Diageo admits it has had ‘no successes’ in selling direct to consumers
The alcohol behemoth says finding a formula to sell to consumers directly is like “a pot of gold at the end of the rainbow that you need to keep on chasing”.
Diageo says it is yet to find an effective way to sell to consumers through its own online platforms, and has instead upped its focus on working with wholesale partners and retailers such as Ocado, Tesco and Amazon.
Speaking at a press briefing yesterday (6 September), the alcohol giant, which sells brands such as Johnnie Walker and Gordon’s Gin, said it is looking to hone in on its digital capabilities, in which ecommerce plays an important role.
Charles Ireland, Diageo‘s general manager for Great Britain, Ireland and France, told Marketing Week that it splits ecommerce up into four parts. The first part of its plan has been focused on developing a strategy and getting its “house in order”, with Ireland claiming the business is now “in decent shape”.
It second and third parts look at the strategy in the on-trade and off-trade and how it can sell through their ecommerce channels. And finally Diageo is looking into expanding its own online offering by selling directly to consumers through individual brand websites.
However, Ireland admits selling its products directly to consumers has proven tricky so far. He said Diageo’s luxury online retail destination Alexander & James, which launched five years ago but shut down in January this year, “wasn’t doing what it needed to do”.
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“In terms of direct to consumer [selling], I think there are consumer goods companies that are doing it quite successfully, but we haven’t quite hit a successful formula yet and we’re continually working on it,” he explained.
When asked why Diageo is struggling to get consumers onto its ecommerce platforms, Ireland said while people might have more flexibility from a financial perspective, they are generally time poor and will therefore not necessarily seek out products on dedicated websites.
In terms of direct to consumer [selling], I think there are consumer goods companies that are doing it quite successfully, but we haven’t quite hit the successful formula yet.
Charles Ireland, Diageo
In the meantime, Diageo is looking to foster closer relationships with retailers and digital “pure players” such as Amazon. Nevertheless, Ireland remains optimistic about its chances of one day launching its own successful direct selling online platform.
“If we were to find something that worked, it would enable us to get that closer level of connectivity with consumers and a level of relationship that we haven’t quite got at a consumer level at the moment,” he said.
“It might be a little bit like a pot of gold at the end of the rainbow that you need to keep chasing, and we learn things along the way. We’re keeping ourselves open to the possibility that we might find something, but at the moment we haven’t got anything successful that I can tell you about.”
Choosing digital over traditional platforms
Besides focusing on ecommerce, Diageo said it is also changing its approach to digital marketing. Ireland says that “maybe for the first time ever”, it is spending more money on digital platforms than traditional media. It is predominantly spending its money on partnerships with Google, Facebook and Instagram, but is also looking at newer players like dating app Tinder.
Digital advertising has faced a lot of scrutiny this year, however. Facebook admitted multiple metrics errors, while Google found itself in the firing line after The Times newspaper revealed that brand advertising was being placed next to pornographic and extremist content on YouTube.
When asked if these headlines have negatively affected Diageo’s perception of digital advertising, Ireland insists the company’s background of working in a highly-regulated sector means it is already “more cautious” and has strict boundaries in which it operates.
He concluded: “When [those stories] hit the media around Google and Youtube, we take that as an opportunity to reflect on what we’re doing, and make sure we’re doing things the right way. We do pay attention [to these things] and keep finessing our approach.”