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Rise of digital-native brands adds intensity to competition

Eric Heller

Chief Knowledge Officer and Evangelist

WPP Amazon Center of Excellence

Wunderman Thompson Commerce

EHeller@wundermancommerce.com

Rise of digital-native brands adds intensity to competition

Winning in e-commerce requires the right skills, data, and partners

I was speaking recently with a client about the rise of digital native brands on marketplaces like Amazon. This gentleman leads global e-commerce for the brand, and happens to be from South Africa. He remarked, “There’s an old African proverb that speaks to how major global brands are being affected by the rise of digital natives: ‘A flea can trouble a lion more than a lion can trouble a flea’.”

This strikes at the heart of what is happening right now on the world e-commerce stage. While cross-border e-commerce has been around for more than a decade, Amazon’s entrance triggered a step change. Amazon infused trade with trust through their “A-to-Z Guarantee”, which protects shoppers buying from third-party sellers. And their super-fast Prime shipping in markets including North America and many European countries has transformed expectations of what’s possible. Suddenly, disruption was and is everywhere, from Anker in consumer electronics, to Zinus in mattresses and Zhou Pharmaceuticals in supplements. Even more intriguing is that Amazon’s CEO has admitted the growth is clobbering retail: “Third-party sellers are kicking our first-party butts, badly.” Amazon’s third-party platform and easy global distribution has unleashed what some of us refer to as a “dragon”.

This begs the question, then: Is this the end of traditional brands? Hardly. Innovation and nimble evolution are popping up everywhere. Just a few months ago, “charcoal toothpaste” emerged as a hot new search term, with third-party brands as the only sellers. Now, though, I see products from category leaders like Colgate showing up in digital first. These are early forays, for sure, but brands clearly understand how to address this type of challenge head on. At WPP’s newly launched Center of Excellence for Amazon, a cross-agency consultancy focused on pulling together the strategies and people from across WPP to support clients, I’ve partnered with some amazing teams to launch strategies aimed at recovering share lost to newcomer brands. There are some common threads to these successes that other brands can use, not just to defend their share, but to win:

1 Take Digital Natives Seriously

Many brands still ask us to suppress digital natives (brands available only online) when we report on their competitive set, arguing that they aren’t representative of “real” challengers. This is a mistake. These brands are real competitors and, with more than 90 percent of shoppers telling us they check reviews on Amazon regardless of where they are shopping, including in-aisle, most brands can’t afford to ignore anyone showing in the top five to 10 search results, let alone someone standing in front of their premier product.

2 Organise for E-commerce

The skills needed to win in e-commerce are different even to those among top-flight marketing teams. Our partners CRC recently asked retailers which skills they were looking to hire for this year; “data analysts” were named by 47 percent–higher than the figure for any other kind of expertise. Our recommendation is to build a diverse e-commerce team reflecting the unique nature of the digital challenge, comprising:

  • A strong, connected manager or senior manager with good analytical skills
  • Data analysts and site hygiene specialists
  • A supply chain / forecasting lead
  • A content / marketing lead
  • Product information leads
  • Brand and category leads
  • Promotions analysts

3 Democratise Your Data

Imagine what you would have paid just a decade or two ago for data showing what every customer thought of your product. What about every term used to find your product (or your competitor’s) when customers walked into a shop? Today, we get that in real time. Yet so many brands still view that as “just e-commerce data,” when in fact this data is critical to disseminate throughout the organisation. While it is undoubtedly important that e-commerce teams act on it, is it also going to product development? What about brand teams?

Finally, it is important to have the right partner. Working with Amazon, Alibaba and other marketplaces requires a unique skill set and approach. For this reason, WPP has established the cross-agency Amazon Center of Excellence (ACE) team out of Seattle, specifically focused on building and supporting brands in this space. ACE experts can work in collaboration with any agency team to provide both strategy and execution advice for even the most complex global engagement. Ask yourself: is your brand the lion or the flea?