Why supply chain optimization holds the key to achieving personalization as part of a direct-to-consumer model

Why would a consumer product goods (CPG) brand look to adopt a direct-to-consumer (D2C) model? Or should the question be, “Why wouldn’t they?”

Personalization is the aim of the game in a post-pandemic world where consumers are not only prioritizing omni-channel commerce and are doing so for a broader range of products than ever before. And if suitable levels of personalization are to be reached so that consumers pick your brand out of the crowd, then direct, actionable data is needed.

This data is needed to achieve market growth off the back of more direct and continuous feedback from customers. It’s needed to guide new product unveilings or more bespoke marketing. It’s needed to spark consumer interest and awareness around products. And it’s needed to trigger more regular income through the possibility of subscriptions.

Ultimately, 49% of consumers are likely to become more loyal to a brand when content is personalized, and 62% go as far as to say they “expect” – not just “want” – personalization, as a gauge of long-term customer traction. A D2C model offers the most straightforward avenue for CPG brands to generate the extent of data required to create stronger brand loyalty and to drive increased sales for CPG brands/manufacturers entering the world of retail.

Doubling Data

For CPG brands, D2C means cutting out the middleman between them and customers. Data is received first-hand, making the decisions made off the back of that data entirely tailored and applicable. This heightened understanding of consumers who already have a direct interest in your brand, is more likely to yield a product and marketing offering that aligns with their expectations.

Already, larger-scale CPG operators will be accumulating hundreds of millions of consumer data records in the aftermath of COVID-19’s peak and through the resultant rise of e-commerce. By enacting a D2C model that makes that interaction and exchange of data direct and more pronounced, there is a real possibility of even doubling that extent of consumer data records in as little as five years. Inevitably, this paves the way for two key benefits: a greater overall pool of data to gauge industry and consumer trends, which might dictate ultimate decision making; however, it also produces a larger pool of individual customer profiles to create more personalized offerings.

What do your own customers like? What don’t they like? What products should you bring to market as a result? How should you bring them to market?

Perhaps surprisingly, CPG has been comparatively slow in asking these questions as part of a more direct model. In fact, the e-commerce channel as a whole has yet to be exploited by many. But even the most unexpected of product arms – take snack foods and drinks for example – are now subject to consumer change, where brand preference, regular purchases or even subscription models are in demand.

The Task Ahead

So, where to start? If this is the landscape, and these are the opportunities, then it seems a no-brainer for CPG brands to branch out and form this e-commerce presence. And, indeed, it is an option that more and more are exploring. However, when doing so, they quickly realize the scale of supply chain task before them.

It’s a task which looks to decrease distribution costs despite now enacting multiple small shipments instead of larger single shipments to retail outlets. It’s a challenge that seeks to balance existing B2B relationships with this new D2C offering without damaging availability on either side of the equation. It’s a complexity that implicates last-mile considerations across a newly fragmented and dynamic footprint.

All of the supply chain staples that retailers have been supposedly mastering for years already – but that continue to be a struggle for even the most experienced and established of businesses in the current climate – now need to be mirrored, or even bettered, by CPG brands working almost from a standing start.

These complexities take on even more significance for CPG operators who have numerous brands under their umbrella – each with their own nuances around customer footprint, distribution conditions, regularity of shipments and the business partners required.

Plan for a Successful Last Mile

Simply put, if a CPG brand wants to make a successful transition to a D2C model, then these supply chain considerations need to come first. In particular, order management software (OMS) that taps into the need for a personalized service, can trigger a chain of actions that ultimately lead to the right products being directly delivered to the right customers at the right time.

In this vein, data isn’t just informing product marketing, but also fulfillment – when customers want to receive items, and in what way. For some brands, this will bring into play their omni-channel presences in the form of physical stores for collection, as well.

An order management (OMS) solution makes sure that the first mile is every bit as important as the last mile, fostering a data-driven, artificial intelligence (AI)-induced, interconnected and automated infrastructure where decisions are optimized, and efficiencies are found.

This means putting planning at the forefront of the entire process, by ensuring inventory locations are optimized according to where customer demand is. It means designing a flexible fulfillment network that can be agile to customers’ differing delivery or collection preferences. It also addresses and optimizes the sourcing and management process, as inventory is attained from multiple locations, regions and suppliers.

Increased Sales Through Improved Personalization

Ultimately, by putting the customer at the center of order management, the very first moves lay the foundations for the final phase to hit its mark. When adopting a model that leaves no room for any excuse around middlemen in-between, this notion is of paramount importance.

By adopting a system that can help manage, store and filter customer data, before then informing optimum forecasting, inventory placement and distribution channels, CPG brands can begin to capitalize on the D2C opportunity in front of them.

This opportunity involves heightened customer engagement, to leapfrog traditional retailers and strike right at the heart of demand with new products. The ultimate upshot and lure then point to an increase in online sales, via a model that can promise consumers the level of personalization they continue to crave.

Why Blue Yonder

Blue Yonder’s Commerce and Order Management (OMS) microservices can be deployed augmentatively or collectively to help retailers quickly address pain points.  The solution leverages AI and machine learning (ML) to deliver customer-centric experiences for inventory availability, order optimization, order orchestration, and fulfillment.