The digital ecosystem has thrown legacy FMCG distribution into disarray, both, with its speed and shortened feedback loop, as well as the availability of a plethora of online fulfilment options. A founder today is faced with a dazzling array of channels, audiences, and approaches to choose from. How do you pick your Go-To-Market strategy?
Q1. ONLINE OR OFFLINE?
Leverage offline for scale… but only after you build your brand equity online. Create your brand equity and your first set of loyalists online, so that when you move offline, there is organic customer pull instead of channel partner led customer push.
Mamaearth is a great example of an online first brand built on its D2C website and online marketplaces – which moved offline seamlessly, thanks to high consumer brand awareness, recall and resonance. It also helped the brand to compete and win against legacy category leaders like L’Oréal and Dove.
Use online as a launchpad
Online allows you to build a high degree of brand recall that acts as a springboard when you explore larger but more crowded adjacencies. For instance, Mamaearth started out as a baby care brand, but is now a runaway success in the beauty and personal care space which is a huge market. Yogabar built tremendous brand recognition through its energy and snack bars, and leveraged it to scale their breakfast cereals business operating in a much larger category.
All online, all offline, or omnichannel
Eventually most brands go omni-channel, the only question is when and not if the timing of which largely depends on the nature of the categories in which they operate. Brands like boAt stayed online focused for a long time primarily leveraging the online marketplaces for scale while others like Yogabar went offline fairly early in their journey.
Some categories need to go offline early
We’ve seen that some kinds of products need an offline presence to truly succeed. High-value offerings like jewellery build trust with consumers by having a “touch-and-feel” touchpoint. For example, BlueStone moved from being fully online to building a large offline store footprint which significantly benefited even the online channel as multi-channel sales synergies kicked in. CaratLane did the same, and its acquisition by Tanishq further strengthened its brand credibility in the consumer’s mind. Brands that require complex decision-making, too, benefit from an offline strategy, like Lenskart, which is truly omnichannel to serve its consumers best.
Q2: Q-COMM, E-COMM, OR MARKETPLACE?
Part of the bewildering set of decisions today’s founders and marketers have to face is matching channel to SKU, or set of SKUs. Here, the rule of thumb is that impulse purchases with low AOV are better suited to quick commerce channels. E-commerce marketplaces are a preferable channel for brands with higher AOVs. If you must take a lower AOV offering to an online platform, you may need to adopt the inventory selling model for the unit economics to work. Finally, the D2C website channel works well if your products have a high AOV along with a high repeat purchase frequency.
We’ve seen that quick commerce has fundamentally changed consumer behaviour today. For instance, comfortable in the knowledge that grocery items are now available on-demand in 15 minutes or so, several grocery basket items have moved from a planned weekly / fortnightly purchase basket to a need based immediate purchase.
The q-comm opportunity
Q-comm channels are transaction-focused platforms and aren’t built for product / brand discovery unlike the e-commerce marketplaces, hence they work better for a brand’s “hero” SKUs or bestsellers which are better known among the consumers and sell faster.
The challenge of shelf life
It's often said that perishable products are better suited to offline distribution, but products with a longer shelf life typically tend to fare better online. Innovation is chipping away at this traditional wisdom, too, as brands like The Baker’s Dozen are exploring packaging techniques that retain the freshly-baked quality of their products for longer.
As The Baker’s Dozen’s Sneh Jain explains, “Operational aspects decide our GTM strategy or strategy overall many times. As our shelf life evolved, our distribution strategy has evolved. We can talk about brand, messaging and positioning; but the crux of it all is that shelf life decides how far you're going to go.”
Q3. HOW WILL YOU EXECUTE?
The best-laid GTM plan will fail without the right execution team, and it’s crucial to hire wisely. In our experience brands that have invested in building out their teams ahead of scale have generally scaled faster - getting in place the key revenues heads (D2C, Marketplace, Offline) and allowing them to build out their next level teams is critical for the scalability of the business. Further, it also helps to employ consultants who can give you specialised guidance at the early stages of the business.
In our portfolio, we’ve seen Mamaearth build its organisational structure as it scales. VS Kannan Sitaram describes it well in his blog about the brand’s flight to unicornhood: As the brand widened its offerings, an organisation was being built to support this growth… building multiple organisational pillars, and choosing to work with some of the finest, most experienced people in the field.
As Slurrp Farm’s Shauravi Malik says, “Entrepreneurs who want to start today do not need a massive sales team to start with. You need to figure out in each city, ‘What are your top stores?’, ‘Where exactly are my customers?’, and ‘Where should I meet them?’, and work that through. And that should really sync with your online strategy in some ways.”
For more insights on scaling up, do watch the entire session of Whose Brand Is It Anyway?!