After years on the sidelines, and in response to consumers shifting their spend online, established consumer goods (CPG) companies are rapidly joining the Direct-to-Consumer (DTC) arena. Digital makes up more than 17% of total sales for P&G, Nestlé expects to reach 25% by 2025, and Unilever has opened 29 ecommerce hubs around the world to enable the 25% of revenue it drives through digital.
With DTC commerce sales expected to top $186 Billion by 2025, the opportunity is too large to ignore for CPG. Beyond revenue, digital captures valuable zero and first-party data that helps brands better understand and serve their customer to strengthen and defend market position.
While channel conflict and operational complexity are no longer the DTC dealbreakers they once were, with the right mix of technology and support, CPG brands can engage customers and retail partners in innovative ways without large investments and overhead. A proven joint end-to-end DTC Managed offering from Infosys Equinox and Amazon makes it possible.
DTC for CPG
Justin Honaman, Head – Worldwide Retail and Consumer Goods Go-to-market at AWS in discussion with Kunal Puri, VP and Head of Customer Success at Infosys Equinox about direct-to-consumer (DTC) trends, challenges and opportunities shaping the commerce strategies for consumer goods brands.
0:00 – 2:24 |
What are the current Direct-to-Consumer (DTC) Opportunities?
1:11 – 2:24 |
Why is Direct-to-Consumer (DTC) an exciting opportunity?
2:25 – 4:30 |
What are the key challenges for Direct-to-Consumer (DTC) adoption?
4:31 – 5:41 |
Looking for a checklist to drive successful Direct-to-Consumer (DTC) strategy?
5:41 – 8:40 |
Infosys Equinox x Amazon – End-to-End DTC Managed Offering
DTC for CPG: The challenges
Ask a CPG leader in the “big brand” space why they’re not selling direct, and they’ll cite any of these common reasons:
Channel conflict – They’re concerned direct competition with retail partners and distributors can damage a good relationship or violate agreements
Business model – CPGs’ order and fulfillment processes are set up for wholesale and distributor business rather than selling “eaches” to individual consumers
Operations – CPGs face challenges around enabling the right consumer journeys and fulfillment processes (lacking D2C front end experience and back-office support)
Technology – Enterprise legacy systems may not support new development or integration with ecommerce touchpoints
Buy-in – Without a safe and predictable route-to-market, the C-suite can be hard to convince
These are all valid reasons – and can all be overcome.
DTC for CPG: The Imperative
Successful CPGs employ strategies that:
Enable creative bundling and SKU offerings
For most brands, selling “eaches” online doesn’t make sense for the business or the customer. Instead, offering special SKUs (like personalized packaging, club packs and customizable subscription packs), long tail items, exclusive bundles and even fan merch can capture direct sales without directly competing with retail.
Turn channel conflict into connected commerce
Alternatively, many CPGs let customers browse and build baskets to be fulfilled through a retail partner or delivery app of their choice. For example, Kraft Heinz’ recipe site lets shoppers add ingredients to a mini-cart and choose delivery or pickup through Instacart, Walmart or Amazon Fresh. Real-time local inventory connects to the cart through APIs.
Support omnichannel campaigns with digital
With CPG brands spending $50 Billion a year on digital ads (63% on social), it’s critical to connect clicks to customers – either through a site/microsite with direct checkout, referral to retail partner (via connected commerce), or trackable digital coupon. Print ads can also be made “shoppable” with QR and SMS codes that direct customers to your digital properties.
Capture customer data through digital engagement
For many CPGs, customer data is even more valuable than direct transactions, with applications across marketing, RGM (revenue growth management), product development and personalized experiences. Engaging digital experiences can incentivize shoppers to create profiles and submit preference data, take quizzes, find coupons, save favorite products and content, participate in contests, and even upload offline purchase receipts for loyalty points.
These tactics are by no means exhaustive – many brands are exploring unique and creative commerce projects across all channels and touchpoints.
DTC for CPG: The solution
Larger CPG companies can move just as nimbly as digitally native challenger brands with the right technical and operational support, and build virtually any digital experience.
Modern, flexible commerce technology (MACH-X) can integrate cleanly with legacy enterprise applications and rapidly deliver new digital experiences. Paired with turnkey warehousing, fulfillment and customer support, CPGs can solve for the end-to-end capabilities required to serve consumers, with the flexibility to scale up and down with demand and organizational needs.
Learn how a global health and beauty brand developed a highly scalable and performant API-first architecture and enabled B2B2C multi-tenancy for brand partners to support consumer websites, distributor storefronts and cater to global markets.
Technology
Infosys Equinox is an ecommerce and marketing platform built upon MACH-X principles, representing Microservices, API-first, Cloud-agnostic, Headless with eXtensibility:
Microservices: Tightly focused capabilities that can be deployed independently. For digital commerce, these include Catalog, Pricing, Inventory, Promotions, Search, Accounts, Loyalty, Subscriptions, Cart, Tax, Checkout and Order Management
API-first: Microservices are delivered as individual or bundles of APIs, rather than tightly coupled monolithic applications
Cloud-native: Services are hosted in the cloud (such as AWS) for elastic scaling
Headless: APIs represent back-end capabilities that can be integrated with any front-end, including non-standard touchpoints like voice, chatbot, mobile apps, digital screens, and the Internet of Things
eXtensible: APIs are built with open-source technologies that can be modified and customized to your exact business specifications, including B2B, B2C and B2B2X requirements
MACH-X helps developers build faster without disturbing existing code, enabling CPG enterprises to launch big projects in as little as six weeks, and deliver updates on a continuous basis – even multiple releases per day.
Operations
For the order and everything after, with Infosys Equinox and Amazon joint end-to-end Direct-to-Consumer (DTC) Managed offering you get a suite of value-added services including:
Amazon Connect: A cloud-based contact center for DTC customer care
Amazon Pay: A frictionless express checkout option that lets customers pay with their Amazon digital wallet (with over 300 million active users)
Buy with Prime: Enable customers to shop with all the perks of their Prime membership
Amazon Fraud Detector: Catches fraudulent and suspicious orders using AI and machine learning
Amazon Pinpoint: A multi-channel messaging service to send notifications through email, SMS, push or voice
Amazon Multi-Channel Fulfillment: Leverage Amazon's expertise and fulfillment network, to pack, pick, and ship orders to any customer
Amazon Supply Chain: A fully automated, end-to-end solution that manages supply chain logistics from factory to customer
Amazon Personalize: The same recommendations engine that powers the Amazon Marketplace
Enterprise benefits
Enterprises with large portfolios of brands and business units benefit from technology that’s both reusable across properties, and customizable to specific requirements. Look for technology that:
Infosys Equinox and Amazon end-to-end DTC Managed Offering helps you get to market faster with less risk, cost and overhead through best-of-breed MACH-X commerce technology and battle-tested fulfillment, customer service and technical capabilities of Amazon.
Reach out to us at contactus@infosysequinox.com to chart out your Direct-to-Consumer (DTC) road map.
