What Is Your Stance on Outsourcing - Core or Context?
Taking your first steps into direct-to-consumer can be confusing.
The normal story looks like this:
over-indexed in #retail/wholesale and/or B2B
under-indexed or not indexed at all
don't know nearly enough about your "real end customers"
bewildered by the array of choices, options, and wanting to make firm first steps into the new world.
I think the big first question I have for most people is: "Is this critical to your existence? How many of these capabilities do you want to own vs outsource? Which option is most consistent with your firm's investment thesis and long-term strategic plan?"
It gets to investment philosophy and their stance on outsourcing, what they view as core vs. context. The reason I ask is that it's possible to outsource the whole thing. There are firms that wake up every day and try to do a good job at that. But then you lose track of your customer in a different way. Someone else learns about your customer. You get "reports" about your customer because you aren't necessarily feeling the pain directly. Which path is for you?
Madhur Aggarwal added some thoughts:
Can’t speak to retail but in B2B and B2B2C, there are two strategic drivers in my experience:
1. First party data. Many B2B firms are realizing the consumers of today are buyers of tomorrow. But they don’t know these users.
2. Product led growth models. Companies digitizing their offerings are starting to behave like software companies and are recognizing they need a product led growth model a la Atlassian, Slack, etc.
The margin play almost never plays because deal size is smaller or the upfront investment and time required is significant. It does not help that many think of D2C only as a channel play. It is a fundamental business model shift.
From where I sit, COVID has started to wake some people up...We have been underinvesting in our ultimate end-customer relationships for too long. Something needs to change.
