The increasingly connected and online world has dramatically changed the way humans live and conduct business. Electronic commerce (“eCommerce”) – the buying and selling of goods (or services) over the internet –is a key driver of this change. Now comprising over 13% of total retail sales in the U.S., eCommerce has fundamentally changed the consumer product channel strategy.
Historically, of course, many consumer-product companies, especially those offering “high-end” products, carefully controlled distribution. This helped protect brand identity and in many cases offered the consumer a better offering if the product required a complex sale and service requirement.
What we have witnessed, however, is that many of our customers and prospects have pivoted to integrated, direct-to-consumer (“DTC”) models to gain market share and visibility. Contrary to popular opinion, we have found that such companies are able to distribute online without retribution from from the brick-and-mortar retail channel – so long as they don’t compete on price.
Further, we are finding strategic and financial investors focusing on the DTC option. It used to be asked “when are you going to sell to Wal-Mart” but now it is “when are you going to get a eCommerce web site up?” Indeed, every situation is unique and nuanced, but if you would like to discuss our findings as it relates to channel strategy and how that might impact a sale or capital raising process, please reach out to Peter Morgan, Managing Director, at (415) 388-5684 or peter@thespartangroup.com.