This year has changed things substantially for every business, but for many digitally-literate disruptor brands which have cut a swathe over the past few years, it has meant finding a new value proposition as legacy competitors suddenly close the gap.
As Facebook’s Chris Sarandos explains: “Take Walmart, for example, which is now really leaning into its digital experience - through its app, mobile website, and also its social channels. It’s even built a grocery delivery and grocery pickup business.”
Sarandos, the Chicago-based Marketing Lead - Disruptors & Venture Capital, says while some legacy brands have achieved good results, most are still playing catch up after being forced to think about more digital delivery mechanisms for their services.
Rob Ward, founder of Melbourne-based Quad Lock, a disruptor business that manufactures smartphone mounting systems, shares similar sentiment: “The big wins probably come from brands that are already set up in a way to operate optimally during a time like this, because they can just hit the ground running.”
“I think it's not necessarily close between disruptors and legacy brands currently. But ‘the future’ will arrive sooner, because circumstances are pushing us forward a couple of years to where we perhaps should have been.
“Some of these smaller brands probably grew to become bigger brands than they would have been at this point. Conversely, many legacy brands are asking where they really should have been, and we may soon see a closing of the gap,” Ward adds.
Going to the mattresses in 2020
Physical lockdowns have meant many digital pure-plays have benefitted from a glut of new customers who’ve been forced to give them a chance. IAB Australia’s CEO Gai Le Roy says these trialling customers are the ones to convert in the short-term: “I’d be focusing on what's going to make them stick, how I communicate with them, and how I turn them into loyal brand customers,” she added.
In terms of major growth areas for digital, Le Roy notes the recent boom in home delivered food, as well as fitness, parenting and education. “We had that initial wave of everyone trying to make sourdough, then we got a little bit sick of that. And so people started looking for meal kits,” Le Roy observes.
In terms of businesses demonstrating this digital flexibility, Facebook’s Industry Head of Disruptors ANZ, Henry Kelly, singles out the innovative Koala brand for diversifying into a new product area after identifying a need.
“With the onset of COVID-19 Koala promptly offered a work from home desk - something that they clearly weren't even thinking about before. But they mapped the consumer demand and had the ability to move very, very quickly.”
Kelly also noted consumers’ increasing embrace of digital purchasing. “We've seen via research we conducted with Kantar in August that around a third of Australians recently stated that they have bought things online that they normally would buy in store. Research also showed around one in five Gen Zs are using Instagram shopping,” Kelly says.
“The other thing that we're seeing is the idea of discovery commerce. So we're using machine learning that's intuitive to Facebook to go out and meet where consumers and people are spending their time. There's a real competitive advantage for disruptor brands there,” he adds.
The maturation of digital disruptors
Le Roy also pointed out US IAB research from 2019 that showed business founders’ were increasingly interested in the prospect of setting up physical stores. As of last year, collectively it was their third highest priority.
“Commercial real estate is cheaper than it was last year. So there's probably an easier way in now.
“But conversely, I think we've trained consumers to be able to purchase online, so there might be more partnership options, while the click and collect side of things with big retailers has really taken off,” she adds.
And as legacy businesses pick up the pace with their digital offerings, so too will digital pure-plays assess how they diversify with new physical experiences, according to Facebook’s Sarandos.
“An interesting case study, once again, is in the mattress space. There are a couple bed-in-a-box disruptor brands who have built physical retail stores - Casper being one really great example.
“They have completely reimagined the in-store experience by letting people actually go and take a nap. So they have very ambient lighting. They have cool little nap pods. It’s a really interesting experience.”
Sarandos sums up the zeitgeist thus: “Disruptor brands are born on digital and built on mobile but it’s all just commerce. Digital is shaping bricks and mortar and online more than ever before.”
The importance of purpose for businesses
What consumers are really going to connect with, Sarandos believes, are brands built on a core purpose.
He explains: “It’s those that offer something to society beyond just making money for their shareholders. These are brands who have done things - whether it's ranging from organising funds, and giving them to charities in need, or changing their production process to produce PPE and hand sanitisers.”
In terms of purpose, if you're something of a me-too product, Ward says, it's even more important to wrap something else into your brand offering, because your product might be similar to 10 others.
According to Le Roy, while important, purpose only works, “If the hygiene factors are there as well. You really need to make sure you have a good quality product, and you deliver on time.
“And then purpose comes up underneath that. We’re seeing some really interesting examples locally, like Who Gives A Crap toilet paper. They've got a good product, they're delivering, they're communicating well, and they're cheeky.”
The $10 million dollar question
And so to an interesting hypothetical. If they were given $10 million to start their own disruptor brand tomorrow, what would the panelists plough their money and efforts into?
Sarandos plumps for the telehealth industry: “If people are no longer tied to a physical location to have to go to see their doctor or go see somebody for counselling, then the sky's the limit in terms of where they can get access to care and support.”
Le Roy opts for both a head and heart approach to investment. “My head says I'd start a commerce agency - one that can really help the smaller brands go to market, get their catalogues up and get their offering live. My heart wants to found a home delivery pinball machine service that rotates every two months.”
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