Getting D-to-C and Third Party to Work Together
Gone are the days when retailers and brands could rationally fear one platform cannibalizing another. Conventional retail wisdom used to tell us that if a consumer was buying your brand in one place, they couldn’t possibly be learning about or buying from it in another, let alone during the same purchase journey. In today’s world, however, the smartest brands have wisened up to the fact that as long as a consumer is engaging with them, it doesn’t matter if that engagement happens on their own platform or via a third-party platform, as long as there’s data readily available to study afterwards.
To dive deep into the direct-to-consumer (D-to-C) vs. third party topic, I sat down (virtually) with Lindsay Whitworth, vice president, global consumer direct at Sonos, Inc., and Jarbas Pinheiro, director, business development for Sunglass Hut North America, for CI&T’s Future Ready Digital Summit. The similarities between their responses to all of my questions emphasized how universal the challenges brands face really are when thinking through D-to-C and third party strategy.
Repeatedly throughout our conversation, it was clear that the reason both brands have maintained strategic positions in their industries is because they refuse to consider D-to-C and third party as mutually exclusive. There was no fear of cannibalization when we discussed existing among a variety of retailers’ and D-to-C platforms. Furthermore, when I asked what efforts look like in funneling business from third parties to a D-to-C spot, Whitworth and Pinheiro were quick to say that’s never the intention. Meeting consumers where they are was the philosophy at the core of both executives’ messages.
Whitworth reiterated this fact, saying, “The journey is not linear. Sixty percent of customers ultimately end up at sonos.com at one point or another in the path to purchase.” Pinheiro furthered that sentiment, stating "we want to curate in the best way possible the assortment for that customer in that [phase of the] journey."
The foundation for our discussion came from CI&T’s survey of 414 U.S. consumers regarding their preferences and expectations when shopping third-party sites vs. branded sites. Nearly half of participants (52 percent) reported starting their shopping journey on Amazon.com or another marketplace when they didn’t know which brand they were going to buy, and 55 percent reported starting their journey the same exact way when they did have a specific brand in mind. Considering that most consumers will initiate their path to purchase with a marketplace search, attempting to attract shoppers to any other place first would mean fighting a losing battle. Whitworth and Pinheiro’s commitment to embracing the idea that D-to-C online and offline stores don’t and shouldn’t exist in a vacuum validated our first-stop data.
Other key findings from our consumer research parsed out the different expectations consumers had for how brands appeared on third-party sites in contrast to D-to-C sites. The majority of consumers did report the expectation that brands would offer differing experiences when shopping D-to-C vs. shopping third party. The most common assumption was that prices would be different, with the majority of respondents articulating that prices would be lower on third-party sites.
The next most common assumption was that assortment would be greater on a third-party platform. It’s important to note, however, that in unaided responses regarding why consumers would shop a D-to-C site over a third-party site, consumers repeatedly mentioned that there would be more inventory available via D-to-C. The distinction between assortment breadth and inventory management demonstrates a key nuance in shoppers’ perspectives of D-to-C vs. marketplace platforms.
Our research, in combination with the insights Whitworth and Pinheiro shared, highlight how important it is for brands to ensure that consumers’ perceptions and expectations of each platform are aligned with intentions.
A slide deck version of the survey data can be accessed here and a recording of the discussion with Lindsay and Jarbas can found here.
Melissa Minkow joined digital transformation firm CI&T as retail industry lead after two years in merchandising strategy at Target; six years covering omnichannel, e-commerce and social commerce at Gartner; a short tenure in pharmaceutical market research; and the completion of a Kellogg MBA.
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Melissa recently joined CI&T as Retail Industry Lead after two years in merchandising strategy at Target, six years covering omni-channel, e-commerce, and social commerce at Gartner, a short tenure in pharmaceutical market research, and the completion of a Kellogg MBA. She is a retail futurist whose methodology is rooted in cross-industry consumer insights and innovation. She measures her success by how far out of the box she can inspire a client’s customer-centric solutions.