Selling through third-party retailers is a common practice for consumer goods brands, as it provides numerous advantages that greatly benefit these companies. Third party retailers in fact offer consumer goods companies valuable visibility within an established and extensive customer base by consolidating diverse product ranges under their umbrella.

Moreover, retailers often have a strong reputation within specific niche markets, such as Farfetch in the high-end fashion industry or Etsy for craft and handmade products. This reputation allows brands to gain direct access to the customers served by these retailers, further enhancing their reach and potential customer acquisition.

Even though retailers give brands access to a wide customer base and enhance their exposure, they are also right in between the brand and its customers, sometimes acting more like a wall than a bridge. In many cases, retailers withhold customer data from the brands that sell on their platforms. They retain this data for their own marketing purposes and to drive sales on their own platform.

This represents a huge problem for brands that they sometimes overlook: they do not know who their customers are. The absence of customer insights not only limits the effectiveness of their marketing efforts but also wastes potential sales opportunities that are within their reach, if they could effectively target their existing customers. You should never forget that existing customers spend 67% more than new ones. 

Why do retailers keep your customer data?

Here are the main reasons why your retailer won’t share customer data with you: 

1. They leverage data for competitive advantage 

Retailers are able to collect large amounts of data on customers who make purchases on their platforms. They recognize that utilizing data-driven insights enables them to make informed decisions to significantly enhance sales on their marketplace. Here are some fundamental practices commonly adopted by marketplaces:

Prioritizing popular products: Retailers often display the most popular products first to capture customer attention and drive sales. By showcasing items that are in high demand, they can leverage social proof and increase the likelihood of conversions.

Product recommendations: Marketplaces employ algorithms and recommendation systems to suggest complementary products to customers while they browse or view a particular item. These personalized recommendations encourage customers to explore additional products, increasing the likelihood of making multiple purchases.

Personalized offers and promotions: Leveraging customer data, retailers can send targeted and personalized offers to customers based on their previous purchases. By tailoring discounts, promotions, or special deals to individual customer preferences and buying behavior, retailers can foster customer loyalty and incentivize repeat purchases.

Through the collection of customer insights, retailers can effectively optimize the customer experience, boost sales, and foster customer loyalty within their marketplace. The data collected holds immense value for retailers, leading them to be reluctant in sharing it with brands. In fact, by retaining this data, retailers prevent brands from surpassing them and gaining an upper hand by promoting their own products. Instead, retailers focus on consolidating their own brand and leveraging their competitive advantage. This strategic approach strengthens the retailer's brand presence, putting brands at a disadvantage in terms of visibility and market positioning.

2. They have data protection and privacy concerns 

Data protection and privacy concerns play a significant role in preventing retailers from sharing customer data with brands. Retailers must comply with data protection laws, such as General Data Protection Regulation (GDPR) in the UE and California Consumer Privacy Act (CCPA) in the US. Their regulations impose limits to the ability of companies and organizations to share the customer data collected. 

In addition to the compliance with data protection laws, expectations from customers also need to be handled by retailers. When customers are sharing their personal information with them, they are trusting the platforms to protect their sensitive information. By sharing data with brands, retailers could undermine their reputation and lose the trust of customers. This is why it is important for retailers to be cautious about maintaining customer privacy and meeting their expectations in this regard.

To conclude, it is also important to consider the increase in security risks that comes with sharing customer data with third parties. Retailers have a responsibility to protect customer data from security threats and breaches. They invest in robust security measures and protocols to ensure data integrity and minimize the risk of data breaches. By limiting the sharing of customer data, retailers can mitigate the potential security risks associated with data sharing.

Overall, data protection and privacy concerns, along with legal obligations, customer trust, and security considerations all contribute to increasing retailers’ aversion to data sharing.

3. They do not have the right tools to share data 

Even though all the concerns presented above are important to consider, they could be overcome if the retailers would have proper tools to enable safe data sharing. According to Forbes, the limited exchange of data between brands and retailers can be attributed to the absence of appropriate data-sharing technology or a lack of awareness about such tools. 

Successful data sharing relies on having the right mechanisms in place to facilitate seamless data transfer between parties. One viable solution is the utilization of project collaboration tools that enable the importation of data into dashboards, allowing for analytics to be performed on the data and presenting the results in easily accessible formats. This integration of data-sharing technology can significantly enhance the effectiveness of data exchange between brands and retailers.

These tools could support the collaboration between retailers and brands in the future, that by increasing openness around customer data could both increase revenue margins.

How to overcome this challenges in 5 steps

To overcome the wall between retailers and brands, it is fundamental to create a D2C channel through which brands can collect customer data and use them to improve customer experience and boost sales opportunities in existing user base. Here’s how to create this bridge in 5 steps: 

Implement product registration: Encourage customers to register the products they purchase from your brand. This can be done through a simple online registration process where customers provide their information, such as their name, contact details, and purchase details. Product registration creates a direct connection with customers and enables you to collect important data for further engagement.

Offer benefits to increase conversion: Incentivize customers to register their products by providing attractive benefits. These could include extended warranties, exclusive discounts, special offers, or access to VIP customer clubs. By offering tangible perks, you can motivate customers to actively engage with your brand and willingly share their information during the registration process.

Gather relevant customer data: Use well-designed forms during the registration process to collect customer information that is pertinent to your business. Ask questions that help you understand customer preferences, interests, and demographics. This data can provide valuable insights for targeted marketing campaigns, personalized recommendations, and improved customer experiences.

Organize and manage data effectively: Establish a robust system to organize and manage the customer data you collect. Utilize a customer data platform to store, organize and track customer information securely. This allows for easy access, analysis, and segmentation of the data for future marketing initiatives.

Leverage data for ongoing engagement: Utilize the customer data you have collected to engage with customers on an ongoing basis. Activate your data to craft communication and marketing efforts based on customers preferences, purchase history, and interactions with your brand. Send personalized emails, product recommendations, or exclusive offers that enhance their experience with your products and foster long-term loyalty.

By establishing a direct channel and collecting customer data through product registration, you can overcome the challenge of retailers withholding information. This approach empowers your brand to build direct relationships with customers, better understand their needs, and continuously enhance their experience with your products or services.

Layerise is the all encompassing solution to collect customer data

As consumer goods companies often do not have the right combination of skills and infrastructures to build these systems, it takes a long time to implement them internally. That is why they team up with Layerise! 

Layerise takes care of all the 5 aforementioned steps for you! In fact the Layerise solution is built for consumer good brands to create a direct connection with their customers to collect valuable knowledge about them with the ultimate goal of enhancing their customer experience. By leveraging the power of Layerise, you can drive improvements in brand competitiveness and experience substantial revenue growth.