KHWS Blog: Addressing the imbalance between brands and e-tailers

Addressing the imbalance between brands and e-tailers

Behavioural Insight

Brands and retailers are inextricably linked, but the relationship is on a pendulum swing. Where brands have held the upper hand until this millennium, the growth of ecommerce has given retailers the position of power. This is because for the majority of brands, developing a direct-to-consumer ecommerce offering is not a worthwhile investment. Consumers have no inclination to visit multiple sites for one shop, meaning that established retailers are the only way to take their products to market. Whilst retailers still need brands to attract customers, they are undoubtedly calling the shots when it comes to how products are marketed on their site.

However, brands and retailers have reached a point where they need to compromise in order to avoid too much negative sentiment in the industry. E-retailers have become aggressively focused on outperforming competitors in a race to the bottom, leaving brands the unofficial martyrs, as retailers fail to prioritise conveying other attributes that make brands and their products attractive, in favour of price.

For large brands such as Lego or multinational groups like LVMH, sheer scale allows them to set up shop online, and own a share of the fast-growing ecommerce sales pie. FMCG brands, however, still rely on retailers in order to reach customers. The long and the short of it is that brands who don’t have their own ecommerce platform, have limited control over how their brand and products are portrayed at point of purchase.

Behavioural science – getting to the bottom of online shopping

Minimising brand engagement and prioritising sales is the current ecommerce status quo. It is fundamentally flawed as it leaves brands concerned about how to make their products stand out on ecommerce platforms, and how to create effective marketing to drive consumers to purchase their products when the digital purchase journey is unpredictable and not based on traditional linear behaviour.

While price will always be a significant factor in customers’ purchasing decisions, the reality is far more complex, influenced by a myriad of other things. However, it is important for brands and retailers alike to remember that although technology and consumer behaviour has evolved, the mental processes shoppers use to make decisions remain the same.

Looking to heuristics – the hardwired shortcuts people use to make purchase decisions, regardless of brand, category or channel will help brands and retailers understand consumer behaviour. There are 128 heuristics and working with Durham University Business School we have identified the nine most relevant to purchase decisions.

We call these nine heuristics, Sales Triggers, and they provide a framework which makes behavioural science usable, shaping strategies and informing marketing activity to help brands and retailers sell.

Start with the shopper – how to build richer online experiences

Putting pricing to one side will give brands a greater opportunity to create richer experiences and enable retailers to stand out. With this in mind, it’s clear to see how establishing a brand/retailer partnership will open up a wealth of mutual opportunities and drive more sales.

Working together, they will be able to identify moments and environments within the ecommerce platform that will provide a variety of compelling marketing opportunities. The reality is that e-retailers need to be more open to testing them.

The untapped marketing environments and tactics, that can be unlocked via partnership include:

• Adding content ‘nudges’, a brand’s ‘One Key Thing’ (one of our Sales Triggers) can be brought to the surface effectively
• Reframing how and where promotions are served both to drive impulse sales and rate of sale can be increased – our ‘Instant Gratification’ Sales Trigger
• Adding an additional environment such as a mini ‘shop in shop’ to showcase a brand’s product portfolio delivers a brand experience and helps to overcome the major barrier to purchase – choice overload.

Our work on a digital shop in shop for Samsung, that was exclusively featured for over 50 electrical retailers’ ecommerce platforms, was designed to clearly demonstrate the key features of the Samsung TV/AV range, simplifying consumer choice and guiding them through a considered purchase. The results have been impressive, driving significant sales online. 

Test and learn

Brands and retailers cannot afford to get into a relationship that is not mutually beneficial.

Running test and learn marketing campaigns can help avoid this. Taking a strategic approach like this will allow retailers to assess two things – how people are responding to brand communications on the ecommerce site and how they can tweak the marketing partnership to react to consumer behaviour. This intelligence will enable retailers and brands to identify the right Sales Triggers to inform more effective, and mutually beneficial, marketing and sales activation.