Modern brands are snubbing retailers in favour of selling direct-to-consumer in a bid to increase revenue.
An featuring Joey Zwillinger, founder of trainer brand, AllBirds, reveals how the company opted to sell direct-to-consumer rather than through retailers.
Zwillinger's success is attributed to the changing economics of making and selling trainers.
According to Rahul Cee, who trained as a footwear designer and had a long career in the industry, working for Nike and Vans in India, the absence of a retailer’s share saves trainer brands an estimated 50 percent on revenue, allowing them to invest in higher quality materials and develop better products.
And larger brands are following suit.
In 2017, Nike announced it was it uses and set a target to generate 30 percent of its sales online by 2022.
Other notable direct-to-consumer success stories include Dollar Shave Club, bought by Unilever for $1billion in 2016, and eyewear brand, Warby Parker, which was valued at $1.75 billion in 2018.
A threat to trade marketing jobs?
As brands opt to go direct-to-consumer, will the demand for trade marketing managers rapidly reduce?
Brands’ marketing is now more fragmented, focusing on smaller segments based on data and consumer experience, rather than the catch-all approach using large retail outlets.
“What we could see here is the dissipation of traditional trade marketing manager jobs and an increase in Ecommerce marketing opportunities as more brands go direct to consumer,” says Phil Wright, Managing Director at WrightObara.
“This will require individuals who are well versed in Ecommerce sales and marketing, optimising the customer experience on websites, ensuring the website is effectively merchandised, taking into account sales data, user interaction, as well as margin considerations. There will also be elements of PPC, Affiliates, eCRM, Social, SEO and, of course, traditional aspects such as building strong relationships with suppliers. However, increasing vertical integration may also impact this.”
Even brands who choose online retailers to sell their products, rather than going direct to consumer, will require a new fleet of digitally savvy trade marketing managers.
“Trade marketing managers must ensure the digital assets such as products, photographs, descriptions and specs are all on point,” adds Wright. “They also must be ready to take advantage of display ads on their retailers’ websites to drive conversions and be innovative in the way they engage their trade audience.”