Three innovative distribution models currently help retailers to survive the Covid-19 lockdowns and new players to disrupt traditional markets.
Brand distribution has undergone drastic changes in the past couple of years, and Covid-19 is further accelerating this trend. Changing demand priorities and consumer behaviours, new media and channels to engage consumers are some of the drivers. But more than anything else, the creativity of business owners, managers, start-ups and marketeers who invent new and innovative distribution models or apply them in new ways make the difference. This article introduces three examples of such innovation and best practice in distribution:
- Brands helping their retail partners to survive lockdowns,
- Online retailers who help offline retailers survive, and
- Innovative sales funnels that change the dynamics of an entire industry
Vans’ Foot the Bill Customisation Programme
Vans’ Foot the Bill Programme is an innovative distribution model for the global skater community. Vans launched this initiative in April 2020 to help their retail partners in the skater community to survive the lockdown, the shift in consumer spendings, and the footfall drops that fashion and footwear retailers are experiencing since Covid-19 entered the world stage. The initiative has been a huge success so far and continues to save small skate shops during this year’s lockdown as well. In 2020, the programme sold 20,962 pairs of Vans globally and raised around four million USD for the participating stores.
How does it work? Each Vans partner customises a Vans style with a design that best represents their business and/or skating community. This design is then made available on Vans’ official customisation website, and consumers support their beloved community shop by using this design to create their very own version of Vans.
While this programme helps small businesses to survive, it also enhances Vans’ own image, strengthens its brand DNA and confirms its authenticity by tying skate lovers across the globe to the brand. It’s a classic win-win scenario for all parties involved.
Zalando & C&A – an Innovative Distribution Partnership
Only a year or two ago, business insiders would have laughed when asked whether they’d expect Zalando to cooperate with vertical low price multichannel retailer C&A. Et voilà, a couple of days ago both companies announced that C&A will join Zalando’s Connected Retail Programme.
This progamme allows brick & mortar retailers to benefit from the huge reach of the fashion marketplace Zalando. Once a consumer places an order on Zalando, a local offline retailer has the option to serve that order and deliver the product from their stock directly to the consumer.
Zalando usually charges a commission on these orders, but due to the repercussions of the Covid-19 pandemic on offline retailers, Zalando suspended commissions until the end of March 2021. Additionally, Zalando now transfers the money on a weekly basis in order to improve the cash-flow of retailers in lockdown.
Many retailers and brands already use this shelf extension: multibrand retailers like Wöhrl or Dodenhof, fashion groups like VF, brands like Karl Lagerfeld or Drykorn, and now vertical retailer C&A, one of the top five fashion retailers in Germany and the DACH region.
The programme is already operational in eight European countries, and as of March 2021, Austria is joining too. Zalando cooperates with around 3,000 offline retailers and plans to double this number by the end of the year.
Many retailers who hesitated to join the programme in the past are now open and, frankly, desperate to participate. And this may make Zalando’s ambitions to double the number of participating retailers by the end of 2021 become reality. It may help too that among all online marketplaces relevant to the fashion industry, Zalando frequently receives best ratings from participating brands or retail partners – by far better than Amazon or Ebay.
Enpal – an innovative disruptor to the German photovoltaic industry
‘Rent a photovoltaic system’ is neither new nor a particularly innovative distribution strategy. But Enpal‘s way of getting in contact with new potential customers is – at least for this industry.
Like many other vendors, Enpal offers hassle-free access to green energy produced right on the roof of your home without any investment, a reduction of your monthly energy bill, additional income through feeding excess energy into the public power grid, free-of-charge maintenance and repair, as well as comprehensive insurance. Those features are offered by many other vendors too, so what makes Enpal that special?
The start-up was founded in 2017. A little more than three years later, Enpal already operates more than 5,000 systems in Germany and plans to operate five million photovoltaic systems within the next six years.
To achieve this, Enpal intensively worked on understanding what customers really want and what negative experiences their competitors’ customers report. This allowed them to improve and shape their own business model to eliminate those precise pain points.
- Other vendors start charging monthly rental bills once the solar panels are installed and operational, regardless of whether they already produce and/or feed power into the system or not. And often it is this interface between your private and the public power grid that creates problems and delays. In response, Enpal only begins charging once this interface is up and running.
- The majority of other vendors remain owner of the photovoltaic system for the entire duration of the rental contract, usually around 20 years. After this time, the customer either prolongs the contract, or the vendor dismantles the system. Some vendors offer their customers an option to ‘buy’ the system at an adequate market price, whatever that means. Enpal’s answer to this: After 2o years, Enpal gives the solar system to the owner of the house for a symbolic 1 Euro, or offers to dismantle should they not wish to continue operating it.
- But there is one more factor that may make a real difference in Enpal’s market position: how they use innovative distribution models to acquire new customers. The Enpal app has been available for three months and has already become a valuable sales funnel generator. Through the app and its SEA, Enpal reaches not only home owners (who typically are the target group of photovoltaic system vendors’ marketing activities) but also their children, grand-children or friends. And that’s what makes the difference.
This younger generation is highly aware when it comes to sustainability and green energy. And they have the power to trigger interest in a generation of home owners who already own a well-functioning heating and power supply system, and may have heard that photovoltaic systems (at least in Germany) are no longer a profitable investment as feed-in prices continue to shrink while energy prices continue to rise. Enpal seems to have done their homework and begun building a community that promotes green energy beyond current home owners, thus also ensuring that the next generation of home owners already know and like the brand.
For this industry, that’s definitely an innovative distribution model and long-term sales funnel generation at its best. And this may make Enpals ambitious goal of operating five million photovoltaic systems in Germany within the next six years a realistic one. Let’s keep our fingers crossed for the sake of all of us.
Different industries, different approaches – but all innovative in terms of distribution, getting access to a wider audience, and increasing traffic and sales. And that’s encouraging news, given that we are all in great need of innovation at this time. Thus, if you have come across other innovative best practices, just let us know and/or participate in our current study:
About the Author:
Heike Blank has worked for big organisations such as VF Europe and s.Oliver but also for niche brands such as Ecko Unltd. and Zoo York in top executive positions. Her extensive experience with opening and managing own retail, partner stores, concessions and shop-in-shops in 23 countries in Europe, the Middle East and Asia make her an expert in distribution, expansion and brand building. Read more of her work here and connect with her on LinkedIn.