{"id":11260,"date":"2023-12-20T06:30:11","date_gmt":"2023-12-20T06:30:11","guid":{"rendered":"https:\/\/dmsretail.com\/RetailNews\/the-continued-evolution-of-commerce-and-its-many-forms\/"},"modified":"2023-12-20T06:30:11","modified_gmt":"2023-12-20T06:30:11","slug":"the-continued-evolution-of-commerce-and-its-many-forms","status":"publish","type":"post","link":"https:\/\/dmsretail.com\/RetailNews\/the-continued-evolution-of-commerce-and-its-many-forms\/","title":{"rendered":"The Continued Evolution of Commerce and Its Many Forms"},"content":{"rendered":"

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The Evolution of Commerce<\/h3>\n

We are witnessing a rapid acceleration of change in the commerce arena. Whether it\u2019s direct, indirect, distributed, B2C, or B2B, how we exchange goods and services is undergoing a transformation. As brands and retailers navigate and shift their operating models and go-to-market strategies, there are complex considerations around the advantages and disadvantages of their channel trade-offs.<\/p>\n

As we dive deeper into the various commerce models, here are some fundamental differences between the indirect, direct, and distributed (B2C and B2B) strategies.<\/p>\n

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  • Direct distribution (DTC \u2013 i.e., Nike)<\/strong> is when a manufacturer sells directly to a consumer. This distribution channel gives the manufacturer control over the distribution process, marketing, branding, and customer experience.<\/li>\n
  • Indirect distribution<\/strong> is when a manufacturer uses a third party, like a wholesaler or retailer (Amazon, Target, Walmart), to sell their products (B2C \u2013 i.e., your traditional mall retailer, etc.)<\/li>\n
  • B2B stands for business-to-business<\/strong> and refers to a type of transaction that takes place between one business and another<\/li>\n<\/ul>\n

    Each of these business models requires resiliency, the ability to adapt, change, and adjust to evolving macroeconomic climates and consumer behaviors. Two critical elements have to be considered:<\/p>\n

    The relationship between consumers and brands is a delicate one and requires a customer-first strategy<\/strong><\/p>\n

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    • This relationship transcends all channels. Customers have never thought about channels when they go shopping. They focus on experiences.<\/li>\n
    • Social commerce, storytelling, personalized experiences, compelling merchandising strategies, and livestreaming represent the future of shopping and engagement with the emerging next generation of customers, GenZ and Gen Alpha<\/li>\n<\/ul>\n

      Brands and retailers already have an ecommerce and supportive supply chain distribution ecosystem.<\/strong> However, immersive commerce requires a highly adaptive, agile, scalable, and product-centric digital-first ecosystem<\/p>\n

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      • Compelling storytelling, merchandising, livestreaming, and in-store and digital experiences matter. However, it\u2019s the end-to-end execution from the discovery process to fulfillment that matters<\/li>\n
      • Business and digital transformations are a critical imperative for all business models. However, the innovation mindset requires a continuous loop where management removes the fear of failure to drive the business forward<\/li>\n<\/ul>\n\n

        There has always been a symbiotic relationship between Nike and its retail partners<\/h3>\n

        Nike is an omnipresent force in the sneaker culture and the athletic footwear arena. In February 2022, Foot Locker announced that Nike\u2019s portion of Foot Locker\u2019s sales would decline to about 55 percent by the fourth quarter of 2022, down from 68 percent in 2021. The reallocation was driven by Nike\u2019s efforts to emphasize direct-to-consumer sales and consolidate wholesale accounts.<\/p>\n

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        While Nike\u2019s strategies to take greater control over its brand narrative, messaging, and social media campaigns have been impressive and paid dividends, increasing the DTC business model has proven challenging. Unfortunately, the increased inflationary pressures and supply chain disruptions have led to an overabundance of Nike products in the marketplace as consumers cut back on their spending.<\/p>\n

        Nike CFO Matt Friend said on the company\u2019s quarterly call that inventory was up 44% company-wide, primarily driven by a 65% hike in North America, its largest market. Friend said Nike plans to \u201ctighten buys in the second half of the financial year and liquidate excess inventory more aggressively beginning in the current quarter\u201d in the hope it better balances inventory for the balance of 2023 and into 2024.<\/p>\n

        The wholesale operating model has proven highly effective, as retailers offer the scale, reach, and supply chain inventory distribution capabilities to enable the growth that Nike seeks to achieve. There is a clear dependency on the scale and reach that Foot Locker and other retailers have to offer. Foot Locker was in the process of rationalizing their vendor footprint as Nike pulled back their business. However, Nike and Foot Locker will benefit from the enhanced collaborative model.<\/p>\n

        Foot Locker was in the process of rationalizing their vendor footprint as Nike pulled back their business. However, Nike and Foot Locker will benefit from the enhanced collaborative model.<\/p>\n\n

        Legacy retailers such as Barnes & Noble are undergoing transformations and are being reimagined in the digital-first age<\/strong><\/p>\n

        Sometimes, business turnaround and transformations, such as the one Barnes & Noble, Inc. is undergoing, require returning to the basics and consistency in store design and branding. Barnes & Noble has introduced the new look at several dozen of its nearly 600 locations, including the Upper West Side of Manhattan and the Grove shopping mall in Los Angeles, and at the 20 new stores opening in 2023.<\/p>\n

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