E-commerce experts from Bacardi, Pandora, VMLY&R and McCann predict the challenges the brand will face in the coming year, from restructuring retail to connecting consumers through the sales funnel.
While global economic changes are disrupting entire industries, e-commerce continues to operate at full capacity and won't be slowing down anytime soon.
The pandemic has enabled digital brands to retain customers and convert them to online purchases, but many are now facing declining sales and a cost-of-living crisis.
As part of our in-depth review of The Drum Evolution of E-Commerce, we asked The Drum Awards judges what the biggest marketing challenges retail and e-commerce brands will face in 2023.
Lila Mignoni, Global Head of Brand Communications, Bacardi. As a spirits company, we're in a unique position [in the US] because, unlike other marketed products, we can't legally sell directly to consumers. We sell to distributors who sell online to consumers through e-commerce platforms like Drizly and Instacart, people have grown by leaps and bounds during the pandemic as people realized they can order drinks right to their door.
At Bacardi, our biggest marketing challenge is connecting consumers from discovery to purchase and maintaining a meaningful connection, even if we "hand it off" to a retailer or e-commerce partner to complete the transaction. We understand that it is more important than ever to initiate, build and maintain an ongoing dialogue with our customers so that we are always first.
Michelle Whelan, CEO of VMLY&R Commerce. Things are not looking good as we are expecting an economic downturn in the next few quarters. A race to the bottom can easily begin as companies sacrifice margins to maintain volume. I would say that the biggest challenge for brands is keeping a cool head. We know that continued investment in advertising, especially advertising that generates long-term capital, helps us weather the recession. The same is true of other aspects of brand merchandising, especially now that we've reached a retail tipping point.
Brands must identify what will bring the most value to their customers and differentiate them from their competitors, then be bold enough to make that the focus of investment. Many people want and need the help of brands. This allows smart brands to get closer to consumers. When they understand the microbehaviors of their audience and can respond quickly and accurately, they can create more valuable and lasting relationships.
Saving time, money and effort is definitely part of it. It could be bundles (still untapped in e-commerce) or a more creative play on data and loyalty (similar to a Tesco club card). Whatever the solution, it must be provided with full transparency. Brands need to communicate clearly what they are doing and why. The more honest and respectful they are with consumers in these difficult times, the more products they will buy.
Lizzy Widhelm, SVP, Advertising Innovation and B2B Marketing, Pandora. The biggest marketing challenge facing retail and e-commerce brands in 2023 is delivering messages that resonate with consumers when they matter most. To achieve this, brands must consider what is most important and relevant to their consumers and decide what is the priority in an increasingly complex environment.
For example, how will these brands balance their messaging in a year when inflation, rising bills and declining purchasing power are expected to affect the desire to buy? Are they focused on technical innovation like Metaverse/Web3/NFT or to protect consumer demand in the face of inflation and to prepare and respond to pandemics or global conflicts? This choice depends on the tone of their message and whether it is uplifting, happy, or contrary to today's reality. The problem of not knowing what to focus on when things are changing so quickly will exacerbate individual challenges for brands going forward.
Brands also face the challenge of balancing ROI efforts with innovation and learning opportunities. They need to make sure they are improving their ROI by not ignoring the next and trying channels and formats that don't work to find new customers.
Brands will thrive when they partner with media partners that provide timely and valuable information to truly engage consumers. Publishers with advanced measurement, testing and learning capabilities and the ability to demonstrate ROI to brands will have a huge advantage.
Emily Chang, CEO of McCann China. We need to rethink. With the ever-changing face of retail and commerce, marketing leaders must continually improve. However, we are ordinary people and tend to repeat past success patterns.
Therefore, we must consciously and regularly review our strategy and plans. What's working and what needs to change? What used to work but no longer works? What has changed in the office, the market, or the competition that has inspired me to rethink my approach to the market?
I would also encourage marketers to shift two traditional paradigms. First, leaders are always right. We need to get used to making mistakes and failures because if we never make mistakes and never fail, we are not challenging ourselves enough. So let's get to where we are in the uncomfortable zone of learning and repeating. Pause to reflect on what we've learned, figure out what we're going to do with the next version, and share with the team every step of the way.
We also have to work hard. When we celebrate martyrdom, when we show how hard we work, we have to say goodbye to the proverbial face-to-face. Instead, let's work smart, celebrate results, and reward those who find better ways to do things.
For more on the evolution of e-commerce, check out The Drum's latest in-depth study.
