Article | July 10, 2017

Manufacturer Brand Erosion: A Two Part Series

Source: APG Cash Drawer, LLC
Buyer-Driven Brand

By Breanna Brown, Creative Marketing Ambassador, APG Cash Drawer

A brand is more than just a name; it’s the identifier that creates the perception of a company among its customers. Walk into a grocery store, and you’re surrounded by brands. Grocery stores have in a sense become warehouses for product brands. But what about a store’s own brand?

Grocery shopping has become something you can do online and it’s become easier than ever. But is it the best thing for one’s own brand? Shoppers today don’t even have to leave the comfort of their homes to buy their tomatoes, cereal boxes and favorite cuts of beef. Order them online, and they’ll be at your door in an hour or two.

If you’re a shopper, that’s great. But if you’re the retailer, maybe not. Unless they handle the deliveries themselves, retailers have to outsource the service to a third party – an entity like Instacart, Postmates, Google Express and Amazon Prime Now.

This could cost retailers in brand loyalty for several reasons. For one, shoppers are bound to associate the convenience of fast delivery in tangent with the level of delivery service with the brand and not the third-party delivery company. Secondly, “consumer loyalty is more strongly tied to product brands than to retailers,” Barb Stuckey, president of food and beverage branding firm Mattson, recently told RetailDive. In the age of digital eCommerce, consumers overlook where they are getting product. They just want it fast and at the best price.

So between the product brand and the delivery service, the retailer’s brand loses cachet with the shopper. “It’s all building towards this future where supermarkets are just distribution centers for these online services,” Stuckey said.

Giving Too Much Away?

Bill Bishop, a grocery consultant and chief architect at Brick Meets Click, told RetailDive that partnering with third-party delivery services gives supermarkets a chance to extend their reach. But he adds, “you have to ask, are you giving away too much of your customer relationship to them?”

Concern about brand loyalty is one of the reasons some retailers, such as Kroger and Wal-Mart, have gone a different way, RetailDive reports. Instead of partnering with Amazon, Google or Instacart for delivery, they offer in-store pickup for online purchases.

It isn’t just brand loyalty that retailers potentially risk with these partnerships. You could be giving business to a competitor. As RetailDive points out, Amazon has become a de facto competitor to supermarkets, “offering many of the same products as those available through its retail partners.” If Amazon sells them cheaper, which it often does, guess who’ll get the sale?

Taking the Blame

There is yet another potential issue with third-party delivery partnerships. If deliveries are botched, customers are still likely to blame the retailer. So the whole thing becomes a kind of retail catch-22: If the delivery service does a good job, it gets the glory. But if service is bad, the retail partner – which should have made a better choice of partnership – gets the blame.

At APG, we understand this issue. We often get calls from frustrated customers who bought APG product from Amazon’s third-party sellers or an online retailer. In some situations, third-party vendors display the wrong product images and descriptions so buyers end up getting something that doesn’t meet their needs. This ruins their experience and harms our brand. It can be difficult to help customers who didn’t buy product through the channel. At APG, we make an active attempt to patrol this and protect our brand integrity.

We encourage end customers to work with qualified resellers and we support brick-and-mortar stores because they deliver a more personal shopping experience. With that in mind, retailers who are considering third-party delivery service partnerships should consider what affect it could ultimately have on their brand.