In class we reviewed how going direct to consumer was disrupting the supply chain model. I understand that principle first hand, I worked for Kayser-Roth (HUE and no nonsense leggings) in 2015 and assisted with upgrading their ecommerce platform. They disrupted their own supply chain by going directly to the consumer. They predominantly sold no nonsense in discount stores like Walmart and CVS and they sold HUE in higher end stores like Macy’s and Belk. By going directly to the consumer, there are a few advantages for both the consumer and retailer. For the consumer, you could get discounts on products that are not normally discounted in the store, you could find a wider selection of sizes and/or colors, and the brand had a loyalty program for deeper discounts. For the retailer, they retained more of the gross revenue for the product, they had better data and analytics for consumer behavior and ecommerce also allowed them a channel to purge older or outdated products not sold in stores.
I always thought it was a channel conflict to sell at Walmart, Amazon, specialty retail stores and there own ecommerce platform, but I have since realized, you have to have be on all channels, you cannot rely on one channel for your brand. Consumers shop from different sites for different reasons, so being on all channels maximizes the brands exposure to consumers and the brands revenue!
In North Carolina, there are three large CPG brands that are all disrupting there own supply chain by going direct to consumer with an ecommerce platform. Hanes brands, Kayser-Roth and VF Corp, all three have had a significant digital transformation over the last several years and the growth is expected to continue as more consumers look to remove the middle man and go direct to the brand.
Update 12/3/2018, I have since learned from a former employee that Kayser-Roth is restructuring and they have lost Walmart as an account and therefore as a revenue channel. For no nonsense, which is predominately sold at Walmart, this is huge, but this also could mean an opportunity to expand there reach with there direct to consumer channel. If used effectively affiliate or marketplace tactics could potentially fill the revenue gap left by Walmart. For example, if Walmart is not caring there line any longer, could no nonsense send Walmart there affiliate data and still be listed along side there products, but fulfilled on the no nonsense website? The same may need to done for Amazon and Shop.com, both affiliate brokers, have the data feed (products) showing on the brokers site and search but orders are actually fulfilled on the brands site (this also allows them to capture them in the no nonsense database for re-marketing). They could also be included in the affiliates marketing channels reaching more consumers than they could with standard digital marketing channels. For example, I worked at Shop.com and if you paid a nominal fee they would add an ad to there daily emails to over 1M users driving traffic back to the Shop.com site to your product feed, thus getting consumers familiar with the no nonsense brand and creating awareness for the brand that you may not get in any other channel. If used effectively the DTC channel could potentially save the company or at least fill a portion of the gap Walmart left allowing the time needed to restructure.