The times they are a changin’. Today’s relationships between CPG companies and retailers are now often characterized by a new dynamic—a working partnership, as opposed to the strict vendor/buyer model of the past. How can your organizations forge the best partnerships, and capitalize on this important transformation?
There are some big changes afoot in the online retail industry, one of which is the nature of the relationships that CPG companies and retailers have with each other. Increasingly, brands and retailers are treating each other as partners —as equals in a symbiotic relationship—rather than conducting business as usual in their typical seller/buyer roles.
What does this new type of relationship look like? Who are today’s champions of it? And how can forward-looking brands capitalize on it?
To answer these questions, I recently spoke to two experts—Emma Nemtin and Phil Chang, who are the Marketing Director and Head of Product Strategy at Hubba, a leading product information management provider. Here’s what they said:
“H-E-B is a great partnership example, and so is well.ca”
Emma and Phil cited H-E-B, the Texas grocery chain, as a prime example of a retailer that strives to partner with its vendors. “What we’ve seen is very striking,” Emma says. “They seem to have a pretty amazing relationship with their vendors.”
Likewise for well.ca, the online Canadian health and beauty retailer. “When brands are grading their retail partners,” Phil states, “they give well.ca the highest marks. Because well.ca is open about what they need and when they need it. They appreciate their vendors, and this generates a lot of excitement with suppliers who want to do a great job for them.
“What makes them so different? They’re truly partners. For example, they never yell. They’re innovative and build cool campaigns. And they’re enthusiastic about the content the brand people provide, as well as larger marketing initiatives. Their attitude toward the brands is, ‘Great, you built the shell. I can take pieces of it and customize it, and we’ll use as much as we can.’ Brand marketers love them, and that’s where the money is.” (And when considering the bottom line, did you know that digital interactions will soon influence 64 cents of every dollar spent in stores?)
How can brands establish relationships with retailers such as H-E-B and well.ca? Here are five tips that can help you get started and/or stand out:
Give buyers a steady stream of good images and reliable product info (it’s a case where data integrity is king)
Nothing aggravates buyers more than bad data. It means lots of work and re-work. Want an example? Consider website pages where 30% of images are wrong, outdated or incorrect. The consumer gets shipped the wrong item. Or suppose a consumer finds an HP computer online—but when they go to BestBuy or Staples with the model number, they get completely different specs. It’s vital to execute as flawlessly as possible here—to not only be pin-point precise with your product descriptions, but to make your visual content as compelling as possible.
Feel free to acknowledge there’s often a data problem (it’s the “broken telephone” issue)
Up until about 12 months ago, the dynamic had always been the same between vendors and retailers. The vendor would throw a bunch of images in an email and send it. Or post them on FTP sites. There was no central repository for keeping content in one place and being able to share it. Systems were archaic and it led to frustration on both sides.
Vendors were saying, “We spend all this money on images and marketing and want to share it with a retailer.” But the retailers are saying, “We’re starved for content and can’t get access to up-to-date data. We’re always chasing it down.” There was this cat and mouse dynamic, which we call a “broken telephone” between brands and retailers. The infrastructure hasn’t been there. But we’ve seen in the past year that this dynamic is changing. New technologies are being put in place.
Reappraise who you’re doing business with (it’s a new generation of buyers)
It used to be if you were a vendor, you were at a retailer’s mercy. The retailer would say “Jump” and you’d say “How high?” But now we’re seeing a new generation of retail buyers, and many of them see that a cooperative relationship is much better than one where they’re making demands. It’s more of an equal partnership.
There are a few reasons for this change. One is age. This younger generation has not gone through the same killer succession cycle as their predecessors in order to become a buyer. Some of them even have other aspirations than always being a buyer. It’s a new breed, and many buyers are more open-minded.
A second reason for the change has to do with technology. Even five years ago, managing data was all about enterprise software. But now with the rise of social media, crowd sourcing and other technology developments—the dynamic has changed significantly. You’re looking at more tech savvy buyers who have more resources at their disposal. They’re totally comfortable online, and they’re receptive to new technologies and better ways of doing things.
And finally, there’s the selection process. It used to be that the buyer selected you. Sure, if you were Unilever or P&G, you already had an existing relationship with Walmart and would expect to sell your product with them. But if you are a new vendor, you had to call and hope you’d get on the list. Buyers’ phones rung off the hook. There were lots of cold calls and 10-second pitches. And buyers got very good at disappearing at the right time.
But now, with marketplaces like Jet.com, you’ve got a different type of relationship being developed. Now you’ve got a better forum for connecting with buyers, qualifying yourself, and perfecting a new way of selling.
Offer a perspective that’s larger than your brand (it’s how the market leaders do it)
The buyer has an entire category to look after—a store within a store. They appreciate vendors who are forward-thinking enough to come in with suggestions on placement of their product. But they appreciate a larger perspective all the more—one that shows them how to manage the rest of the category.
Big brands do this very well. Unilever might say, “Our Dove line up is by a 30% share and we should be in the middle of the shelf. But listen, this season hair color will be a big trend, so keep Dove shampoos for everyday hair care, but also add a great color line-up for those looking to make a change.”
Review the reviews (it’s where both you and the buyer get the feedback you need)
Sure, everyone thinks they can do a buyer’s job. But just think of the numbers in terms of who’s providing you with feedback. At Walmart, for example, a buyer not only works with 700-800 vendors, but also works with all 3,000 Walmart stores who are providing feedback
And there are all those consumer reviews. If the buyers see a lot of bad reviews, they may have to go back to the vendor and ask them to take a hit for the sake of the relationship. The buyer might say, “I thought you were being credible with me. But now the product has got to be marked down.” Vendors need to be sensitive to this.
How do retailers mine reviews? In the past, it hasn’t been possible to do a complete job, so retailers use their sources. Members of their eCommerce team may go through the exercise of putting together a top 10 and bottom 10. These are part of the set of filters. The team may say: “Let’s look at the bottom 10. Why are they at the bottom? Do we need them? Can we cut them?”
Buyer filters can also include creating their own buying experience. For example, once a month, they may buy all of their groceries or other featured products online from themselves in order to get a sense of how good or bad the experience turns out to be.
Do you want an easier way to share product information with your retailers and make your brand shine? Join Hubba today.
To learn more about innovative tools that enable you to monitor online product reviews—while gathering product and pricing intelligence about your own brands and your competitors—contact Profitero today.
With more than 20 years of experience building data-powered businesses, Cynthia serves as Profitero’s VP Marketing, Global. Previously, she served as VP Marketing at Morningstar where she drove the growth agenda for the B2B SaaS business that collected, normalized and delivered online account data.