The rise of technology and the internet isn’t just disrupting traditional retailers; it’s also enabling brands to reach their customers directly without the need of a ‘middleman’. Dollar Shave Club effectively sold to their loyal subscribers without ad agencies, traditional media or offline distributors like Walmart and Walgreens.
With the Death of The Advertising Industrial Complex looming upon us, traditional, mass advertising such as outdoor, print, TV and distribution through offline brick and mortar retail are rendered inefficient. Companies like Unilever have no choice but to acquire ‘the little guys’ like Dollar Shave Club to stay relevant.
The Advantages of Moving Towards Direct-To-Consumer
In many of his speeches, Alibaba’s founder and chairman Jack Ma talks about how the world is moving from Information Technology (IT) to Data Technology (DT). In a DT world, businesses have direct relationships with consumers, enabling the former to collect data to build and market products and services personalized to the latter.
One classic example is Xiaomi, the Chinese electronics company and 4th largest smartphone maker, who sells attractively priced smartphones on its website to drive the direct relationship with its users. The company then uses the data to push peripheral products, plush toys, software, and online and mobile advertising.
Amazon is the other example, selling other people’s products at lower margins to get the volume it needs to monetize through marketplace fees and Prime subscriptions:
Amazon, meanwhile, is transitioning to a new model completely. The vast majority of Amazon’s products are increasingly sold with little to no margin at all: profitability comes from fees paid by third-party merchants and Prime subscriptions. It is a model that is completely dependent on scale, and the lower the margin and thus prices, the higher Amazon’s volume, which means ever more leverage from Amazon’s massive fixed costs in infrastructure and logistics.” – Ben Thompson, Stratechery
This transition from IT to DT is exactly what Unilever is trying to achieve through its acquisitions of Dollar Shave Club and Honest Co. Both firms enjoy better margins through online marketing and distribution. More importantly, they own the direct customer relationship, which they leverage into higher customer lifetime values through innovative models like subscription commerce.
Direct-to-Consumer Accelerated in China and Southeast Asia
China and Southeast Asia are growth markets unburdened by a legacy offline retail infrastructure meaning brands are jumping over the middleman at a much faster pace than in mature markets like the US, Europe or Japan.
Why did internet ecommerce grow so much faster in China than in the US? Because the infrastructure of commerce in China was bad. Unlike here, where you have all the (physical) shops: Walmart, K-Mart, everything, everywhere. But in China, we have nothing, nowhere. So ecommerce in the US is just a dessert; it’s complementary to the main business. But in China, it’s the main course.” – Jack Ma, Founder and Chairman, Alibaba
An example of traditional, non-conventional brands going direct to consumer is Yurun Group, China’s second-largest meat supplier in China. Based in Nanjing, Jiangsu province, Yurun operates in two sectors, chilled and frozen meat, and processed meat products, which are marketed under the brand names of Yurun, Furun, Wangrun, and Popular Meat Packing.
Yurun operates an official Tmall flagship store through which the company sells its various brands and products and also distributes digital vouchers.
Capturing the Direct-to-Consumer Opportunity Through Digital Transformation
Fashion, electronics, and consumer packaged goods (CPG) aren’t the only categories that are increasingly being sold online. Let’s take a look at Betagro, a 50-year old Thai food manufacturing conglomerate, and identify the opportunities available for the company to go direct-to-consumer and transform itself to capitalize on today’s digitally-savvy consumer.
Who is Betagro?
Betagro Group was founded in 1967 by Dr. Chaivat Taepaisitphongse, the company’s current chairman. Headquartered in Bangkok, Betagro engages in animal feed production, livestock, animal health products, and food product businesses. The company is known for its brands like S-Pure eggs, Better Food, and Dog’n Joy pet food.
Betagro Value Chain & Gap Analysis
Below is a simplified overview of Betagro’s value chain. We specifically looked at Marketing and Sales & Distribution, two areas that are typically impacted by internet, ecommerce and technology.
Betagro mainly sells through retail partners like Tops, Tesco Lotus, Big C, and Family Mart and its own distribution channels, namely Betagro Shops, with a footprint of over 100 in Thailand. Unlike its main competitor Charoen Pokphand Foods PCL, who has access to massive distribution through its 8,000+ 7-Eleven branches in Thailand – Betagro still has to rely on partners.
From a marketing perspective, like many other traditional business in Thailand, Betagro still uses offline channels such as event marketing through roadshows, mall booths, etc. and sampling in supermarkets. Its online efforts are limited to its corporate website Betagro.com, which is lackluster, and content marketing on its “Betagro Society” YouTube and Facebook pages.
To maximize the company’s online efforts, there exists many opportunities across the user journey for specifically Content Marketing and Influencer and Affiliate Marketing that we highlight here.
Content Marketing: Videos
Given the very nature of its business, content marketing is a great way to educate, activate and engage customers for Betagro. Similar to how Dollar Shave Club leveraged its now cult-like “Our Blades Are F**king Great” viral video to spur its initial hyper growth, Betagro can create cooking videos and online recipes to engage their audience and build brand identity.
Betagro’s official music video on YouTube garnered over 5 million views in less than one year’s time. Although impressive, it pales in comparison to short-form cooking videos on Facebook like those by Tasty, some racking up over 30 million views in less than 12 hours.
Content Marketing: Recipes
Best Food’s US website is another great example of using online recipes for SEO and engagement. While Betagro’s website mainly covers corporate information, Unilever’s BestFoods.com offers many recipes that allow the brand to display their products in attractive high-res imagery – selling without direct selling.
Having recipes online not only helps with engagement but also with SEO, resulting in an increase in organic traffic from Google. A quick look at Similar Web data for BestFoods.com shows top keywords are all recipe-related ones.
Influencer & Affiliate Marketing
Facebook paid advertising is one way to distribute content for Betagro. Another – and sometimes more efficient way – is to leverage influencers or “Key Opinion Leaders” (KOLs). In Thailand, due to a “no-tail” environment, a lot of these KOLs are on Facebook instead of having their own blogs or websites. Below is a list of popular cooking and food related KOLs.
Betagro could partner with these KOLs to educate and increase brand awareness through text and video content directed at an audience with interest in their products. In the Mai Yom Auon example above, the page owner cooks using a pan provided by the advertiser Korea King.
Another way to leverage these KOLs is by adding them to an affiliate program where the aim is to drive traffic to a future Betagro ecommerce website – either in the form of a brand.com or shop-in-shop on a marketplace.
The amount of distributors for Betagro products are limited leaving the company to the mercy of its retail partners such as Tesco Lotus and Family Mart. But by offering its products online, Betagro is able to increase its leverage vis-à-vis these partners as well as collect data from the end consumer.
Betagro can also leverage digital channels to drive offline sales. For example, Honestbee and HappyFresh are food delivery apps that are being used by major food retail distributors across Southeast Asia.
By partnering with these companies, Betagro can help drive foot traffic to offline Betagro Shops as well as promote and advertise Betagro brands and products.
By implementing the marketing strategies mentioned above, Betagro will be able to expand their audience, increase sales and jump ahead of competitors. The best part? without largely denting their budget.
Written by Sheji Ho, aCommerce Group CMO
Betagro Case Study: Direct-to-Consumer Opportunity Through Digital Transformation Full Download