Multi-Channel Retailing Ushers in New ERA for D2C Marketers
By D.J. Murphy, Editor-in-Chief
The Electronic Retailing Association (ERA) has evolved in the more than 20 years of its existence from a television-centric group lobbying Washington in the face of increased regulatory scrutiny to a professional trade organization addressing the concerns of direct-to-consumer (D2C) marketers in the midst of a shift—like many other retail segments—to a multi-channel sales environment. Direct-to-consumer marketing traditionally is defined as a retailer using primarily audio/video to tell compelling stories that drive consumer response and sales. Initially, this meant infomercials persuading consumers to pick up the phone and place an order through a call center, according to Julie Coons, president and CEO of ERA.
“About ten years ago, the National Informercial Marketing Association (NIMA) became the Electronic Retailing Association,” Coons says. “As time went on, these traditionally television-centric companies that sold product through long- or short-form infomercials began using more channels including radio, e-commerce and now mobile applications on phone or tablets. What’s really changed from the beginning of the industry to now is the move from using a single channel—television—to multi-channel marketing.”
The inclusion of e-commerce as a direct-to-consumer channel also has resulted in a change in the way D2C marketers get paid. What was once strictly a call-center operation has moved online. And, while D2C always was a card-not-present payment environment, e-commerce has raised the complexity of its members’ payments, Coons says. In a sales environment focused on costs of all kinds, direct-to-consumer marketers keep a keen eye on payments, she notes, though it is one of many concerns.
“These entrepreneurs, by their very nature and the marketing they have chosen to pursue (as opposed to traditional brand advertising or different direct marketing techniques), are focused on every line item of cost because it leads to a better margin. This is a highly margin-driven business. So, they’re very focused on media rates for that particular reason. They’re very aware of the cost to create the product itself. They bear in mind all the transactional costs. I think they give payments lots of thought, too. I think they’re tough negotiators with payments providers, but I think they give it careful consideration.”
In fact, Coons says there is plenty of room in her organization for processors and other companies in the card-not-present payments space and ERA provides a perfect opportunity to meet, network and deal with D2C retailers. Throughout its history, ERA has counted many types of suppliers to the industry as members including fulfillment houses, media companies, television production companies and, yes, credit-card processors.
“The processors who are active in the association have put a lot of time and energy into it, understand the business and have worked to create a very good customer base for themselves,” she says. “From ERA’s inception, the core members of the industry—the marketers—said we’re only as good as the suppliers who understand the business and work with us cooperatively. They welcomed the suppliers into the association from the beginning.”
ERA conducts educational programs, meetings and networking events all year highlighted by its annual D2C Convention held each fall in Las Vegas. Coons says the organization not only programs its educational events with its membership in mind, it actively engages with them for content topics. And payments usually is high on ERA members’ list of concerns.
“What you saw in Las Vegas in September, what you’ll see at the end of February [at The Great ideas Summit] in Miami is really member-proposed and selected education and almost always you’ll see something that involves payment processing,” she notes. “One way or another, you’re going to see something that talks about the latest in the card-not-present industry.”
In addition to the educational and networking opportunities provided by ERA at its events, Coons says one of its most important functions is as a standards-setting body and self-policing agency for its members.
The group operates a self-regulatory program with a set of standards its members must adhere to. The program, funded by ERA and administered through the Council of Better Business Bureaus surveys the industry regularly. Coons says there is a set of escalating steps for companies that violate the standards.
“Essentially we police the marketplace,” she says. “If the folks who run the program see something not okay, they engage with the company. If necessary, they open a case and investigate. If that company refuses to participate, they are referred to the [Federal Trade Commission].
Coons relates an example illustrative of both the self-regulatory and advocacy roles ERA serves. In 2010, Congress was cracking down on a practice known as data pass. Some Internet-based merchants were offering products or services from a third party and often it was difficult for consumers to tell who was offering the product, or even that they were making a purchase that subsequently would show up on their credit-card bill.
ERA was instrumental in quickly responding to its members’ concerns about the questionable practice. It also was diligent in its attempts to protect members from arbitrary action by the card networks, whose response was thought by some to be heavy-handed.
“The card associations were getting pressure from Capitol Hill and then turning around and shutting down merchant accounts,” Coons remembers. “It hit this industry hard. We were active—as were others—in trying to moderate what we saw as the worst restrictions.”
From television to e-commerce to mobile to multi-channel, the direct-to-consumer retailing industry has evolved like many other retail segments. ERA has been there to guide its members through the evolution for two decades and Coons says the group will continue to be the only association focused solely on D2C.