By Chris Griffin, CEO at Anatwine
To date the options for any brand looking to go international have been expensive and high risk. Choosing to open a flagship store in a new city, such as Beijing, in tandem with local offices and a wholesale operation can cost millions of pounds. And while brands are also keen to exploit the growing ecommerce markets and middle class spending power across the world, few want to create a dedicated online presence in each market – or invest in massive country by country marketing campaigns to build awareness.
The alternative is to create direct relationships with leading retailers, which is a tried and tested model. However, retailers are also wary of adding too many brands or too much stock to a portfolio and will typically only stock a tiny subset of the overall range, making it tough for a brand to fully convey its positioning and values to a global audience. Furthermore, even the best retail merchandisers typically take several seasons to understand how customers are responding to each new brand and effectively refine the offer to maximise sales, creating frustration for a brand that knows it is losing out on significant potential sales.
Whatever approach adopted, a brand’s global expansion has traditionally been slow, expensive and high risk. Yet the opportunities internationally are compelling. So what’s the option?
Real Time Fulfilment
Brands need a way to be far more agile, to move in and out of new geographies without overhead or risk. The evolution in global logistics, which now makes both national and international product distribution both low cost and rapid, is supporting a completely new – and risk free – approach. Top brands now have the opportunity to leverage a real time network that delivers access to the top retailers in each geography and demographic.
Using this model, the retailers have direct access to each brand’s stock, underpinned by a standardised and guaranteed customer experience. This real time network supplements the existing wholesale model, enabling the retailer to extend the range on offer without the inherent risk associated with investing in significant additional stock up front. With no budget or warehouse constraints, a retailer can radically expand the range and offer online customers a far broader array of each brand’s product range. This improves the customer experience and enables the brand to build its reputation and rapidly increase product sales from day one.
Of course, retailers will not typically offer the entire range for every brand. However, with real time analytics, the retailer has a head start in determining the best product mix for its customer base. For example, comparing the brand’s sales in similar countries or across a similar demographic mix, in conjunction with a brand’s top selling products, can provide good insight into which products should be made available immediately. The retailer can then continually track performance and use analytics to refine, expand or reduce the range at will.
The contrast to the traditional wholesale model range refinement process is stark. While in the past a retailer had to build understanding of the customer/brand relationship across each Winter, Spring, Summer and Autumn season, now it can gain that insight within days or weeks. Rather than spending years to refine the offer, potentially resulting in lost sales for both brand and retailer, now the retailer can maximise the range, remerchandise products and drive up incremental sales within weeks.
For any brand, the ability to build strong relationships with the leading retailers in each new geography is compelling. The retailer’s profile will support wider brand exposure; while the speed with which the retailer can combine its own customer knowledge and merchandise expertise with real time global sales analytics to refine the offer is transformative. With no risk and no cost, a brand can be confident that customers across the world can immediately buy the popular and best-selling new products, reinforcing both global brand value and customer experience.
For brands, the extension of the current model to incorporate real time distribution fundamentally changes the global expansion model. Brands already wholesaling to retailers can build on the relationship by significantly extending the product range on offer; while brands looking to break into a new market can do so without the overheads; there is no need to set up a local warehouse and office or employ a local resource team – everything can be done from HQ. Critically, this model provides a degree of immunity to global volatility - with international reach a brand can move in and out of markets without incurring additional costs and can maximise the economic strength in different countries at different times. The challenge of determining which geographic area to prioritise have gone: the vision of international success can now be realised to deliver significant incremental sales across the world without any of the attendant cost or risk.