This article is part of the “What's next in fashion wholesale” 2023 Trend Report, a guide for brands outlining the key trends happening in wholesale today, from changing end-consumer needs to how technology can help wholesale sales teams sell better. You can read more about the report here.
What does the consumer journey look like today? Can you describe it clearly, or does your mind get stuck trying to navigate the many channels and touchpoints, making it difficult to draw a line between the different steps? The consumer journey has never been so complex and widespread. It can start with a trending hashtag on TikTok or while browsing in a local shop. It can come through a Google search for reviews, or when asking a friend about what to buy for that special occasion.
The Changing Landscape of Consumer Behavior
The lines that divide digital and physical channels have been blurred by consumer behavior. According to a Salesforce research, the end-consumer no longer sees any differences between the channels they decide to buy from. How can brands confidently navigate these spaces and ensure they are reaching the right audience?
At the same time, the consumers’ decision-making process has become more selective and better informed. After a period of "revenge spending",(1) consumers are increasingly mindful of their expenditure. They want to find answers to their questions about the product and its performance while browsing, whenever they are. No matter if it is a small mom-and-pop shop, a Direct-to-Consumer ecommerce, or a big department store. Consumers are looking for a place where they can find expertise and help if they need.(2)
So how and where to find the consumer at the most convenient purchasing stage?
"We need to find the consumer where they are, where they are shopping, and wholesale partners are a key ingredient to this."
Benjamin Gallais, Lead Digital Product Manager at On
The Privacy Imperative and Data Challenges
Let's not forget that data security top of mind for consumers, and that sharing their info for advertising reasons no longer seems attractive.(3) Privacy controls for iPhone users, for example, are limiting the amount of consumer data tracked and impacting large ad companies such as Meta.(4) Marketplaces and e-commerce stores are directly affected since their conversion rates highly rely on consumer data (and advertising) to bring consumers into the buying journey.
The consumer do not want their data to be used for the wrong reasons. At the same time, they are more inclined to buy when there's a level of personalization in the experience.(5) Contradicting? Not at all. It's a matter of trust and control. The right amount of data, in the hands of the right companies, can be a game-changer for consumer experience. New brands such as Unspun, that make custom jeans using 3D body scans, are gaining traction in proving that data can and should be used wisely.(6)
How to overcome this data challenge? Since data protection and privacy requirements are making harder for brands to find and engage with consumers through digital marketing, getting first-party (end-consumer) data is a golden ticket to understanding buying behaviour. And here’s where wholesale partners and third-part marketplaces come in.
“We only have seen the tip of the iceberg when it comes to smartly using data", says Bas Kemme from IntoTheNxt. As he adds: “I was perplexed when I saw Zalando tell a major German fashion brand what to sell, just analyzing and presenting their data on assortment, pricing, promo effectiveness.” The potential of a well-crafted consumer dataset can be crucial for sales outcomes, but also impacts production: “If both retailers and brands get better consumer data - and use it wisely - we will have less waste from overproduction and inbound/outbound logistics” concludes Kemme.
Are DTC and B2B competition?
Part of analysing end-consumer data is understanding their journey from brand/product awareness to purchase decision. The physical journey impacts the digital one, and vice-versa, making the distribution strategy more complex, but also fluid. Salesforce reported that 60% of digital sales are influenced by store experience.(7) Consumers want to have the ability to purchase from any channel, and of course, they expect a consistent experience across whichever channel they choose.(8)
Could this lead to channels cannibalisation? Are DTC and B2B competition?
For Jeremie Blondel, from The North Face, there is an old concern from the industry about the competition between DTC and wholesale channels. That the growth of DTC could potentially replace multi-brand retail. But this apprehension is in the past, he says: “now it's time for collaboration in the channels.”
DTC and B2B channels bring different things to the table. While brand-operated stores - both online and physical - can collect more first-part consumer data, third-party retailers offer industry expertise and curation.
According to McKinsey and The Business of Fashion, marketplaces like Net-A-Porter, Matches Fashion and SSense, focused on online wholesale business models, are using their expertise to match brand inventory to customer demand. Also, they manage curation and optimise pricing and merchandising. “By focusing on these core strengths, they have been able to continue to create significant upsides for brands, including cementing consumer trust in the retailer as a curator. This, in turn, has enabled them to drive conversion as well as augment brand positioning — supported by dedicated content and marketing”.(9)
A successful distribution strategy for the upcoming years involves understanding where to add value for your consumers and delivering different levels of engagement wherever they go. It also involves strategically choosing your retail partners to maximize the valuable data and knowledge they can share.