Case Study Of Nespresso

EXECUTIVE SUMMARY

The rapid expansion of new technologies and digitalisation is transforming shopping behaviours and consumers’ habits. Many industries have started to shift their approach to market and gradually transform their business to meet consumers’ changing expectations and anticipate new trends. In that context, the fast moving consumer goods (FMCG) industry is at a cross-road : while digitalisation affected primarily their retailers, it is starting to gain an important role in their own global strategy. The need to embrace the change along with facing the inevitable transformation have brought on many opportunities which companies are only starting to explore.

This thesis aims to analyse one of these opportunities : the direct-to-consumer

Direct-to-consumer is a full opportunity for FMCG companies, particularly in the e-commerce channel. Recent research have proven that FMCG companies’ executives are underestimating the potential of e-commerce for their business and might be missing on opportunities to prosper on many levels.

Manufacturers have started to explore the opportunity to become distributors, to offer a full branded experience to their consumers and go beyond their usual strategic business area. Nestlé launch of Nespresso products and owned stores is a clear example that manufacturers can become much more than just brands and suppliers to retailers : they can be excellent service providers, bring a true added-value to their consumers, a strong brand connection along with additional business and

They often rely on powerful distributors (hypermarkets, supermarkets, convenience stores, independent proximity stores…) as well as smaller sub-channels such as restaurants, businesses, schools, hotels, vending machines etc While these channels have become standard and unavoidable, especially in developed countries, they have reached in the past decade a certain maturity and companies often look for new growth levers in order to stay competitive. As a result, companies are always seeking for new profitable and innovative ways to distribute their products to the consumers.

One of the most innovative business model in that sense is the direct-to-consumer (DTC) model, which aims to generates additional sales (on top of the existing channels) and create a proximity with the consumers by distributing the products directly, without resorting to the usual intermediaries.

The direct-to-consumer has known a real boom in the past years, thanks to the Internet and the rise of e-commerce. But how do these companies, relying strongly on distributor giants such as Carrefour, Walmart and Tesco, adapt to this new trend ? Shall they as well develop their own e-commerce? Shall they internalise the distribution channel and enable consumers to buy their products directly?

These are the kind of questions the boom of e-commerce has triggered and the