Eclectic Thought Samples From Larry Burns

The Potential of “Discovery Commerce”

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“Discovery commerce” is a term that is starting to make its way into the lexicon.  It’s a new option for a consumer to purchase a subscription to a set of products they can try.  In other words, people are spending dollars to discover something new.

The models that seem to have the greatest long-term sustainability are those where the product being provided falls under the heading of “a curated set.”  Birchbox is a classic example.  It’s all about beauty.  As a subscriber, you get four to five product samples each month of new or interesting beauty products that have been carefully selected for you.  This is a really good end-benefit for the subscriber.  The Birchbox site is well-designed and has an e-commerce engine, so when you like something you’ve tried, it’s very easy for you to return to Birchbox and make a purchase.  In fact, there is a reward program if you so do.

Offering trial-size options for a consumer to test is a way to raise the return on investment for a brand.  But one thing I fear is an issue that I have been grappling with in the sampling world for years: product samples of any kind are not an inexhaustible resource.  How do you scale things like this?   They work very well on a smaller scale, but if you attempt a larger scale you can run into conflicts with the brand’s marketing strategies.  I’m fascinated to see where this is going, because this is a great idea, but I think getting into a constant inventory flow of product samples in order to populate these new discovery commerce opportunities presents a new challenge.

In the world of consumer packaged goods today, approximately 5% of promotional spending is devoted to product sampling of all types.  Companies are being formed (and funded) with models in which profits come from the samples themselves and from access to the subscribers. In fact, all sorts of different models are being created, but there’s a limited set of sampling opportunities available because of the manufacturing realities. Samples are not always simple to create, there’s a very real cost for these goods, and many large-scale companies frequently encounter shipping  concerns.

So let’s be intelligent about this. Since April, what I’ve been saying to the consumer packaged goods world in our executive-level conversation is this:  Because there are so many new and interesting models of distribution that you’re going to want to experiment with, align with or tap into, when making manufacturing plans and marketing plans you should really consider expending more resources to create more samples.  You’ll want to have them available in August or September of 2013, when you don’t want to find yourself missing out on some major opportunities.  You need to really consider increasing your sampling inventory because you’re going to find all sorts of new arenas, areas, options where you can place them.

Discovery commerce is a burgeoning area, so we’ve yet to see if it achieves long-term success and sustainability.  But clearly, people like the idea because they’re plunking down hard-earned cash, in this economy, to be a subscriber.  Here’s to the continuing innovation in this type of business model.

Categorised as: Learning, Marketing, Sampling, Sampling Works!

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  • Hi Larry,

    I agree that cost-effective channels for sampling are definitely increasing, subscription boxes being one of them. What do you think about the concern that these boxes are constantly introducing competitor’s products to the same subscribers month after month? As a consumer I like the idea of variety, but brands hoping to win over a consumer for longer than a month may not.

    • Renee –

      You raise a very salient point and one that I’ve been thinking about more and more. If we humans do seek variety (which in certain categories we know is truth) …. how do brands juxtapose that with their desire for “brand loyalty”. I do hear this paraphrased comment from brands “Well, I might do that once – but if it is a subscription, kind of the definition of the same people, why would I do it again (on that same SKU)”.

      I am actually working on another post in this topic realm with the recent demise (May 31st) of CraveBox – one of the early entrants in this wave of companies – and some other changes as well. So watch for that and I’ll go into some comments on various things I see going on.

      The point you hit on lays out a very real challenge for this consumer driven genre of “sampling”. People do love to try new stuff, we humans are naturally curious animals – and some of us are even willing and able to pay; although I would still submit the payment is really more about the curation than the actual product. If people want to “but to try” in a business model that may not be ideal for some brands then what should they do to respond?

      I am having lots of conversations about this topic “Can you help me think about Discovery Commerce” and larger scale brands still do question / wonder about the credibility of this vehicle for them. We will start to see more retailer platform driven ‘buy it to try it’ options start to appear and they can make lots of sense – but will this be a truly sustainable model? I am quite sure the folks running the growing companies supporting currently viable options can tell you – “absolutely and here’s how”. There is a place for ‘buy to try’ in the market without question – although i remain convinced it’s about the curation, context, information, and “feel” of the marketing around the boxes that is where the magic lies today.

      THANK YOU for your comments.