Over the last four weeks I have attended three trade shows across Europe. They are traditional shows and are in truth a natural habitat for myself and the team. Each week brought with it at least one 20 hour work day and it was great. For me there’s nothing like the adrenaline rush I get from meeting new people and discovering new businesses and products. I think that sales and retail in general is one of the few industries that give such an immediate rush all built around sales and personal relationships.
The businesses I met were focused on many different markets, everything from consumer tech, to IOT plays to pet tech and even pet foods. But one thing stood out to me across all the sectors I saw. That one thing is the amount of companies and in particular start-ups that see the direct to consumer channel as the play. What I mean by that are companies that start their journey by targeting the direct to consumer space. In theory this is a quick and relatively low cost way to get into the market. And if you get it right perhaps you too could be bought by a consumer giant just like Dollar Shave Club’s $1 billion all cash deal. However the companies I met were not selling razors. They were selling products that had retail prices ranging from €25.00 to €300.00.
And here in lies a problem. The companies in question did all their costings and forecasting based on their production costs etc. and then issued their RRP’s accordingly. They then hit the market. Now brand building is an expensive job, getting traction and repeat business is also a time and cash hungry endeavour. When you add into the mix, even with the exponential growth of eCommerce, on-line sales still only account for 10% of global retail sales so it needs to be part of the story. That means if you’re launching a consumer product in 2017 physical retail should still be high on your agenda. But if you’ve set your pricing policy to go direct to consumer you find out very quickly that distributing to physical retailers is out of the question.
Why? Well unless you happen to have physical infrastructure in each country you wish to service you will need to appoint distributors to handle the sales and distribution functions. And if you’ve set your pricing to go direct to consumer there’s just not enough margin to interest a distributor. The knock on effect is if a distributor does get involved there will not be enough margin to interest the retailer. It gets worse again still. By the very fact the business went direct to consumer they have invariably set the maximum RRP of their products via their on-line store. Any distributor, retailer or consumer will discover this within minutes of coming across the products in question.
So what’s the solution for these companies? Well not to put too fine a point on it, we are, WWW.COVAWORLD.COM. To put it simply we provide a dating or matchmaking service for brands, suppliers and retailers. We are now working with the direct to consumer companies we met over the last four weeks and giving them new channels to market. We enable the companies to get into the physical retail space without all of the costs associated with the traditional distributors and wholesalers. We go further still by giving suppliers and wholesalers to the physical retail space a low cost highly efficient digital distribution model via our platform.
We think the future of retail is exciting. The physical store will not be going anywhere anytime soon but how we interact and experience them will be very different. I think through platforms like COVAWORLD that difference will be coming to a retailer near you very, very soon.
Any thoughts you’d like to share? You can get me at firstname.lastname@example.org Twitter @covaworld