Blog Post - Hugh Fletcher, Jun 13 2017

Brand Threat by Ecommerce Sites Controlling your Data

Brand Threat by Ecommerce Sites Controlling your Data

Brand managers must act like retailers and own the customer relationship

Up until now, your average brand manager has had his or her hands full thinking about brand equity, reach, and awareness. But brand managers beware; there has never been a greater threat to brands than that currently posed by ecommerce and the retail revolutionaries like Amazon.

Brands that react may just have enough time to save their relationships with their customers. Those that do not react face the dilution of decades’ worth of brand equity, the loss of data, and even the demise of their brands altogether.

Brands are at risk because, whilst they have been pontificating about their ecommerce futures, the retail innovators, tech giants, and startups have been getting on with building the new retail future — a future that is pushing the brands further and further away from customers and their data.

These businesses have innovated with customer experience, technology, data, and logistics, and they have done what many brands have not done: put the customer at the heart of the experience and their decision making. This has resulted in a world where just a small number of organisations are defining the direction of ecommerce. And if you control ecommerce, you control future commerce. According to some estimates, 95 percent of purchases will be facilitated by ecommerce by 2040. Ignoring ecommerce is no longer an option if you want your brand to survive in the future.

Age of the ‘interface imperialists’

The landscape of commerce has changed. And with this new landscape comes a redefinition of competitors. Competition for brands is coming from every angle, as this new breed of hungry competitor looks to aggressively expand into new products and service categories. Being an online retailer or a social media site is not enough for them. These new competitors have instigated a land grab, one whose aim is to own the interfaces with the customer. The age of the ‘interface imperialist’ is now. This aggressive horizontal expansion strategy is what is pushing the acquisition and expansion growth strategies of the likes of Amazon and Facebook. This expansion has as its aim the ownership of the customer: “He who owns the interface owns the customer.

He who owns the customer owns the data. And he who owns the data owns the future.” This is the mantra of the interface imperialists like Amazon, Apple and Facebook. At every touchpoint, these organisations are looking at the products and services that they could and should be providing, not just what they are providing now. This constant reassessment of their offering allows them to critically judge their current offer and identify new products and services that their customers want.

This constant reassessment is not something that happens enough in brands. This thinking is fresh—take Netflix founder Reed Hastings’ assessment of Netflix’s competition. He said that Netflix’s competition wasn’t other content providers, but sleep itself. Such out-of-the-box thinking enables an organisation to redefine its offer and approach, and defines its expansion.

Brands that can think like this will increase their chances of survival; those that cannot will lose out to the ‘interface imperialists’ and their aggressive expansion.

Owning the customer

This new commerce landscape is also changing traditional views of loyalty, which are too emotional and too fragile. Loyalty is no longer the holy grail. Rather, what is required is customer ownership. Most customers aren’t loyal to Amazon. But most shop through Amazon. Why? It’s a no-brainer. The shoppable products in one place are almost endless. The traditional friction points have been addressed with advances like one-click purchasing. And the service, through Amazon Prime, is second to none.

So, customers are loyal to Amazon out of love for the service. Amazon probably doesn’t put it like this, but they aren’t after customer loyalty, they’re after customer ownership.

Jeff Bezos himself famously said “When people ask me if our customers are loyal, I say ‘Absolutely, right up to the point that somebody else offers them a better service.’” With this type of mentality, brand loyalty is dead, and service loyalty is king.

This is an interesting challenge for brands. The equity in the brand and the product itself has been and will continue to be eroded by interface imperialists offering better service and an ecosystem providing more wide-ranging services and benefits. How can brands look to own the customer?

This new commerce landscape is also changing traditional views of loyalty, which are too emotional and too fragile. Loyalty is no longer the holy grail. Rather, what is required is customer ownership.

Brands must think like retailers

Brands need to think like retailers. They now need to invest in owning their customers, their data, and the customer-brand relationship, and not allow this interaction to be diluted by a third party like Amazon. This could be accomplished through direct-to-consumer sales, loyalty schemes, or more simply by making their existing data work harder for them through digital intelligence.

Brands need to increase the number of customer touchpoints to maximize the amount of time, energy, and share of wallet spent with them. They need to do this by creating an ecosystem of complementary products and services that will keep their customers close and grow a mutually beneficial relationship. In addition:

  • Brands need to understand the core service of their offering in order to identify horizontal expansion opportunities.
  • Brands need to take long-term strategic decisions to prepare themselves for the future, not just think about their equity and sales results of this year.
  • Brands need to wrestle back control of the customer interface. After all, he who owns the interface owns the customer. He who owns the customer owns the data. He who owns the data owns the future.

The future of brands will be defined by those that take on the challenges of the new commerce landscape. For those that pretend it isn’t happening, the future is bleak.

This article is an extract from the BrandZ Top 100 Most Valuable Global Brands report available at wppbaz.com

To find out more on the challenge for brands, get in touch with our Global Head of Consultancy & Innovation, Hugh Fletcher.

Interested in more topics like this? Go to What We Think or sign up for our newsletter.

Read the full report here