The State Of Digital Commerce For Brand Manufacturers In 2023
Digital commerce has become a priority for brands as consumers increasingly search for and buy their favorite brands online. A recent survey that Forrester conducted in partnership with Vorys eControl found that 93% of brands recognize digital commerce as a growing area of focus for their executives, with 90% agreeing that digital sales are a priority.
Following are some other insights from the study:
- Brands use three elements of digital sales: online marketplaces, wholesale dot-com accounts, and direct-to-consumer sales. Marketplaces were found to be growing as fast as or faster than wholesale channels by 77% of respondents. Additionally, 62% and 50% said the same for their wholesale dot-com and direct-to-consumer channels, respectively. However, brands are cautious about disrupting their traditional businesses and not neglecting their larger, offline distribution points: More than three-quarters of respondents expressed concern about channel conflict with key partners.
- Direct-to-consumer (DTC) e-commerce is compelling for brands, but many remain skeptical about investing in an owned online storefront. Brands identified several challenges with DTC, including inadequate resources, higher prices, and delivery challenges. DTC can be more profitable than other channels, offers insulation from multicategory stores going out of business, and delivers valuable consumer data. However, many brands aren’t fully exploiting the data, with only 42% using it for new product development and consumer feedback.
- Marketplaces are a significant driver of e-commerce growth: Forrester estimates that two-thirds of all e-commerce worldwide happens through marketplaces. Half of the brands we surveyed said that their sales on marketplaces were growing faster than sales through traditional wholesale. Brands recognize the value of marketplaces, but only 45% said they are pleased with them. The gray market problem remains an issue, with loose brand governance leading to products from any brand being available online in some way.
Forrester clients can view a more extensive summary of the findings here and can schedule a guidance session or inquiry with me to discuss our research findings further.