Lost in all the DTC hype is that it never really was direct-to-consumer. Google and Amazon were always at the start and Facebook at the loose-end. They are where intent is most valuable – the first and last mile to your brain. Where you can be influenced the most.
Powering direct-to-consumer for the products of so many, it makes sense that revenue and margin growth for Google, Amazon, Facebook (GAF) in a post-advertising world over the coming years is selling products themselves. Heck, through your efforts to reach your customers on their platforms you have probably given them the identities of all your customers already. Why wouldn’t they go after them themselves?
With their distinct advantages, namely infrastructure, quantity and quality of engineers and years of machine learning, you are now competing with them for your customers. You are competing against companies making their own chipsets to do AI. You’ve been leveraged and you had no choice not to be. That is what the platforms do.
Shop Til You Drop
Yesterday was Prime Day. In the middle of July the most well infrastructured e-commerce site in the world went down due to demand. Christmas in July.
Besides being a low price, comparison shopper dreamscape, Amazon has for years been honing its strategy in selling their own products. Most obviously in clothing and now expanding into core CPG. It has over 100 private label brands.
While you were paying all your attention to Amazon, Google too has made large advances in shopping. They have something called Google Express which allows you to shop online at multiple stores using one shopping cart. Think of this as the ultimate one-stop shopping. Google just started providing tier 1 customer support for returns as well with something called “Shopping Actions.” Most important Google will own the customer unless the customer opts out of this relationship at check-out.
Facebook is less interesting and has chosen for the time being to team up with Shopify. They have much less purchase intent data but they have almost every shopper on their platform. Probably they have your customer file. They have an incredible amount of advertiser data. They have the ability to follow you across the web and collect your site-visit data as a first-party.
If You Can’t Beat Them, Join Them
So it’s not a question anymore if you are competing with the platforms. You are. The question to ask now is how to compete?
The answer is, become a platform too.
Brands should think of the word platform as a verb. It is something you do. It’s an action. It also a competitive mindset. Mostly it’s an opportunity to modernize by putting the customer at the center of every part of your business.
- a raised level surface on which people or things can stand
- the act of giving everyone in your business input/output access to the same customer data file
GAF focus their business towards optimizing for relevance. In order to become obsessive about customer experience, in order to “Amazon” your own brand you must do the same. This can only be accomplished if you are able to decode all customer event data back to a single ID. That dataset must be available to every part of your business.
GAF have built this way from the ground up. Your UID on these platforms have never changed. The data associated with UID is accessible across these companies to create benefits for you (Prime Day) so they can understand you better. Everything you do on-site and off-site is captured and logged via first-party data back to this ID. Machine learning and predictive analytics are applied to this data and used to make real-time decisions.
This may sound like something that is impossible for your brand to achieve but it is table stakes to compete in the future for a few very simple reasons.
Loyalty needs a customer platform. Multi-Touch Attribution needs a customer platform. Merchandising needs a customer platform. Forecasting & Planning needs a customer platform
I could keep going but it’s obvious. Every part of your business needs a central database where unified customer event data is kept and can be accessed via an API to build intelligent models about your business. You must understand your customers from the top-down.
The problem you face now is all your customer data is under different IDs in different systems. There is no way for you to know what your best customers did on your website last week, let alone do anything proactive to improve their customer experience with your brand the next time they arrive or purchase.
Competing on Data
Yes of course, GAF is collecting your brand’s data. They probably have their tags on your site! You will never have their data at scale. You will never be smarter than they are at the data they look at. But, they are looking at it to help solve their problems. Their problems however are not your problems. That’s the good news.
The bad news, your problems are far worse. Likely they include legacy tech issues data challenges and talent problems. Who is the person in your company responsible for growth? How is their success measured? But these are your problems and frankly, they are easier problems to solve then the ones GAF are trying to solve.
Your data is your company. It is time to start running your company like a data platform. It’s time to start competing on data. This means a few things.
1) Tech and engineering are your lifeblood. If you weren’t a tech company already you need to become one. Software is eating the world. Duh.
2) Data science/ML and analytics are chair one to everything. Everything can be optimized. Every yes or no question both internally and for your customers needs to be answered with confidence and ideally in real-time. There is not a part of your org where Data Science/ML shouldn’t be leading.
3) Engineering is the new procurement. Understanding core infrastructure as it relates to data and keeping control of costs is incredibly important to bottom line. Yes, on a unit basis costs keep coming down but more and more processing is going to take place. You are probably already paying too many people too much to host services for you.
If you’re going to play with the big boys this level of competition requires the right people, process and technology to create and execute the playbook. It’s a big investment. It’s not easy, in fact it’s probably the hardest of all the ways your business has ever had to compete. But it is doable and necessary to have the right to win in the future.
Reversal of Fortune
Somehow DTC brands are busy looking at omni-channel and Google and Amazon (WholeFoods notwithstanding) are looking at selling products direct to consumers online. Something doesn’t sound right. Especially when supply-chain, merchandising, marketing, fulfillment, everything benefits from DTC and everything here can be and will be real-time.
Consumer habits around brand direct, private label, or whatever you want to call it, are changing too. It’s getting easier and easier to buy things. It’s getting easier and easier to communicate with customers. It’s getting easier and easier to understand what consumers want. It’s getting easier and easier to avoid being interrupted and advertised to.
Having a strategy to compete with the platforms is much more important than competing with other brands in your vertical. Your platform strategy is the most important strategy for the future of your business and it starts and ends with one thing, your customers. Let’s go compete for the customer!