Whoever sets foot inside a business as a customer encounters countless brands, ranging from the food industry right through to sporting goods. Besides manufacturer brands, trade brands are also increasingly gaining in relevance. Particularly in eCommerce we are encountering more and more own brands. What are the reasons for this development?
Customers today have the option with just one click on the Internet of arriving at your competitors and comparing prices through extensive portals. Competition in eCommerce is therefore increasing briskly. We show you in our Article on discounting wars in online retail how you can avoid the pricing pressure through exclusive premium offerings. Large online retailers such as Amazon, Zalando and Otto demonstrate how they escape the pricing spiral: By building up their own brands, they achieve clear competitive advantages in highly competitive markets.
Customer affinity for own brands
Now as ever, consumers are characterised by an elevated brand affinity.
According to the PwCconsumer survey from 2015, some 73 percent of respondents prefer to buy own brands from retailers with whom they have already had good experiences. The younger target group in particular shows a stronger brand affinity. Brand names are especially strong in products from the electronics (72 percent), cosmetics (65 percent) and domestic appliances (64 percent) sectors. For most customers, a combination of affordable price and high quality is crucial to purchasing.
Strong own brands are in the fast lane
In the course of digitisation, the brand world has changed considerably. The long-established brands of large manufacturers have been surpassed by the so-called “Digital Native Vertical Brands” (DNVB).
Verticalisation is regarded as the new keyword in online retail: Retailers save themselves the passage through intermediaries and sell their own high-quality products directly to the final consumer. Their distribution is largely performed digitally in eCommerce.
Because differentiation from competition by price is not always beneficial, online retailers position themselves using DNVB or vertical own brands. For customers, these represent a price advantage and a greater product range with exclusive offers.
Online retailers, on the other hand, benefit from a high customer loyalty and a high customer lifetime value. Since self-production and self-marketing are increasingly becoming the USP in eCommerce.
How to bolster your online retail with own brands
Despite strong growth, in German online retail, there is still too little money being banked. Shop returns are only slightly above zero percent on average and thus significantly below those of stationary retail.
Own brands can help you to expand your margins. But be aware that building your own brand contains challenges.
A strong own brand is of central importance to the positive image of a company. If this is not optimally done, it can have a negative impact on you as an online retailer. Think firstly therefore about a clear strategy for positioning your own brand
With own brands, you can distinguish yourself from your competitors in eCommerce. As well as offer exclusivity and strengthen your customer loyalty. In our article on “Pricing for own brands” we show you how to develop an optimal pricing strategy for own brands. Market and competitor analyses based on highly valid online data help you to discover trends and niches and thus strengthen your brand in eCommerce.
Would you like to know how to use online data to bolster your online retail? Contact us now – we look forward to your message!