Reva: You’re listening to Next in Consumer Products from Publicis Sapient. The podcast that shares insights on unlocking what’s next in digital and consumer products.
Reva: COVID-19 has completely disrupted how people shop. With multiplying digital channels cropping up by the minute, consumer purchase journeys have become more complicated. Different touch points, such as direct to consumer websites and social commerce, are becoming the norm and are challenging traditional retailing models. For consumer products companies, the question remains - how should they be re-imagining the end-to-end customer experience and make every touch point count? In this episode, we’re going to discuss the concept of total commerce and why it’s important for CP firms to build an omnichannel experience.
Joining me today is Publicis Sapient CP Industry Lead in EMEA and APAC, Scott Clarke, and Saba Arab, Associate Managing Director at Publicis Sapient. I’m your host for the session, Reva Bhatia. Now let’s dive in.
So, I’m going to kick things off with a background question for you, Scott. Can you quickly explain the concept of total commerce: what it is and what the implication is for CP firms?
Scott: Yeah, absolutely, Reva. I think in looking at total commerce, or any solution for that matter, it always helps to start with a clear definition of the problem statement of the challenge that we’re trying to address. And as we know in consumer products marketplace, consumer journeys have become increasingly complex encompassing more and more touchpoints. And we talk a lot about online and offline and owned and non-owned channels, but the reality is we need to start thinking about solutions and experiences that transcend all of those channels. Experiences that flourished not just through your own channels, but also non-owned and move seamlessly across both direct and indirect.
It’s interesting for all the talk that we put forward around channels, really our consumers think about brands and experiences. So total commerce is a way of looking at your channels in a much more holistic and full funnel way, moving away from a focus on the where and more around the whats. So ultimately total commerce is a holistic full funnel approach that activates your commerce strategy throughout the path that purchase transcending owned and not owned channels and direct and indirect or digital and offline, so ultimately a total commerce approach integrates and aligns brand.com, partner ecommerce and physical retail to create a holistic and differentiated consumer experience, really shifting the focus from the point of transaction to the point of experience in helping consumer products companies think holistically about how to drive consumer relevance irrespective of channel.
But that in itself brings forth a number of different questions. This isn’t easy, and ultimately we need to identify the right strategy for your brand as exists across a plethora of different channels. And the questions that clients are are now putting forward is what role should each of my routes to market play? And what should my investment be across those channels? How do I win on the virtual shelf? What role should my brand.com play in the context of my entire channel mix? Do I want to go direct to consumer, if so what form of direct to consumer makes the most sense for my brands and why? How do I connect offline with online, recognizing the consumers are likely to engage both online and offline often in the context of a single shopping journey? And how do I create a unified brand presence across channels while leveraging each channel individually? I think these are the questions that most consumer products companies are dealing with today. Our total commerce solution helps those companies think in a much more harmonious, much more rational and much more integrated way across those different channels in which they communicate their brand value and their brand essence.
Reva: That’s helpful context, Scott, and I want to double click into something you mentioned a few times, which was owned channels and direct to consumer. And so, Saba, I’m to now kick it over to you to dive a little bit more into this I’ll call it an emerging trend of direct to consumer that we’ve probably been many years now where we’ve seen this emerge with different CP firms. What role do you think D2C plays in the broader total commerce ecosystem, and why would you say it’s really important for CP firms to start to take more control of the shopping experience for consumers?
Saba: I think D2C is such a critical new channel. And I’ll come into that explaining it from both the consumer side and also their CP side. But you know stating the obvious, that’s the channel that you basically have the most control over, alongside any owned physical that you might have and where you can define the role very specifically and actually drive it through to the intent that you want. Now if you look at that role as I said, if you look at it from a consumer perspective, an organization needs to be really intentional and clear around what’s the distinctive value of each of the channels for the consumer. Why would the consumer go there, and how do you balance those channels against each other? As Scott mentioned, you know, you can have partner ecommerce, you can have physical, you can have D2C.
Why would a shopper go to brand.com versus Amazon? What are they going to get in terms of convenience, you know? Is it going to get there quicker, are you’re going to get delivered to your house? If you go into physical space, what are you going to get in terms of experience, are you’re going to have an immersive digital experience where you see what the furniture looks like in your house, or can you actually go into a physical store and get a different type of experience that you can have? Are you going to get a lower price? Are you going to get access to a different assortment, which is, which is a lever that a lot of CPs pull in terms of holding some stuff back for their own channels, whether it’s D2C or physical are you going to get some level of expertise that you might not get otherwise through other channels that you can have. And when you think about going D2C and trying to pull consumers into the D2C angle, you have to think about where this D2C sits along the spectrum for each one of these things. And it can be a combination. You can have a combination of, for example, great experiences and expertise, but it can’t be all of them. And you have to make a very intentional choice around that.
Another thing to think about from a consumer experience angle is D2C isn’t just an ecommerce website that’s what people typically think, “OK somewhere I can go, and I can just buy something.” There are multiple models of D2C, you know? It can be subscription models is a type of D2C. You can have experience websites that are type of building that D2C experience. And understanding the market dynamic and what your consumer shopping patterns are and what the adjacencies are that they’re going to is critical for understanding which model is the best model to go for.
That was from a consumer perspective. If you now flip it to a company perspective as to why D2C is really important, as you mentioned, you know, we’ve seen this trend for a while, and it has certainly been accelerated with COVID that CPs have moved from being manufactured distributors to retailers. And this has been driven by multiple reasons. The need to understand consumer needs and behaviors deeply through the whole value chain has increased, increasing the need for that direct engagement. There’s been disruption in shopping patterns by technology an importance of data within this especially first party data, and just the extension of choice and availability that you see in the market.
Now if you look at it from a company perspective, let’s take an example, let’s take a toy industry. Traditionally the most successful players in the toy industry have been manufactured distributors with significant footprint in specialist retail toy shops and department stores. Now in the middle of the last decade, specialist toy shops started declining, and this led to a loss of, you know, the traditional brand building channel where the big manufacturers had big stands, they had their full portfolio offer, you could touch and feel and play with the toy. This shift was concurrent and, and partially of course driven by but the focus Amazon started putting on the category and on the sector. Within this context, the really successful toy manufacturers were the ones who started taking intentional role in D2C and where it played a significant role in terms of becoming the channel that focused on brand building number one because you’re brand building channel was gone. It got you first party data, and it allows you to build longer term relationships. It’s really important, as Scott mentioned, to be intentional towards total commerce and towards D2C, so that you can retain some control over the shape of the channel landscape, and not be fully driven by the dominant e-tailer that are shaping the experienced they’re shaping the entire sector and shaping the consumers. And the earlier you do this in the journey, the more you can shape it, and the more you’re likely to win it.
Reva: Thank you, Saba. That was great, and not a day goes by where I don’t miss Toys R Us. Great, so sad, so, you mentioned Amazon, and e-tailers and Scott I want to kick it over to you ‘cause you know we’d be remiss if we didn’t mention that, you know, CP firms and Amazon and other e-tailers are strange bedfellows, right? Amazon’s been known to zero in on data, transactional data, and create their own private label brands where they see specific trends that go in direct competition with a lot of the CP firms who use their website as a distribution channel. And so obviously this poses an interesting opportunity for CP firms to, you know, really try to start to unpack how to make the most out of these necessary, but complex partnerships. I’d love for you to just weigh in on advice that we would have for CP firms on what they can be doing to get the most out of these partnerships.
Scott: Yeah, it’s a great question because for all of the talk about going direct to consumer, we know that the majority of consumer products are being sold still on partner ecommerce and pure e-retail platforms. And we need to continue to invest in creative strategies that differentiate all brands on those platforms as Saba mentioned one of the reasons why so many consumer products companies are going direct to consumer today is because they want to gain that brand control, right? They want to be able to shape the end-to-end consumer experience so how do we translate that across to the channels where we have much less control. And it starts with really what is it we must do to stand out on those partner ecommerce sites, how do we stand out on the virtual shelf beginning with how can we tweak our content in a way that it shows up better in search, so consumers are finding our products more easily based on the plethora of different search terms they’re using regardless of where they enter that platform from?
We know that three and five product searches today begin on Amazon, so how do we ensure that our brand is the one that is coming out first by understanding the context by which consumers are entering that category and searching for brands and searching for products. Why are they on that platform, and how do we tweak our content in a way that puts us ahead of our competitors from a search perspective? And then beyond that is how do we enhance and improve the quality of our content so that we are able to convert that demand into a purchase? Again, by creating content that inspires and educates and gives consumers a reason to want to turn intent into action. And then the other questions that obviously we have to ask when we are placing our products on partner ecommerce sites, one is, you know, should we group our products in a way, bundle our products in a way so that they start to make a lot more sense in a curated way, or should they be sold individually? What’s the right assortment mix?
And again, how do we connect the experience that consumers are getting through those partner ecommerce sites with the experiences they may be getting from brand.com, from our direct channels, so ultimately the consumer is able to move seamlessly from channel to channel without disruption or loss of information? There’s no friction, and there’s a convenience provided to the consumer as they move from channel to channel. So again, really it’s all about converting that demand into intent, and that intent into a purchase outcome, and creating and continue to enhance and update content in a way that helps your brand stand out on the virtual shelf is absolutely critical.
Saba: I think one of the things that I’ve observed, which is really an interesting one is, there is a balance of power when you look at these e-tailer especially the big ones such as Amazon, and you absolutely should optimize your content and your access and create those experiences. But one thing going back to the linkage of all these channels is if you have a strong D2C presence and you have those skills and capabilities in-house, it actually allows you to become a better partner with those e-tailers, and it allows you to be able to negotiate more effectively. And it helps you bolster up some of your, let’s call it, less dominant e-tailer relationships, let’s say traditional retail businesses, physical retail businesses that now have online presence. And that helps keep the dynamics of the channel more balanced as opposed for tipping towards one dominant e-tailer, and it creates more parity for the organization and for other channels that it plays in.
Reva: That’s a really great point, Saba. Going back to what Scott was saying, I was just reflecting on again just how much tension there is in that relationship at times, and, you know, I remember, I think it was last year at some point, Nike came out and said that they’re pulling their products from Amazon for lack of control of the brand experience. And being somebody who’s deeply analytical and thinks a lot about these types of things, maybe more than most, I couldn’t help but wonder, you know, are people who want Nike products, because Nike is doing such a fantastic job at establishing that brand.com presence, are they going to go elsewhere to find Nike products versus, you know, use Amazon for discoverability? Like what is the true hit to Nike’s portfolio in this move, if any?
Scott: You’ve clearly got to give them, Reva, a compelling reason to want to go elsewhere. First of all, there’s a reason why consumers choose to shop on Amazon because it gives them a level of convenience, right? And ability to find what they’re looking for with relative ease, and these are now table stakes in the category, right? Consumers expect that level of convenience. They expect frictionless shopping. They expect, you know, that ease of doing business with the brands, and if you can’t provide that at a minimum, you haven’t given the consumer a compelling reason to want to engage you directly. They also know that by buying an Amazon, they’re going to get that product delivered maybe next day, within the week, this type of thing. There was that reassurance that’s given to the consumer, so again, if you want to compel consumers to move from an existing platform to your own, to a direct channel for instance, you’ve got to give them a reason to want to do that. And again, it starts with understanding the context of each interaction, and why consumers have chosen to shop on that platform versus another.
And this is go back to what I was saying before, but, you know, for years we obsessed with the point of sale: how do we win consumers at the shelf? And I think we’ve now grown up to the realization that the real battlefield is at the point of interaction, and with every interaction there was an opportunity to create a meaningful exchange with the consumer and to create that level of differentiated value. And again, it’s not always down to the final purchase. It’s understanding the complexity of the decisions that consumers are trying to make and helping them make smarter choices. Being able to provide additional services or other areas of value add to the consumer that ensures they’re getting more from the products than they first anticipated, that those areas of wow and delights that give consumers a reason to engage your brand directly. But again, it all starts with understanding the context of each interaction and where there may be an opportunity to help consumers make smarter, better choices and reach better outcomes.
Saba: Yeah, I totally agree with that, and I think when you look at that Nike experiences, it’s the one of the things that were driving, and when you look at Amazon you’ve got, the Amazon marketplace as well, and it’s very, very challenging to control the quality of products and the third-party sellers that go under it, and the review process, and so on that’s happening there. And Nike was losing control over that when they made that pivot. But as you said, they made that pivot after years of very intentional, boned channel investment and not just D2C, but stores. They have had a massive proliferation of stores globally in all major metropolitan cities, and that’s part of their strategies to go after metropolitan cities, and they have created this experiential way of shopping, which starts in the store, and now they’ve transitioned it to online. They use that base before pulling out from Amazon it would probably have hit their portfolio and their sales much, much, much, quite hard if they didn’t have that to fall back on.
Another example of a company that has done this very intentionally and very well is the Lego Group, the toy company. If you look at their growth that’s come mostly through D2C especially during COVID, it was a very intentional choice to go after physical retail and off to brand.com, which brings to light this whole discussion around total commerce. This isn’t about beating Amazon, or selling direct, or going with your partners, whether it’s physical retail or otherwise, it’s about really understanding the entire dynamic of the market and what’s happening out there and what’s happening with your consumers. How are they shopping differently, and how can you stay ahead of this curve and define that channel dynamic yourself, rather than being a slave to that channel dynamic?
Reva: It’s interesting, both of you mentioned like the establishment of a brand.com experience and wanting to give people a reason to engage with your brand directly. And as we’ve been chatting, I actually got a delivery from Amazon that I ordered yesterday in one box, and it’s Birkenstocks and Miracle-Gro. This paints me to be potentially somebody who’s very into gardening. I’m not. I I need Miracle-Gro ‘cause my plants are dying, but my point is, is like would I want to buy direct from Miracle-Gro or engage with that brand one-to-one ever? For me, no. So, I guess my question to you both is, when do brands choose, like are we a more transactional brand, are we more commodity-oriented or are we like a Nike? Can we offer an experience that’s truly differentiated? So, I’d love to just, you know, unpack that a little bit more, like how do brands know how much to invest in these one-to-one experiences?
Scott: I think it starts with understanding what your value differentiator is ultimately, right? Why do consumers choose to buy from you? What’s the value that they get from your brand versus what they may get from a competitive brand? I will say if the only difference is price, it’s probably not a good starting point for going direct to consumer, right? But if there are other areas of value differentiation, or if you feel that your brand has an opportunity to raise the bar and create new forms of value with the consumer, now it starts to get really interesting, right, in terms of how you can engage the brand in a direct way. And the opportunities I think could vary, we’ve talked about this on a previous podcast about the importance of brand relevance, rather than just brand preference and the different ways that brands can achieve relevance today.
One is just helping consumers make smarter choices, right? Removing decision complexity. I think we’ve made the choice, the mistake in the past thinking that what consumers really value the most is choice at the shelf. They don’t. Consumers are trying to accelerate to the right outcome, which is becoming increasingly difficult given the amount of choice available to them, and it’s almost quitting decision paralysis in a way. So, helping consumers make the right choice for them, for their families, for their loved ones and so forth.
The second is around personalization, right? Opportunities to wrap services around the product that unleash more inherent value from that product. We talk about going beyond the product and finding ways where through those services, we can help those products solve bigger problems for the consumer, right? That’s the second.
The third, which can’t be overlooked, is, is around the purpose of the brand itself. We’ve talked a lot about the importance of sustainability, and a brand standing for something more than just the product, whether it’s around social justice, or environmental change, climatic change, whatever, right? What is that the bigger purpose of the brand and helping to democratize that and, and engage consumers in meaningful dialogue around the brand is a way to create that increased relevance.
And then the fourth is really around immersive experience, right? And we’re seeing some great examples today of how consumer products companies are creating really powerful content rich experiences using augmented reality, virtual reality, using AI in really intelligent ways to create an experience with the consumer that’s not just in times educational, inspiring, but also fun, fun and enlightening. And, and so there’s many different ways in which brands can win over the consumer, but again it starts with a deep understanding of what your brand stands for and why consumers choose to buy from you. Why they engage you in the first place?
Reva: That’s great, Scott. Thank you. And so, you know, I know we’ve unpacked a lot, and, Scott, you just rattled through a really succinct, but perhaps daunting to-do list for CP firms to consider. So, you know, I’d love to just maybe take a step back with all of these different channels that we’ve unpacked, what would you guys say are the key takeaways and guiding principles for CP firms to truly evolve their omnichannel total commerce experience?
Saba: I think for me the guiding star of this is, CPs have to be very deliberate and very considerate in thinking about the strategy and the role and the contribution of each channel. To start with, this has to be an exec-level decision, and it needs to be continually monitored and optimized. Their role in the mix needs to be optimized with the data that’s coming in given the pace of change in the industry, because there are some really hard choices to be made.
Let me just say this straight a couple of them. Is an organization willing to forgo some of its margin through D2C because you get lower margin typically in exchange for brand building and getting first party data where the benefit takes longer to come through and filter through and it’s not as readily measurable and attributable?
Is an organization willing to make a challenging call in terms of reducing the share of sales or product availability that goes through some of its long-term partners that it’s been working with to build its own channels?
Are they willing to train and incentivize their sales teams to look at things holistically across channels and not see the channels in competition with each other? These are real life examples of challenges that we have seen in D2C being implemented effectively as well, and good understanding that maybe your consumers’ wants and needs and going though it consumer lens, but actually executing it with purpose, intent and sponsorship is absolutely critical.
Reva: Scott, your take.
Scott: Saba really nailed it, but I think just to add to it, we are living in an omnichannel world today, and, you know, we still want to make distinctions between physical and digital. And the reality is that those two have now converged, right? And we’re always on, always connected, right? There is ubiquitous connectivity, and when a consumer walks into a physical store, you know, chances are they are connected. When they walk in as an opportunity to turn that connectivity into an advantage for the brand, so thinking less about the channel and more about that integrated seamless experience and looking at all routes to market in a more collective way. There’s no single approach to this, right?
I don’t think one channel is going to prevail over the others, and it’s recognizing that consumers engage different channels for different reasons, so you’ve got to be present in those channels, but also as I mentioned before, and as Saba touched on, the ability to stand out from the crowd within that channel is going to be increasingly important. And data, you know, without sounding too cliche here has in fact become the new currency, right? So, it’s opportunities to capture which data at each point of interaction and turn that into better experiences in the future, so thinking about every interaction as ultimately a value exchange that you have with the consumer, and the better experience you provide the more intimate information you can capture in return. Nothing comes without a price, but I think that type of value exchange is what is not only going to give consumer products companies an opportunity to better differentiate within across channels, but also ultimately create better experiences and better outcomes for the consumer.
Reva: That’s great, Scott. So, we’re going to wrap today with a little lighthearted closer. I know you guys have done a great job at articulating some examples of what you’ve seen, but what I’d love for both of you to cite really quickly, what are some creative and interesting examples of total commerce that you’ve seen brands adopt over the past year, specifically due to COVID, or, you know, seemingly due to COVID over the past year. Any examples come to mind?
Saba: I actually moved house during COVID, and shopping for a new house online is not fun. And it made me come across and realize how much the technologies advanced with people using AR, spatial intelligence, AI to look at the space, imagine the space and decorate them. And is everything from kind of deluxe paint where you go on your wall and actually see what the colors look like to all of the amazing capabilities that IKEA has.
And we had a 3D virtual tour down of the house because we couldn’t access the house. There was elderly lady living here, and she was very concerned with COVID, so we had a full 3D virtual done, which we could then look at to like measure distances, look at features and then actually sometimes place products in the room to see what it looks like. It was totally mind-blowing and game changing.
Reva: That’s amazing. I’d like to see that stick around.
Reva: Scott, anything comes to mind?
Scott: For me, I can think of walking into to a Nike store in Manhattan a couple of years ago, and they were experimenting with a new digital display that had a very generic shoe ad, I think it was, on the screen. And as I walked closer to the display to get a better look, it was recognizing me by age and gender, I assume, and it was changing the imagery on that digital screen based on who it felt I was as a consumer. And then an engagement to a conversation. There was a voice activation system built into the display, and it’s engaging me in a verbal conversation. And what it is now doing is, I guess based on the outcome, is it’s reading my personality profile on the basis of my spoken word. The words I’m using, the tone and the sentiment behind them. And again, it continued to change the display on the basis of that, so it’s creating this really exciting, personalized digital experience based on a calculation of who I was as a consumer and the things that might matter to me, which is powerful. Now did it get it right? Did I go in and buy a pair of shoes and walk out? I don’t think I did on that particular occasion, but it shows the magic that can happen when we start to integrate different digital technologies to create these new realities. And I think that’s going to be the future, right?
We’re talking today about total commerce largely from the context of web and mobile, but we start adding voice into that, and we start adding IoT platforms, AR and VR. What happens when we’re sitting in your bathroom in the morning brushing our teeth, and, you know, computer vision built into a smart mirror starts to determine that your skin is looking dry, and it recommends a product for you on that magic mirror and gives you the opportunity to purchase either through touch or through voice. So, we start thinking about total commerce in the future, we’re thinking about the proliferation of new channels in smart homes and smart appliances and smart cars and all of this, and how do we create content and create data-driven experiences that transcend all those channels in a seamless way. And that gets really, really exciting and, you know, I think we’re very much at the beginning of that journey, but the next two or three years I think we’re going to see some pretty significant breakthroughs.
Reva: Yeah, or exciting, but also horrifying in the context of potentially my mirror telling me that I look a little sleepy and haggard on any given morning. The thought of that is a little scary.
Scott: It wouldn’t dare, Reva.
Saba: That wouldn’t be so fun.
Reva: Excellent. Well, we are at time. Thank you guys so much for your time today. This was a really, really great discussion. I appreciate you both hopping on.
Scott: Thank you, Saba. Thank you. Reva. Bye-bye now.
Saba: Thanks, Reva. Thanks, Scott.
Reva: Thank you. Cheers, folks.
Reva: Thanks for tuning into Next in Consumer Products. Be sure to subscribe so you don’t miss a beat on the future of digital in the CP industry.