While companies like GAP, P&G, and Facebook operate in different business categories, they have one characteristic in common—they are all large multi-brand companies.
TABLE OF CONTENTS
- What is a Multi-Brand Strategy?
- Benefits of a Multi-Brand Strategy
- Multi-Brand Strategy Trends
- D2C (Direct To Consumer)
- Instant or On-Demand Production
- Advanced Logistics & Distribution Models
- Immersive Omnichannel Shopping Experiences
- Embrace Innovation
- Implementing a Solid Multi-Brand Strategy
As the agility and accessibility to manufacturing keep increasing and go-to-market times continue decreasing thanks to new distribution models, a multi-brand strategy is becoming an attractive option to explore for all companies.
In this article, we’ll look at current ecommerce trends that are relevant in this context, as well as the benefits of a multi-brand strategy. But first, let’s define what we mean by a multi-brand strategy.
What is a Multi-Brand Strategy?
A multi-brand strategy means having a portfolio of products with different brands or names, all owned and managed by the same company.
An example is Nestlé, with a multi-brand portfolio of over 2000 brands, including Nespresso and KitKat. Another example is L’Oreal, with brands like Garnier, Maybelline, NYX, and La Roche-Posay in their portfolio.
Related Reading: Ecommerce Strategy for Success
Benefits of a Multi-Brand Strategy
The strategy of diversifying your brand portfolio holds many benefits. Today, several ecommerce trends are simultaneously making this approach increasingly appealing and easier to implement.
Some of the main advantages of the multi-brand business model include:
A Growing Customer Base
Having multiple brands can help serve different customer needs and gain new customers. Cross-sell, and up-sell opportunities are available across different audiences, such as incomes, ages, tastes, and values. Multi-brand strategies also allow businesses to cater to “brand switchers” who switch between brands but remain customers.
Become a Market Leader
Synergy effects and startup costs result in cost savings for new brands within a multi-brand strategy. But more importantly, less shelf space for your competitors makes it easier to dominate a market. The more brands you have, the more likely customers will choose yours. And the more products you have, your company can learn about new and improved production methods.
Internal Competition Stimulates Growth
Data and insights from one brand can be used to create new brands. A multi-brand strategy can build healthy internal competition between the different brands in your portfolio and can help spur performance and improvement. Building new brands within your portfolio may mean hiring new employees. But, a growing team cultivates creativity and helps builds your business.
Increase Brand Awareness and Reputability
Having multiple brands increases brand visibility. The more visibility you have, the more trust customers tend to have for it. This is why it is essential to have consistent brand messaging and quality products that foster a loyal following.
Building several brands diversifies risk, as all of your eggs are not in one basket—for example, if one brand’s reputation is marred, it doesn’t impact total sales.
Related Reading: Build a Multi-Brand Marketplace for your Company
“Multi-brand companies are so by conscious design and mature into this portfolio management approach. Companies should consider different strategies and go-to-market methods and look at business maturity, customer brand connection, and application of digital directions when considering a multi-brand strategy.”
Commerce Strategy Consultant
Multi-Brand Strategy Trends
The everchanging ecommerce landscape makes a multi-brand strategy interesting for a more significant number of players. Let’s look at some of the most prominent ones and their implications for your business.
D2C (Direct To Consumer)
The rise of D2C (Direct to Consumer) has reduced the complexity of launching and maintaining more than one brand. Removing the middleman (i.e., retailer or reseller) means companies can experiment with branding and go to market much quicker. The number of businesses independently manufacturing, promoting, selling, and shipping their goods is rapidly rising, which is changing the ecommerce landscape.
The D2C business model allows suppliers to provide a superior end-to-end brand experience as they retain control over the whole process. The company manages everything—creating a winning product, attracting an audience, marketing the product, delivering the product, and owning customer communication and experience. The direct interaction with consumers enables D2C suppliers to collect customer data and address issues without intermediaries slowing things down.
Related Reading: Optimize Your Digital Customer Experience
Instant or On-Demand Production
China’s rise as a manufacturing power has spurred ecommerce growth. Today it’s easier to find a manufacturer than ever before. This means it takes less time to start a brand from scratch, react to trends and tendencies, and turn them into physical products.
If we take fashion as an example, the days when the fashion year consisted of spring, summer, winter, and fall collections are long gone. Instead, the winning brands are not only launching new products in response to new trends and demands, but they’re also launching whole new brands to meet them.
Small “point solutions” for well-defined niche audiences can be developed and scaled quickly. An example is Amazon, which will create products when a category is doing well, as they sit in the middle of all of the data and manage their multi-brand commerce strategy.
Advanced Logistics & Distribution Models
Distribution will continue to be one of the most critical aspects of ecommerce. The need for brick-and-mortar retail space will continue to decrease as brands increasingly rely on advanced logistics and distribution systems that save money and provide a better customer experience.
As efficiency increases, the need to hold large quantities in stock also decreases, further diminishing the need for a physical footprint. Options like drop shipping and AI-based fulfillment make launching, testing, and tweaking new brands even easier.
Related Reading: Why Retail Store Closings are Driving Omnichannel Marketing
Immersive Omnichannel Shopping Experiences
Brand success is based on three primary factors:
- A clear purpose
- A solid understanding of key customer targets
- An exceptional brand experience
This last component is critical in digital commerce, where customers interact with the brand via multiple touchpoints. Strong brands ensure consistent messaging by optimizing the customer buying journey to reinforce brand values, perceptions, and performance. But consistency must be maintained throughout the entire digital customer experience.
Brands affect every point in the conversion funnel for potential customers and shouldn’t measure just clicks as a KPI. Brands must measure the top and the middle of the funnel, paying attention to consumer engagement, sentiment, and interaction with shopping ads and content. In fact, with rising inflation, brands must look for new capabilities to enhance customer experience while also reducing contact quantity.1
These multi-brand / multi-touchpoint strategies are highly effective, as strong brands have been shown to outperform the market consistently. Yet, strong brands cannot get too comfortable as choices and channels increase. They must embrace new methods and approaches to beat their competition. And being cutting edge pays off. Research by McKinsey shows that businesses that are brand innovators grow their topline revenue four percentage points faster than less-innovative companies.
Linear commerce, social commerce, livestream commerce, and mobile commerce are just some innovative solutions for companies to evaluate in their digital strategy. Couple these innovations with cutting-edge technology, such as mobile commerce geotargeting available through Attentive — forward-thinking brands have much at their disposal to meet the increasing demand for engaging online experiences.
Implementing a Solid Multi-Brand Strategy
Today’s consumer expects a smooth, seamless experience regardless of what country they’re in, what channel they’re using, or which brand in your portfolio they’re buying. This requires companies to manage the customers’ whole lifecycle and choose tech that gathers all touchpoints and data in the same system.
Opting for a unified ecommerce experience rather than a single, best-of-breed point solution for each brand is a better and more sustainable path to success and ROI for multi-brand businesses. Whether your customer stops by a physical store to return an item or browses your website at midnight, you need to foster that relationship built on trust and minimized risk—interact with them and track, manage, and close the sale.
At Vaimo, we’re helping multi-brand, multi-currency, multi-language clients. Get in touch with our team of experts to learn how we can help you take your ecommerce business to the next level!