Direct to consumer has its challenges


Following on from my earlier post describing Endava’s Supplier and Partner day, one of the presenters talked about how some brands have faced new challenges when moving into the direct to consumer space.

Many of the brands that we see, in face most of the superbrands that we recognise, require a retailer as a middle man. 

The top 10 brands of 2011 are:

  1. Coca-Cola 71,861 ($m)
  2. IBM 69,905 ($m)
  3. Microsoft 59,087 ($m)
  4. Google 55,317 ($m)
  5. GE 42,808 ($m)
  6. McDonald’s 35,593 ($m)
  7. Intel 35,217 ($m)
  8. Apple 33,492 ($m)
  9. Disney 29,018 ($m)
  10. Hewlett-Packard 28,479 ($m)

Out of those 10, you usually need to walk into a retailer to buy Coca-Cola, IBM, Microsoft, GE, Intel and HP’s products. Of the remaining four, I would estimate most people buy Apple and Disney products not in an Apple or Disney store, leaving only Google and McDonald’s as direct to consumer superbrands. I think you get the picture.

The Web created a link between brands and consumers. Remember, many brands took a while to create a website, and it took several years to break out of the ‘brochureware’ style site. 

Interacting with consumers? It took the social media revolution for most brands to start communicating. 

However the web didn’t create customer service issues. This started happening with mobile apps. The two main reasons for this is the fundamental difference between web and mobile apps; and charging for content.

The first point is that a website can be changed by the brand, and the customer won’t have access to an older version of it. Now, a brand can produce a mobile app for a current campaign, and needs to think what will happen to that app once the campaign finishes. Think of all those London 2012 apps out there on smartphones… what will happen to them after the Olympics? They will be legacy applications, and it takes a strategic brand to think about the migration post the campaign. In the web world, you can simply redirect the user from the finished campaign to another page. 

The second point is when brands charge for apps, or for the content inside an app. For many brands, it’s the first time they are taking revenue directly from a customer, and this brings on customer service issues they have previously never needed to deal with.

Photo courtesy of Katie Lips on Flickr


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