers online. Some brands feel a non-transactional website is sufficient at present, but creating the ability to sell online would allow them to directly manage their digital conversations with consumers, rather than sharing them with competitors already selling their products online. Our study illustrates this, as 78% of people said they would buy an item from Amazon if they couldn’t buy it from the brand’s website, but only 22% would try and buy the item from a brand’s retail store. Selling direct also establishes opportunities to control key elements of the retail process, such as price; our research revealed that 21% of consumers always carry out a price comparison when shopping online, while 49% expect to pay less when buying directly from a brand. 78%of people said they would buy an item from Amazon if they couldn’t buy it from the brand’s website 21% of consumers always carry out a price comparison when shopping online Go your own way: How brands can take control of their customer relationship online.
  8. 8. Straight to the point (of purchase) Benefits of going direct: Flexibility visibility inspiration passion knowledge management price control viable competition customer insight connected experience fullcatalogue testing new models planning forecasting big data Go your own way: How brands can take control of their customer relationship online.
  9. 9. For many brands, the dilemma is not whether it’s worth going direct to consumers online, but how costly ignoring online opportunities will prove. Not being able to buy a product from a brand’s website can deter shoppers not only from purchasing directly through another channel such as the store, but from continuing to buy from that brand altogether. The cost of ignoring online opportunities That being said, for many brands it’s not a case of ‘ifs’ or ‘buts’ – they realise the long-term strength of their business lies in fostering direct consumer relationships. However gathering the capacity and resources to build a new ecommerce channel, potentially spanning multiple regions, is another challenge altogether… Go your own way: How brands can take control of their customer relationship online.
  10. 10. The cost of ignoring online opportunities What are the challenges of going global? Trading online internationally is incredibly complex, with many considerations to incorporate into the creation of an ecommerce channel – from tax and fraud management and export and PCI compliance to regional consumer variations such as multi-lingual marketing, product appeal and preferred payment methods. 43% of people would be put off buying a brand’s product through another channel if they couldn’t buy it through their website. Go your own way: How brands can take control of their customer relationship online.
  11. 11. The story so far To shoulder the burden of establishing an effective ecommerce presence, many brands have already investigated alternative ways to go direct to consumers without having to venture out alone. For those who don’t have the budget or expertise to invest in their own technology, until now, using a third party website such as Amazon or Alibaba has seemed the most viable option. However these are not without drawbacks; they can be costly, risky and dilute the relationship between brand and consumer. In some circumstances it can lead to a complete loss of control over the brand relationship – after all, what’s to stop a third party website advertising rival products on the same page? 8common reasons why brands aren’t doing direct ecommerce today • Lack of online sales expertise compared to retailers • Limited direct to consumer insight • Shortage of in-house resources and expertise • Gaps in partner network • Disparate geographic presence • Insufficient IT support • Budget constraints • No vision! Go your own way: How brands can take control of their customer relationship online.
  12. 12. Fighting the Amazonian giants – the new way to go direct online Thankfully there is now an alternative that enables brands to retain complete control of consumer relationships while removing the complexities of transacting online, potentially across multiple markets: outsourcing. Outsourcing the management of the commerce business infrastructure is the most effective way for brands to establish direct online access with consumers, without relinquishing power in the process, and retain the focus on their core business. The brand remains front and centre while the back-office complexities and risks associated with running an international ecommerce operation are shouldered by the provider. Partnering with an ecommerce infrastructure provider offers brands with all the benefits of an online marketplace – rapid deployment, proven technology, expert support – whilst retaining complete access to the consumer. This includes the data being generated by direct online transactions, which can be used to gain actionable insight. As a global commerce expert, Digital River knows first-hand that, for brands who want to engage directly with consumers online, outsourcing is a means of maintaining or regaining control over that relationship. Here is a case study from HarperCollins that we’ve worked with who’s done just that… brands outsource their ecommerce strategy • Expert consultancy • Cutting-edge technology and solutions • Cost-effective • Low risk • Flexible business model (opex vs capex); low TCO; high ROI • Quick time to launch • Removes complexities of ecommerce management (fraud, compliance, logistics, tax...) • Ongoing external management • Control and ownership of customer data generated 8popular reasons why Go your own way: How brands can take control of their customer relationship online.
  13. 13. Case Study HarperCollins Publishing is one of the biggest battlegrounds for third party marketplaces – Amazon in particular – in 2014. Many traditional publishing houses have accused Amazon of bullying tactics to drive down the prices of book sales, squeezing their profit margins and restricting their resources for investing new talent and niche genres. HarperCollins Publishers wanted to find a means of entering the lucrative ebook sector without relying on third party platforms, so that it could control the promotion and distribution of its content by timeless authors such as C.S. Lewis at the same time as offering some of the world’s most famous novels in a 21st century-friendly format. Digital River provided HarperCollins with a bespoke plug-and-play solution. In addition to establishing a new direct-to-consumer channel, it also gave the publisher new flexibility in ways to go to market with new literature. At the same time, Digital River’s commerce-as-a-service infrastructure took care of the practicalities of ebook transactions, such as global payment handling, fraud prevention, security, taxation, compliance and order management. Offering a direct to consumer option is another way in which we can service our authors and let them engage with their audiences in as many ways as possible. Whether consumers want to make purchases from a brick-and-mortar store, an online retailer, or from an author brand site, we have a solution to meet their needs and to make our authors’ products accessible to them. Chantal Restivo-Alessi, Chief Digital Officer, HarperCollins. “ ” Go your own way: How brands can take control of their customer relationship online.
  14. 14. About Digital River Digital River is the commerce business infrastructure powering brands’ direct online connection to their consumers. World class online commerce demands intensive resources. Global reach and local-market savvy. Cutting-edge infrastructure and time-tested experience. Revenue-driving marketing tools and clear, powerful thinking. Since 1994, no one has tackled these challenges and delivered results better than Digital River. Every day, tens of thousands of companies—both large and small—rely on Digital River for the proven expertise and comprehensive cloud commerce, marketing and payment solutions they need to build, manage and grow their online businesses on a global scale. Our mission is to drive client growth through our global commerce expertise. www.BrandsGoDirect.com europe@digitalriver.com +44(0)845 603 5070 Go your own way: How brands can take control of their customer relationship online. © 2014 Digital River, Inc. Digital River is a registered trademark of Digital River, Inc.

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