PURE-PLAYERS VS. BRICKS & CLICKS (BY JUSTIN COHEN, KEURIG)
MTL+ECOMMERCE #32 was about how has Keurig been choreographing their direct consumer business, with their partner retailers. Keurig has made a great contribution to the coffee industry in the last five years. Technology today has the incredible capability of driving growth for ecommerce businesses.
The coffee industry has changed a lot. Keurig is mostly known for selling single-serving coffee pods. However, the brand also owns Van Houtte Coffee, Timothy’s, Green Mountain. They target the B2C market, but the B2B market still represents a great part of their incomes.
The digital director Justin Cohen focused on the DTC (Direct-to-Consumer) ecommerce, the at-home business. Keurig also sells through pure-players and distributors.
The main question is about trying to understand how Keurig works with all its partners without cannibalizing its own direct-to-consumer business, and still support their distributors they way they want to. As customers start to make more purchases online, it’s only natural their brand is going to want to deliver that online experience.
There are three trends that are driving loyalty amongst consumers:
1. Value. It’s not that people are trying to find deals, it’s more about the feeling of getting something for their money. It’s about giving something more, like a special gift or a discount. Some shoppers want to shop based on price. For example, Grolsch has created a cap using the bluetooth technology. Once customers buy a beer, they can download a movie on their computer or on their phone.
2. Transparency. Brew Dog, in the United Kingdom, released the recipes of all their beers online, challenging their followers to make their own beer. It turned into additional sales in store, because people wanted to compare. It also increased the brand awareness.
3. Unlimited. Consumers are looking for an unlimited access for a set fee, with services such as Netflix.
Based on these three points, keurig.ca is there to increase brand engagement and make their shoppers’ life easier.
Keurig works on five growth drivers. The role of DTC at Keurig are:
2. Retention & rewards
3. Control the brand experience
4. Increase brand engagement
The CEO of Netflix considers strategy as his biggest pain point. Everything he has decided not to do keep him up at night. Netflix is never going into sports, e-sports, live features. It is a tough decision to stay in your own model.
Keurig’s online growth strategy depends on on the things they will or will not do, with their bricks & clicks and their pure players partners. They need to grow their channels in the right way.
Justin Cohen then introduced the concept of the endless aisle. If consumers shop in a store, and they are out-of-stock, they can buy it online. The brand that manufactures ships the product directly.
Though, Justin Cohen does not find this notion very strategic. Every retailer is trying to say “put all of your products online”. Some products move very quickly, while the rest is put in a warehouse, and everything that wasn’t bought rationally is going to get back to you, with fees. Retailers are not being selective, nor a strategic partner. Justin Cohen doesn’t think this theory adds much value.
Amazon for example has two ways of working with brands: they buy stock, and they sell it when they are confident enough with the products or the brand; or brands set up a store and send products using the Amazon marketplace. It gives the brand the choice to put any product they want on this “endless marketplace”.
There are obvious inputs in choosing the right channels, which are volume and margin. Those are the two main characteristics to study, but the consumer is also to take into account: how does your consumer like to shop? How seamless is that retailer experience shopping for your consumer? Does this partner has a clearly defined strategy? What are they willing to share? As a brand, Keurig always focuses on being transparent: share information, help personalize their site experience… Keurig and its partners are both collaborators and competitors. They may be reluctant to give data or information, as they know the brand is going to use it in order to grow its sales.
Most of the time, partners have trouble dissociating their online business from their brick & mortar business. They think it could be a source of conflict for the retailer. Keurig.ca is not competing on price ever, as they are a high-end seller. They compete on UX, on rewards…
Depending on your challenges, there are several options to set up a growth online: have certain inputs factor in the channel strategy decision, and have human subjectivity, look at the marketing… in order to choose the right channel strategy for the brand.
In order to do this, the brand must define what they want to accomplish:
1. Design your DTC as your lead brand channel in order to control the brand message;
2. Identify your gasps;
3. Select a few great strategic partners;
4. Share data and information;
5. Review, revise and optimize every year.
HOW VIRTUAL REALITY WILL IMPACT SHOPPING HABITS? (BY DAMIEN LEFEBVRE, VALTECH)
The difference with augmented reality is that with virtual reality, everything is created, and users are able to go everywhere they want within the set limit. Unexpectedly, the VR system started in the 1950s.
Ebay started a VR project with a retailer in Australia a few months ago, to see 2D items in a 360 environment. Ebay is about to develop this service in the future. Alibaba is also working on a VR project, showing more than 5 000 items in the next few months. Though, Damien Lefebvre does not believe people will buy a 360 headset to see items in VR at home. He believes in something else, but time will tell.
In store, the game is different. The good news is generation Z and millennials love VR. They want to buy VR items, and they even expect VR systems to change their in-store experience. Valtech started working on VR in 2015, and the market is expected to see a massive growth:
VR represents a 30 billion dollars market. People would be ready to pay more for a 360 sexual experience, to see Celine Dion in concert, the real estate industry… the potential is huge.
Merrell created a VR experience in store, based on motion capture technology. People were able to hike and walk on top of mountains. The message was strong: you did it in VR, buy Merrell shoes and do it in real life.
Real estate businesses can also make their clients visit houses, furniture shops can feature three chosen couches and let consumers decide which couch fits better in their own home… the possibilities with VR technologies are endless!