Aggregators turn to digital markets

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As consumers increasingly turn to e-commerce and consumer packaged goods (CPG) brands seek to establish more direct connections with their customers, many have turned to direct-to-consumer channels ( D2C) to cultivate trust and better understand who buys their products.

However, Sebastien rymarz, co-founder and CEO of the marketplace brand accelerator The climax, told PYMNTS that CPG companies such as Procter & Gamble, which was founded in 1837, were designed for retail, not e-commerce, and are plagued by legacy brands that make pivoting more hard.

“We’re sort of rebuilding this platform that CPGs have built over the past 200 years, rebuilding it for e-commerce,” he said. “We actually have an advantage over them because we’re starting with a blank canvas.”

Heyday was founded in August 2020 and has so far raised $ 245 million, a testament to the strong investor enthusiasm for market aggregators. Nine Amazon-focused aggregators have raised more than $ 2.3 billion in funding, according to Crunchbase, with Massachusetts-based Thrasio taking the lion’s share at $ 1.6 billion.

Related: 52% of consumers made retail purchases using aggregators in 2020

The ‘Bring it to Me Economy’ report, produced in collaboration between PYMNTS and Carat de Fiserv, found that 91% of consumers have made at least one purchase on Amazon in the past year and 70% have made purchases on another digitally recognized market.

Rymarz said, however, that by viewing markets as a digital economy, “you realize that it is an economy that has not been institutionalized from a capital formation perspective, from a market perspective. talents, from the perspective of scale players – and that’s what got me super excited. It’s like the Wild West.

What held back institutionalization, Rymarz said, was a stigma that big digital native brands – such as Dollar Shave Club, Allbirds and Glossier – don’t sell on Amazon or other digital marketplaces. “For a lot of products, Amazon will be competing with you, they’ll steal your data, they won’t share data, and the list goes on,” he said. “It’s kind of the stigma.”

But the reality is that consumers are increasingly looking to markets as convenient places to purchase a wide selection of items. “How we see the future evolving at Heyday is all about location, location, location,” said Rymarz. “People say that in a physical context, and it’s true in digital. And we think this location is digital markets.

Find the right fit

Rymarz said Heyday focuses exclusively on three categories of consumer goods – functional home, lifestyle and personal care – and only invests in brands that have lasting value and the ability for Heyday to add value. . “If we see a brand that has a ton of products, has practically exhausted the market and is in a ton of channels, it can be a great brand and a great company, but it will be harder for us to drive value. for that. business, ”he explained.

Heyday differs from brand aggregators such as Perch and Thrasio in that it does not focus on acquisitions. The company typically buys about two brands per month, “and for the next few years that’s what we plan to buy,” Rymarz said. Rather, Heyday’s strategy focuses on building and incubating brands with a market-driven mindset. “If you start an e-commerce business, the digital market will obviously be your biggest channel,” he said. “It won’t be direct to the consumer.”

D2C e-commerce sales in the United States reached over $ 111 billion last year and are expected to reach $ 129 billion by the end of 2021, according to eMarketer; by 2023, D2C e-commerce sales could reach nearly $ 175 billion. And Heyday’s portfolio includes D2C operations – Rymarz noted that “digital is omnichannel,” which means being where the consumer buys.

But Rymarz is also steadfast in his belief that “the Warby Parker of the next decade will be built first in the market,” highlighting the fact that many brands are already recognizing him and are changing to be listed on Amazon and other markets. “They can’t ignore this place, or the volume over there.”

“We build the technology, the operations, the execution of the ad campaigns… we build all of these things to be great in the market. You can’t be great in the market if you don’t take this approach, ”Rymarz noted. “And if you want to be great at e-commerce, you’ve got to be great at the market.”

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