3 Insights for Manufacturers Wanting to Thrive in the Direct-to-Consumer Landscape

3 Insights for Manufacturers Wanting to Thrive in the Direct-to-Consumer Landscape

Martin Brengdahl

Martin Brengdahl,

Who is in charge of the relationship with your end-customer? To manufacturers, the rise of e-commerce is offering a plethora of opportunities as well as obstacles. To succeed, creating your own e-commerce strategy is key.

In the next couple of years, we will likely see several Kodak-moments from manufacturers not engaging in direct-to-consumer (D2C) e-commerce. The reason why is that it's not enough just to be an “innovation-powerhouse” or to be content with implementing cutting edge AI-driven analytics. The 4th industrial revolution is changing the dynamics that we are used to, and these changes cut deeper into the core business strategies than most realise.

Download report: How 7 Manufacturers Succeed in Industry 4.0

For these reasons, the key component to thrive in this new world, is to gain control of the most important relationship there is – the relationship with the end-consumer. But as we all know from life, there goes a hundred meagre relationships attempts on every good one. The challenge is to empathically understand your customers and by that, win the trust of what is often a complete stranger, and by that build a long-lasting relationship. Digital-at-birth companies are doing this with increased proficiency and are eroding long-held truths as we speak.

Manufacturing e-Commerce Challenges 
For manufacturers, who have traditionally relied on wholesales and sales agents for the direct interaction with the consumer, the rise of e-commerce is offering a plethora of opportunities as well as emerging threats; from small and nimble contenders to global marketplace giants, all eager to snatch market shares. This new competitive landscape requires well-calibrated strategies to succeed, and if the companies rise to the challenge, the results will not wait. 

As Nike's recent report shows, they have reached a gross margin increase of 45.7% last quarter, thanks to their new direct-to-consumer platform. In addition, a direct-to-consumer channel offers the much-welcomed agility to adjust to new market needs with as few dependencies as possible. As well as directly exposing manufacturers to the important conversation to the consumer’s wants and needs, truly making the consumer’s problem your problem. 

Hands-on Experience from Manufacturing e-Commerce
Our Digital Strategy practice helps clients taking the reins of their consumer-relationships by creating their own e-commerce strategy, and we see three key changes in mindset all successful manufacturers share:

  1. They understand that what once marked the barrier of what constitutes a consumer-goods company is blurring. Traditional manufacturers as Global automotive, and home-appliance makers who once relied solely on sales agents are increasingly embracing their new role as a consumer-goods company selling direct-to-consumers via digital channels and welcoming the newfound direct relationships with their consumer.
  2. Having a clear purpose of what they want their direct-to-consumer initiative to achieve. Firstly, a well-anchored consumer value proposition is necessary to successfully guide the flow of consumers to the new e-commerce channel. In addition, the new channel strategy must be prepared to overcome possible conflicts of interest since a direct e-commerce channel is likely to trigger anxiety from current sales agents.    
  3. Doing digital is not being digital. The days when the IT department was perceived as “the geeks down in the basement”, is over since long. For any company wishing to stay ahead of competition, the only way to do business moving forward is to embed the tech-teams within the business. These combined teams work diligently together to create a common language, focusing on one thing – how to serve the most important relationship there is.

To learn more about how we can help you accelerate your transition to direct-to-consumer, contact me on martin.brengdahl@cognizant.com or learn more about Cognizant’s Digital Strategy practice here. You can also check out our dedicated manufacturing site.