Something dramatic is happening to the way beauty and personal care products are bought and sold. All around the world, in all kinds of market, brands are bypassing the traditional wholesale retail model and selling directly to customers.

This is the direct-to-consumer (D2C) revolution. And it’s important to recognize just what a fundamental change it represents for manufacturers. It wasn’t so very long ago that their entire business models were built around manufacturing to stock, selling through brick-and-mortar retailers, and communicating via mass-media marketing.

A very different route to market

With D2C, the manufacturer becomes a retailer in its own right. And that means going from selling to a few hundred retailers to serving potentially millions of end consumers. It changes the business model, the operating model, and the sales model—requiring brands to reassess virtually all aspects of the way they manufacture, distribute, market, and sell their products.

This is creating an existential moment for some manufacturers. And, as we explain in our new point of view, The Beauty of Cloud, it means there are three capabilities that are now absolutely essential to get right.

The first is hyper-personalization. This is about understanding each customer as an individual, with their own set of behaviors, expectations, and preferences. That not only means you can target your brand messaging far more effectively, it’s also a crucial enabler of the individually customizable products and services that consumers increasingly demand.

The second is providing a strong multichannel customer experience. Whether it’s web, app, store pickup, or in-store purchase, the whole end-to-end experience needs to be fast, personalized, and seamless. Ideally, it also needs to be supported by innovative beauty tech capabilities, such as virtual try-ons, smart mirrors, or other augmented or virtual reality concepts.

The third is to have agile and responsive supply chains. This is about accelerating the switch from traditional mass production models and manufacture to stock towards manufacture to order and on-demand D2C fulfilment. It also means ramping up the supply chain’s ability to deliver individual product customization.

Building the future beauty industry in the cloud

What do beauty and personal care brands need to do to deliver these capabilities? Perhaps the most fundamental enabler is their underlying technology infrastructure. And, today, that means the cloud.

Not only is cloud a more cost-effective source of IT infrastructure—an important consideration given the additional costs associated with D2C—it’s also a key source of organizational agility and flexibility, as well as a platform for customer-centered innovation and business reinvention.

In fact, whether it’s better data management, access to advanced analytics as a service, shorter product innovation cycles, or easier connectivity with partners across the supply chain, cloud underpins virtually everything that brands need for an effective D2C model.

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Scaling up the whole business for D2C

Let’s consider a real-world example. Imagine a social influencer recommends one of your skincare products to their millions of followers. Suddenly you’re faced with a huge surge in demand. On the face of it, that’s great news. But converting this explosion of interest into long-term customer value means the rest of the business and the whole supply chain has to be able to step up to meet the extra demand.

This is where the speed, scalability, and cost-effectiveness of cloud is incredibly powerful. It means you don’t need to anticipate highly uncertain future demand spikes by building in excess capacity (and you don’t need to incur the capital expenditure and lengthy lead times that come with it). The infrastructure simply scales up when it’s needed.

But there’s more. When innovative cloud-based services, such as predictive artificial intelligence, are added to the mix the business can start to operate in a completely different way. That includes shifting from a reactive to a proactive approach, where demand signals—including those from social media channels—can be recognized and acted on as soon as they happen. It provides critical advance intelligence and extra time for ramping up the whole supply chain to meet additional demand.

See the beauty of cloud

The rapid changes the beauty industry is going through—dramatically accelerated by the COVID-19 pandemic—mean scaling up cloud adoption is now the number one priority for most brands in most markets.

The goal should be to create a simplified core platform in the cloud and complement it with an ecosystem of decoupled and resilient cloud capabilities that enable real-time integration and the free flow of data insights across the organization.

That’s how to create the responsive and scalable D2C capabilities, the data-driven granular consumer insights, and the hyper-personalization in both brand messaging and product customization that are now essential.

If you’d like to learn more about how your business can get more value from cloud technology, or how to get started on the next phase of a cloud journey, please have a read of our new point of view — and don’t hesitate to get in touch!

 

Disclaimer: Copyright © 2021 Accenture. All rights reserved. Accenture and its logo are registered trademarks of Accenture.

 

Romain Groleau

Lead – Cloud Growth, Asia Pacific, Middle East and Africa


Kunal Shah

Managing Director – Technology Strategy & Advisory


Rajat Agarwal

Managing Director – Consumer Goods and Retail, Industry Lead, Growth Markets

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