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Posts tagged as “brand”

How to Succeed as an eCommerce Brand in an Era of Dominant Retailers?

There has always been tension between CPG (consumer packaged goods) companies and the retailers who sell their products to consumers. If a consumer will pay a fixed price for a product or service then the battle over who gets the margin in any sale is between the person who merchandises a product and the person who manufactures it. This is an age-old marketplace tension where leverage often determines the value captured. This is true whether it’s physical products or media products. Think about the tension between media companies and cable operators like last year when Viacom threatened to pull Nickelodeon, Comedy Central, MTV, BET, etc. from Charter’s subscribers. This has obviously occurred in battles with tech platforms like Yelp vs. Google or Zynga vs. Facebook). As always this battle is settled by the degree to which a consumer has a strong preference for a company’s product vs the substitute products it may choose instead. Many of us learned about substitute products in undergrad economics courses. If a perfect substitute can be launched for a product you often see the retailer create a white-labeled version because it then captures all of the margin. When a product is truly unique and demanded a retailer willingly promotes and sells it en masse in part because it does get margin on the good but also because it brings customers in the door who spend on other products. If the retailer can get the product “exclusively” (even for just a time window) then it hopes to get more customers shopping at its store or watching its video channel vs. its competitors. As a product or service you can often trade short exclusivity periods for the retailer’s willingness to spend marketing dollars promoting your product or give you better merchandising in the physical or virtual store. So Why Does This Matter? If you create a truly unique product that is defensible and doesn’t have easy substitutes you have the ability to win deeply loyal customers and grow large and profitable. If your product can easily be copied, as soon as you are successful it will be. In an era where…

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