Navigating DTC Alongside Marketplaces With Richard Chapple From the Growth Foundation - Episode 180
DESCRIPTION
One of the biggest growth areas in retail over the last few years has undoubtedly been direct-to-consumer (DTC) brands. Today we’re joined by Richard Chapple of The Growth Foundation to discuss how you can optimally navigate DTC alongside marketplaces.
Richard and his team are launching the Growth Foundation in April 2021, so make sure to check their LinkedIn profile.
Tune in to find out more!
After 20 years’ in bricks & clicks retail marketing, Richard founded OsbornChapple, a professional services and consulting company with an objective to unlock super-sonic profitable growth for a number of business types. Firstly, large traditional FMCGs, who are being held back by slow traditional retail channels and disrupted by new Direct to Consumer business models on a project/retained basis. OsbornChapple working at VP/C-level with Unilever, The Walt Disney Company, Honda Motor Company, Jamie Oliver, L’Oreal and PepsiCo on local/global projects spanning everything from vision and objectives to strategy and tactics.
The second business that Richard and his team engaged with high potential small eCommerce businesses and models on a sweat equity basis, who they work with on an intensive programs to build best-in-class people and team structure, tools and capabilities which allow the brand to commence their next phase of fast growth.
“The things that are slightly easier to ship and return are the ones with the greatest international reach.”
KEY TAKEAWAYS
If you've got a product that you're creating from scratch, a brand new product with some uniqueness and that typically feels around a more direct to consumer-led launch initially where you've purpose in control of the fall, your suppose destiny, you don't have any third parties and you can understand where your products are.
Customer ownership is a key strategic pillar for direct-to-consumer brands.
A bit more first-party data ownership allows you to sort of get some interest in terms of what our marketing dollars do, how do people react with your content, etc.
A brand should consider expanding from one channel to another if you're finding your existing channel sort of starting to slow down, or maybe the again the unit, economics of driving demand in that channel are becoming much more difficult or less powerful and you can find another channel more cost-effectively. So there's an element of looking at your target audience in transpose or defining your addressable market share of where you are and does another channel kind of own a significant part that you can play in.
What makes sense for one company with a big market share goal, and they don't care so much about the contribution margin of the specific channel, as long as they can gain that market share aggressively, that's going to be an entirely different conversation to a company who is their focus is on net profit margin and being profitable across every channel.
What is different about DTC compared with Amazon/marketplace launch & growth strategies? If we are talking about commercial pillars, the product is one, the brand is two, marketing is three, trading is four and OPS is five. And then you've got foundational pillars, which sit under all of them and work horizontally.
Amazon in particular, as we know, has phenomenal fulfillment, operations, and often far superior to direct-to-consumer businesses in terms of pick pack delivery and customer support.
Amazon is an incredible shopping mall and DTC sites are like a destination store where you have to drive to make a conscious decision to go and visit this tiny little boutique in the middle of nowhere. If you don't send any traffic to it, it just sits there doing nothing.
Brands get wrong about DTC is that they don't consider what's required to drive the traffic. It's not about getting it wrong, but it's more around the opportunity to invest earlier in insight-led decision-making and using the CRM program to a greater extent.
The things that are slightly easier to ship and return are the ones with the greatest international reach.
Behavioral differences between shoppers in the UK versus the US is that US consumers are slightly better and they're slightly easier to market to (their click-through rates on ads are slightly better and their cost per acquisition). And lifetime value tends to be slightly richer than the UK equivalent. What's interesting here is that the lifetime value seems to be better as well.
Stock-up behaviors are higher in the US versus the UK because of pantry sizes.
MENTIONED IN THIS EPISODE
Connect with Kiri Masters
Connect with Richard Chapple
Learn more about Bobsled Marketing
Learn more about The Growth Foundation