The Amazon threat leading brands to turn to the Direct to Consumer (D2C) model
With Amazon taking up an ever increasing share of product searches and online transactions, how can brands fight back?
Seemingly every day we see a new statistic about the steadily increasing volume of online transactions that Amazon is hoovering up; increased number of product searches starting on Amazon and ways in which they are effectively eating the brands’ lunch. In fact Amazon have just posted their highest quarterly profits ever.
Those product search numbers range from somewhere north of 55% for standard Amazon users rocketing up to 74% for Prime Customers. One of our US based clients actually felt the number was somewhere around 65% for the North American markets just for standard users.
Brands however are not sitting by and letting this go, especially the traditionally non-transactional CPG players, now looking at getting a stronger foothold in Direct to Consumer (D2C). Unilever has been making a strong play in this arena for some time with acquisitions including Australian T2Tea some 5 years back, followed by the punchy takeover of DollarShave Club for a cool $1bn in 2016. T2Tea now runs a successful refer a friend program through Mention Me in their home country as well as an ever-broadening footprint in the UK and New Zealand. So what can referral do to help combat Amazon's advance and assist in brands’ desire to get closer to consumers and understand the data around that consumer behaviour?
Referral does a number of things for brands – driving new customer acquisition being the primary purpose, with ancillary benefits around database building and generating brand loyalty. But these aren’t just any old customers we’re talking about – referred customers are proven to be more brand loyal through a higher lifetime value, typically around double that of customers from other marketing channels, with an initial AOV of +10-25%. In addition, referred customers have a higher propensity for repeat purchase and are also 3x more likely to become referrers themselves.
So where else have we seen success for D2C? Another great example is Heineken’s The Sub – launched in late 2013 to capitalise on the growth of the home beer market, Heineken brought the Sub to market in conjunction with Krups and design expert Marc Newson. Now available in multiple international markets, Heineken came to Mention Me to help leverage their loyal and engaged customer base. Those customers simply love the product and service supported by the-sub.com, where users can shop and discover new brands from Heineken which are then delivered to them directly at home. What’s not to love?!
Nestle have also broadened their footprint away from their traditional food product mix, taking the D2C model with them into skincare with Nestle Skin and most notably the Proactiv brand. Proactiv is a prolific outdoor advertiser (you’ve probably seen them on the tube in London recently) and also benefits from Mention Me’s referral platform, sharing a powerful consumer and corporate message: ‘Proactiv is integral to our mission to change the way the world thinks about skin health. With Proactiv, individuals can prevent and care for acne though a home treatment programme that combines our expertise in skin health with digital marketing expertise.’ It’s interesting that this is not just a functional product but also one used to showcase Nestle’s digital marketing prowess and skill as they champion an attitude and consumer behavioural change.
This post was previously published on the Mention Me Referral Marketing Blog.