FMCG brands are looking to reach out to consumers in ways that have never been done before. The approach is different and so are the tools to reach out to the end consumer. Legacy consumer packaged goods (CPG) brands are exploring ways to reach consumers directly through digital channels. Then there are pure direct-to-consumer (D2C) brands emerging which are built on pillars that are new and significantly different from what consumers have been used to. The common factor among both is reaching out to consumers and building successful brands.
How are D2C companies creating a compelling value proposition? Industry experts discussed the challenges and opportunities at The Economic Times CEO Breakfast Consumer Goods Roundtable, presented by Accenture.
According to Manish Chowdhary, Co-CEO, WOW Skin Science, e-commerce has been dramatically changing and evolving. 50% of health and beauty products are now sold online. “When we started in 2013, the internet revolution was just taking off. Today, consumers are looking for something innovative and brands such as ours are directly listening. D2C model is taking off and is here to stay,” he said.
There are other trends pushing companies to take the D2C route. “For young entrepreneurs, it is a natural way to reach to the customers. You can start small and reach your targeted consumer. Also, the consumer is now undergoing a big megatrend of individualization, moving from family choices to individual choices where each member is looking for a specific brand or product. That puts together a massive case for adapting the D2C strategy,” said Varun Alagh, Co-founder & CEO, Honasa Consumer (Mamaearth).
Harsha Vardhan Agarwal, Director, Emami Ltd explained that the pandemic has accelerated the shift to e-commerce and also towards evolving consumer behaviour. “There is a whole new way of reaching out to consumers which were earlier not possible and that is creating several opportunities. This happened with the entertainment industry when multiplexes came in and led to the creation of a new genre of movies. Similarly, in FMCG there are so many more opportunities now,” he said.
The most important aspect of the direct-to-consumer model is the customer experience. “Fundamentals of running a business are still the same. The success of a brand relies on offering a differentiated value proposition to customers. Earlier that value proposition dependent entirely on the product; now it is the product plus the experience of engagement,” said Anurag Gupta, Managing Director & Lead- Strategy & Consulting, Accenture in India.
Technology has a big role to play in offering new experiences for customers and creating opportunities for brands to grow. “The adoption of digital technologies is helping a lot in enabling the interaction between companies and consumers.
Data is highly critical now. Organizations need to become data-driven companies,” said Manish Gupta, Managing Director & Client Group Lead- Products, Accenture in India.
Going forward, success will depend on how companies are able to use data and technology. However, utilizing the data effectively remains a challenge. “Companies need to start leveraging the data now. Digital native companies are already doing it as their fundamentals are based on data. A lot of companies still need to get the basics of data right,” added Manish.
One of the challenges in utilizing the data optimally is attracting and retaining skilled talent. “Finding skilled workforce is definitely a big challenge for all companies at present. From a data perspective, it is a new domain and there are not many people with the right skills out there,” remarked Agarwal.
Even if companies overcome the hiring challenge, D2C isn’t an overnight success strategy. It requires an extensive amount of time, effort, the right mindset, and investments to succeed. Not all companies may be D2C ready. The solution then lies in the convergence of the two models. “We have seen that in retail space. There have been traditional stores and purely online stores. The sector is seeing a convergence of the two there. The same will be true for consumer goods companies,” concluded Anurag.
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