DTC vs. Marketplace eCommerce for CPG Brands: Data is Critical

Posted on May 6, 2019

When a brand sells a product through Amazon, the resulting customer and all their data is owned and controlled by Amazon. Same with Walmart.com and other online marketplaces.

While Amazon and Walmart share some data with their suppliers, the most important customer-level data is obfuscated. Critically, when a customer transacts on Amazon or Walmart.com, the resulting customer belongs to their marketplace, not to the brand. It should be clear that Amazon and Walmart are in the game of optimizing the lifetime value of THEIR customers, not the lifetime value of their brands.

As the first article in this series explained, brands should be extremely wary of this relationship. Amazon and Walmart are seeking to aggressively replace outside brands with their owned offerings.

Conversely, selling on your own website through a direct to consumer (DTC) approach enables full access to this critically important data, and enables your brand to optimize YOUR customer lifetime value.  

As the second article in this four-part series on CPG ecommerce showed, the collected data enables rapid test and learn cycles that are the secret sauce of Silicon Valley-type ecommerce brands currently disrupting virtually every retail category.

Data is worthless, however, without actionable uses. Following are three examples of powerful use cases available only to brands with a DTC e-commerce presence:

  1. Opt-in push marketing communications

Email (or SMS) collection is critical and often overlooked. Every successful DTC ecommerce brand (read: Warby Parker, Honest Company, Dollar Shave Club, etc) uses aggressive email collection and monetization techniques. Every. Single. One.

These brands augment gather as much information about each customer as possible. This customer-level data is used to craft personalized emails, text messages, and direct mail campaigns. While email marketing remains the gold standard, other modalities like SMS, and Facebook Messenger are gaining steam. Regardless of the medium, the power lies in the direct line of communication to the customer. Unlike the spam of old, in 2019 personalized, event-driven communications are welcomed by the vast majority of customers.

Using this technique, individualized messages are pushed directly to right customers at exactly the right time.  

2) Remarketing

After visiting a website, the customer’s computer (or phone or ipad) is digitally marked with a tracking pixel. These “pixeled users” can receive powerful remarketing cascades on Facebook, Google, and around the internet. These invaluable marketing touches cannot be be performed when the same customer visits a brand’s pages on Amazon or Walmart.com.  

The cost per acquisition (CPA) using remarketing can be 100-fold cheaper than cold prospecting. Again, simply every successful venture capital backed DTC eCommerce brand uses aggressive retargeting tactics.

3) A/B Testing of Marketing Copy

Which headline works best? Which product description drives the most sales? What price or incentive works best? Which ad copy is clicked the most, and which drives the most revenue?

A/B testing on marketplaces remains a challenge as finding answers to these and other questions is incredibly hard without full access to underlying data.  

In DTC eCommerce using a modern platform like Engine, however, A/B testing is a breeze. Stop guessing and know for certain.

With the right tools, brands can fully understand their aggregate consumer demographics; find (and act upon) powerful insights about individual consumers; glean valuable feedback about their product; and find which marketing message resonates the best with which customers. If your brand isn’t using DTC eCommerce, perhaps Engine can help you get started?