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How eretailers have disrupted their relationship with brands

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Raúl Alcázar, has 20 years of experience working for digital companies. He began his career in the late 90s during the Spanish ‘.com bubble’.  In 2003, together with 3 other colleagues, they created their own digital media agency, acquired by Netbooster (now Artefact) in 2008. Responsible for Artefact’s operations in Spain, he continues to help both national and international brands understand new digital ecosystems. Here, Raúl reflects on how the relationship between brands and leading online retailers is changing.

For a long time, relationships between major brands and retailers have focused on aspects of retail that are gradually becoming obsolete. In today’s e-commerce landscape the user is looking for immediacy and expects to be able to buy products through multiple channels and devices. We are now dealing with a new medium for brands: E-retailer platforms. These platforms have been greeted with mixed feelings as they don’t always cater to the individual branding of products, sometimes they don’t even allow brands to manage their own content (product information, for example). A product’s reputation is no longer determined by the brand, instead it is through reviews/ratings given by the users, with paid media being used to increase the visibility within the platform.

Furthermore, there are new purely online sale periods and price is no longer a differentiator, since customers can compare prices between sellers immediately. Product visibility is at the mercy of algorithms, not human decisions, and customers have more information available to them than ever before. The sector is facing a crisis, which combined with the creation of new KPIs (such as digital shelf space) are making traditional negotiation methods between brands and retailers obsolete.

These new companies are raising customer standards, their use of data and AI has transformed the consumer experience and consequently raised expectations. Google knows more about users around the world than any other brand.

While the battle to know the users’ Customer Journey is being won by new players, they will never replace brands and their star products. Building brand recognition will be the key to success, even when they are in less familiar environments.

Shopping is no longer transactional – brands must utilise their power to talk to customers, turn them into brand advocates and adapt to new purchasing methods. They must stop fighting against the evolution of purchasing habits, as it will be a losing battle. I don’t think it’s worth fighting against these new technological giants, or ultimately, against changing consumer habits, but embrace them and look for the best way to enhance the improvements they offer, focusing their efforts on winning over the competition. Where new purchasing methods, and perks like free shipping and returns used to be a differentiation point, they are now the norm, brands must use data and AI to distinguish themselves and improve customer loyalty.

To do this, brands need to adapt to this new situation and reinforce, among other things, some of the following strategic points:

I implore companies to create recognisable brands where they are naturally sought after, within new digital environments. Precision Marketing allows brands to optimise their campaign budgets through improving the efficiency of their campaigns, including: messages, moments, objectives and ad placements.

Understanding the new digital ecosystem is particularly important in order to find new growth opportunities or find ways to improve existing methods. A good example is Mobile – all signals are showing a clear trend and opportunity for growth. However, very few brands are making use of this.

Driving traffic to advertiser pages should not be the only priority as e-retailers themselves are becoming extensions of brands. Websites will continue to be central to the user’s customer journey, not to boost conversion, but to enhance the customer experience with the brand, both before and after purchase.

There are many dynamic aspects of this complex and competitive market place, where the rules of the game are constantly changing. Brands must begin to move from a model where the product was the centre of purchase decisions to a multi-channel approach. A Client Centric and Data Driven approach will allow them to create a valuable offering for the user and win the battle.Raúl Alcázar, Artefact Spain’s Managing Director counts with 20 years of experience in digital environments. He began his career in the late 90’s where he lived the launch of one of the main Spanish “.com”. In 2003, together with 3 other colleagues, they created their own digital media agency, acquired in 2008 by NetBooster (and currently Artefact). Responsible for Artefact’s operations in the Spanish market, he continues to help both national and international brands understand these new digital ecosystems. In this article, Raúl reflects on how the relationship between brands and leading eretailers and pure players is changing.

For a long time now, major brands’ relationships with retailers have focused on levers that are gradually becoming completely outdated. In an environment where the user is looking for immediacy, ie, being able to buy the product through any option or any device. Now we find the E-retailers themselves (new media for brands) where the content is sometimes not managed by themselves (for example product cards). The media gained are generated thanks to the reviews/ratings given by the users and their own paid media can be used to increase the visibility and recognition of the brand within their own environment.

If we consider in addition to all of this, that new promotional dates arise that come purely from the online environment or that the price is sometimes no longer a differential value, as the ability to compare is immediate. The visibility of products on these platforms being produced by algorithms and not by humans or consumers being super informed nowadays, the sector is facing a challenge, which together with the emergence of new specific KPIs (such as the digital shelf space) are making models of negotiation between brands and retailers, that have been the norm for the last 50 years, are gradually becoming obsolete.

The entry of these new technological players is defining standards of customer experience far superior to those that existed thanks to the use of data and the implementation of IA models, profoundly modifying existing consumer habits. For example, Google knows more users around the world than any other brand.

The battle to know the Customer Journey of the users is being won by these new players, however, they will never replace the brands and their star products. Building brand recognition will be the key to success, even when it comes to positioning them in environments not as well known as they have been in the past.

Brands must focus their potential on talking to their customers, turning them into lovemarks and adapting to new purchasing scenarios, stopping the fight against the most current purchasing habits, as it will be a lost battle. I don’t think it’s worth fighting against these new technological actors, or ultimately, against changing consumer habits, but embrace them and look for the best way to enhance the constant improvement they offer, to focus efforts on winning over our competitors. To do this, brands need to adapt to this new situation and reinforce, among other things, some of the following points that I consider strategic:

Create recognized brands where they are naturally sought within new technological environments. The implementation of Precision Marketing methodologies will allow brands to gain in efficiency in terms of objectives, messages, moments and contexts, and therefore, optimize the communication budget.

Identify and understand the new ecosystem they face in order to detect new growth opportunities or existing opportunities, which are not working properly. A clear example is the Mobile part where all the indicators are marking a clear trend and opportunity for growth and very few brands are making use of the opportunity that appears.

The generation of traffic to the pages of advertisers should not be the only priority, as the (e)retailers themselves are becoming extensions of the brands. Websites themselves will continue to be central to the user’s customer journey, not to boost conversion, but to enhance the customer experience with the brand, both before and after the purchase of the product.
Taking into account these aspects of dynamism, complexity and competitiveness of the retail and consumer market, where the rules of the game are changing, brands must begin to move from a model where the product was the center of decisions to a multi-channel approach, Client Centric and Data Driven, which will allow them to create a value proposition on the user and therefore win the battle with the customer.

 

This article was first written for Think With Google you can find the original version here.

Raúl Alcázar, Managing Director

raul.alcazar@artefact.com