UKNM: retailers & brands

[Ian Tester]

very very interesting question this. i've got a fair amount of experience

both from working for a big e-comm player (who must henceforth remain

nameless due to their new owners shocking defacement of the good lampposts

of camden), and from some strategy work looking into category expansion.


a great example of the problems is the cosmetics industry. 3 major player

control well over 60% of the global market - revlon, l'oreal and estee

lauder. many many players tried and died trying to launch this business

online (they're all consolidating / going bust heavily right now, as we

predicted earlier in the year </smug>). our client goes to the big 3, tries

to get hold of some stock, and gets a blatant turndown on the basis that

they can't afford to alienate their core trading partners (the very very

large department stores such as federated), and that additionally, they're

not prepared to have their products sold in an inappropriate environment

(imagine trying to create the analogue of selfridge's perfume dept online).

so pretty well all the sites launch without the 3 category-killing brands.

even sephora.com, which is both a major offline in its own right as well as

a amajor distributor for the brands, can't get a look in. if they carry any

grey label stuff, they are instantly in major major trouble. result - online

retailers deprived of over 60% of the world's most popular stock.

interestingly, some of the big 3 (can't remember which) are now taking

strategic stakes in the businesses left standing. mind you, if i was a

prestige brand, sold in places such as the major dept stores, where you have

a huge amount of control over positioning, branding, pos and pretty much

everything else, i'd be nervous too.


now the e-comm stuff - we were working with very high-end brands, most of

whom had a minimal web presence and almost all of whom had exactly the same

2 concerns as the cosmetics guys, but were working in a market where no

retailer had the real scale of the department stores. we had to *seduce*

them into supplying us most of the time, offering them editorial control

over microsites, and one of the major reasons we spent so much on our "spin

& zoom" technology was that this was a killer app to make suppliers sign.

they just weren't willing to leave their products online as a small crappy

gif. and i don't blame them - they live or die by their branding.


yes brands should beware when moving to the web, because their offline

trading partners could well take umbrage, especially if the market is

composed of a few, strong players. they should also be very very sure that

the etailer can deliver the kind of awesome service that you'd expect

offliners to provide. we did that by mimicking the queues you have to endure

in some of the best stores, and by not letting commoners with macs into the

store ;-0


some of the more interesting examples of suppliers going direct recently  -

umbro.com (awful, awful site), reflect.com from P&G (great concept), and

levis (who own their own stores as well as relying on retailers).


i've just realised that this doesn't read very well, but i am full of flu,

so i don't expect too much ;-0


i


Ian Tester, Business Accelerator, EMAP Digital

http://www.emap.com - building the most exciting media company in the world

Exmouth House, Pine Street, London EC1V 0JL, UK

T 020 7868 7574 F 020 7868 7514 M 07880 557692 E

ian [dot] testeremapdigital [dot] com

AIM iantester



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