How to Start Building Your D2C Channels

Presented by:

Mudit RawatChief Strategy Officer

Agenda

- Intro

- Trends and Rise of D2C

- The New Retail Playbook

- Q&A

Logistics

Digital Merchandising, Assortment & Pricing

Strategy

Channel Design Development, &

Management

Commerce

Payment Processing &

Revenue

Fulfillment Strategy & Fulfillment Center Design

Warehousing Execution

Automated Kitting & Order

Assembly

Last Mile Selection & Management

Strategy

• Identify & develop unique value of DTC proposition

• Product identification, differentiation & economics

• D2C channel management, consumer analytics & transaction management

• Select fulfillment center locations based on demand & company’s supply chain

• Choose layout, storage, robots, etc. for efulfillment requirements of a business

• Variably priced fulfilment center processing

• Agile robotics enable ultimate sortation flexibility

• Last mile management through partner network

ECOSYSTEM

End-to-End Program Management & Customer ServiceData Capture & Analytics (Customer 1st Party Data)

Enabling Technologies

D2C Enablement: From Strategy to Delivery

Macro Trends Impacting CPG Brands

By 2022, consumers could be spending

$100Billionper year on groceries online

eCommerce is growing, but why adopt a D2C strategy?

Before I answer the question, let’s define D2C

In a direct-to-consumer model brands sell directly to consumers, bypassing the long-time model with a retailer in the middle – in simpler words, brands move from a B2B company to

a B2C company and start shipping ‘eaches’ and not ‘pallets'

Market trends directly impacting CPG brands

CHALLENGER BRANDS

SHIFTING CONSUMER

PREFERENCESRISE OF AMAZON

Consumer tastes and preferences are evolving and they are demanding more out of CPG brands

Long-term benefits

▪ High-protein, plant-based, low-carbs, no-sugar, vegan, gluten-free, etc.

▪ Plant based products

▪ Chemical-free formulas

▪ Vegan, gluten-free options

Visually appealing

▪ Bold solid colors, in packaging

▪ Instagram ready

Lifestyle-focused

▪ Personalized products

▪ Convenience focused

▪ Products bundles with services

▪ Promotes energy, quality of life, sleep

Smaller D2C and boutique brands continue to emerge and disrupt established players

Disclosed funding: $295M

Snapshot of D2C brands directly competing against P&G

11

D2C brands are not only growing fast, but also doing it more efficiently

12

Retailers own the customer but CPG brands continue to spend significant dollars on digital marketing without getting measurable ROI

- Cannot measure ROI

- Driving sales to retailers who are

selling many other categories

(including competitor products)

- Hard to measure time taken for

customers to actually purchase the

product

- No access to critical customer and

transaction data

https://www.emarketer.com/Chart/US-CPG-Consumer-Products-Industry-Digital-Ad-Spending-2014-2020-billions-of-total-digital-ad-spending-change/186604

Expected spend on digital

marketing in 2017

$7B

Why not focus only on eCommerce marketplaces like Amazon?

The unintended consequences of Amazon’s rise are now being felt

- Amazon is driving consumer behavior and the

relationship with the end consumer, not the

brand

- Private label explosion

- Customer specific data masked

- Alexa reduces brand choices as it focuses on

categories

- Marketplace monopoly

Rise of Amazon’s Private Label

- Amazon’s private label brands have

grown from around 30 in 2017 to over

100 as of March 2018

- Amazon’s private label business could

be worth $25 billion in sales by 2022

- Amazon also has access to Whole

Foods’ 365 private label brand

portfolio and continues to promote it

on Amazon and through on-demand

delivery channelshttps://blog.iserve.com/the-rise-of-amazon-private-label-brands-how-can-you-compete

How to address the new market reality –

“The New Retail Playbook”

“

Pure eCommerce will be reduced to

a traditional business and replaced

by the concept of New Retail―the

integration of online, offline,

logistics and data across a single

value chain.

”

- Jack Ma, Alibaba Founder and Chairman

New Retail requires brands to consider commerce as ‘Uni-Channel’ centered around consumer experience

Seamless user experiences

Efficient & agile supply-chain

New business models Collect and analyze data, take real-time

actions

Unilever Case Study – Baby Dove D2C gifting channel

The Program

The My Baby Dove D2C program directs customers to a branded microsite, where they can create personalized Baby Dove products and have them delivered directly to their home.

Unilever Case Study – Baby Dove D2C gifting channel

Key Objectives

1. Add new revenue streams2. Obtain consumer insights3. Strengthen the relationship between the consumer

and brand (email opt-in as well)4. Market differentiation - provide a unique product

offering to Canadian customers

Unilever Case Study – Baby Dove D2C gifting channel

Seamless user experience

A mobile responsive eCommerce site with minimum distraction, easy payment options

and order tracking

Efficient & agile supply-chain

Collaborating across the value chain to build a model that

enables on-demand printing and daily

fulfilment of orders

New business models

Consumers buy directly from Unilever and are

willing to pay a premium price for

personalized products

Collect and analyze data, take real-time actions

A comprehensive suite of customized dashboards

enabling brands to access critical insights in real-

time

Brands need to ensure better visibility, transparency and agility across the value to chain to succeed in the world of ‘New Retail’

Accelerated innovation cycleContinuous experimentation with limited understanding

of demand

Short runs, quicker go-to-market channels

Localization and customization based on the

market and local environment

Efficient supply chain which brings brands closer to your

end consumer

Cost Management

Quality & Traceability

Sustainability & Waste Reduction

Service & Speed

Building direct relationships can unlock tremendous value across the organization

- Create your own unique branded customer experience

- Get access to critical 1st party data

- Drive customer intimacy - the data collected is better because every transaction and

interaction is captured. It’s one CRM. It’s one store, where everybody knows your name.

- At scale, the product gross margins are at least twice of eCommerce (e.g. 65% versus

30%). The contribution margins can be 4–5x higher (e.g. 40–50% versus 10%).

Name: Mudit RawatEmail: mrawat@nexusfx.comPhone: 919.418.0361

Contact Us: