Amazon and Walmart’s Ongoing Price War Motivates Brands to Go Direct

By: Jason Nyhus
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Last modified: December 14, 2017


Any company that sells its product via retailer knows full well the nuanced relationship between brand and merchant. As this recent Recode article points out, the crackdown among retail giants like Amazon and Walmart to offer the lowest market price means many brands are under mounting pressure to sell their products for less, cutting into — and sometimes all out eliminating — profit margins.

While we don’t typically recommend that brands pull away from retailers entirely, we also believe there is immense value in selling directly. Channels can and should co-exist, but they need to justify their value and positioning. The reality of today’s retail price wars further underscores the need for this kind of balanced approach and the important role a direct-to-consumer ecommerce channel can play in a go-to-market mix. A direct channel can help brands reduce their dependence on retailers by empowering them to:

  • Build trusted relationships with their customers that transcends the retailer
  • Own their customer data
  • Compete with a distinctive and wider selection of products and services
  • Control their brand story
  • Create a compelling brand experience

While there will always be shoppers who are solely motivated by price, there are other consumers willing to spend more for choice and services as well as an experience with the brand. Consider that purchasing directly from a brand’s website converts 3-5 times more than a retailer. The ability to buy limited edition products, assurance that customer service interactions will be easy, or a notion that products bought from the source are higher quality are all differentiators that a brand can use to sway a customer into buying direct.

Heading to CES? Let’s connect to discuss how we can help you reduce your reliance on retail partners with a direct-to-consumer channel. Pre-schedule a meeting with our team today.

Read the full Recode article, Amazon and Walmart are in an all-out price war that is terrifying America’s biggest brands, and learn more about how to take control of your customer relationship with a direct ecommerce channel.

 

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