Last weekend I watched an episode from History Channel’s The Food that build America on how Hershey’s battled Mars, Kellogg’s fought Post Toasties. The irony is a hundred years later; brands still have significant challenges to exist. My boutique consulting business Blue Cape Ventures, has ensured that I speak to brand executives in various sectors. 

The past three years have changed my perception of how brands should manage short to medium goals. Brands of all sizes are in different stages of pain which no-one wants to talk about due to fear or concerns that they are in the minority.

The fundamentals are missing for brands

Brands using wholesale as their primary business model have no strategy and are dying. Business models which were relevant have come under pressure due to change in customer behavior. Simultaneously, large CPG brands will tell you that they have X amount of e-commerce sales – it’s almost always wholesale to platforms such as Amazon, JD.com, and Walmart. Wholesale provides unintended challenges as undifferentiated brand websites lead to direct competition with various channels. I have seen the facial experiences from executives realizing that their wholesale partners are not real partners who have the brand’s best intentions are a whole other story.

Pallets and cases versus drop-shipping single orders, another signal of the pain brands are in. Selling pallets to wholesale customers is entirely irrelevant when selling to consumers. Supply chain executives almost always want to spit out whatever thought about the fact that they can’t ship consumers in 2 working days. Ask these consumers if they wish to receive their Walmart or Amazon orders in 48 hours? – the answer is almost always a loud yes. So large behemoths can do it, but my employer can’t? Mind-blowing. 

I have also learned that an agile supply chain is akin to a swear word with brand executives. Why? You see, it’s going to cost us many thousands of whatever currency to interact with our legacy order management software. “As e-commerce is an unprofitable business, we have no urgency to sell to the consumer.” I find this thinking so short-sighted that one understands why brands are going bankrupt almost weekly. 

The missing soft skills

Skills and communication. How do you deal with executives who have never shopped online? Leadership has to drive this and ensure that junior executives, who are the target demographic, can communicate to the organization. Finding experienced e-commerce executives is hard, and onboarding them in the current conditions is a challenge. The entire organization must understand the importance of an e-commerce pilot and understanding its long-term implications. If you want immediate profits or significant growth – it requires skill, talent, and almost always time. Also, ensure that every part of the business understands what is going on. You cannot have a situation where technology, brand, marketing/sales are not aligned. It makes your organization look unprofessional to a third-party (I have had a few of these in the past 12 months).

Brands must understand that in the developed markets, you have six months to execute an e-commerce pilot. I keep hearing that vaccines change everything – valid, but consumer behavior has changed, and we are months away from normality. Please do not talk to me about creating a marketplace or some silver bullet to fix your problem. 

The medium-term future

These same executives will then ask why PepsiCo, Heinz, Mars, and others are creating direct-to-consumer businesses? In various cases, the most experienced executive will say something akin to “make headlines in the correct publications.” While many think that these direct-to-customer businesses are irrelevant – the truth is that these incumbents are trying to future-proof their business. Yes, the company will not create double-digit millions in sales, but that is not the point.

How do incumbents such as Oceanspray, Mars, PepsiCo think about the future? They are working with relevant startups to execute brand experiences, use AR/VR and the like. Using companies like Radicle Insights*, they can find the relevant companies to move them forward, receive investment, or be acquired. 

The March 2020 / pre-COVID-19 world is not coming back. Brands must understand that the future looks like nothing from the past. If this post hit some nerves while reading, then you need to act. The clock is ticking; consumers are going to go elsewhere. Competent brands like Nike and Apple are exceptions and not the norm. 

* one of my partners