How to get more value from direct-to-consumer models with generative AI

Consumer package goods (CPG) organizations are garnering loyalty and creating sources of value by adopting a direct-to-consumer model. Our report with HFS research on CPG and retail trends shows more than 70% of CPGs are building a DTC model, but many maintain that there are challenges in getting the most out of a DTC strategy. Optimizing a DTC, e-commerce channel through the use of generative AI offers a way to mature these models. Here are three areas where generative AI can make an impact and help CPGs improve their DTC strategy.

1. Real-time dynamic pricing and sales planning

Generative AI can tap into massive amounts of data to help CPGs make decisions about how to shape go-to-market sales planning based on price, assortment, and promotion. By tapping into internal, local, and global data, generative AI solutions can help develop plans that have a high statistical probability of success in the market. Gen AI provides ability to use the data, convert it into insights and churn out plans in real time, enabling decisions to deliver the right results.

CPG organizations can act on the results generated from these AI-derived plans and use them to refine their DTC strategy.

2. Better targeting to tackle customer buying behaviors

Consumer dynamics are changing rapidly, given omnichannel options that see consumers shopping across multiple channels based on their purchase intents. And due to an ever-changing economic environment, consumer spending habits are being tested, too. These factors can lead to uncertainty for CPG organizations to understand where to place their bets, especially with a new DTC model that needs fine tuning. But generative AI can help CPG organizations get a 360-degree view of the consumer quickly and suggest actions to more effectively target them with the right price and promotion at the right time.

3. Improve customer experience with order management

For CPG organizations to create a winning DTC model, it requires a smooth shopping experience on their e-commerce platforms from start to finish. Getting the information right, providing availability of stock, and enabling superior experience is an essential part of the buying lifecycle. The last thing a consumer wants to see on your website is that their favorite item is unavailable.

Generative AI can help by evaluating market data and purchase data to manage demand, supply planning, and availability more effectively so you can gain the maximum market share. Generative AI's ability to sort through huge swaths of data quickly will help your CPG organization stay on top of order fulfillment so your customers don't click away disappointed.

How to take full advantage of generative AI's capabilities

It's clear that generative AI can help optimize DTC models and deliver better experiences for consumers. But for CPG organizations to reap these benefits, they need to be sure that they're internally set up to use the new technology.

Here are the four building blocks to help your business get maximum impact from AI and gen AI:

• Focus on outcomes to make sure you introduce generative AI with an end-to-end approach. Enterprises that have mature digital journeys will have a head start.
• Make Gen AI part of your full stack solution and not a point intervention. Integrate it with data orchestration, cloud computing, and automation to unlock true digital transformation.
• Build Data foundations by establishing high-quality data-acquisition systems and standardizing data-quality practices, enabled by business algorithms.
• Create a data-centric talent pool to tap into the company's collective intelligence and adopt a co-innovation approach for generative AI. Do not fear failure but learn from the results, which will help with ruthless prioritization and accelerate ROI.

As consumer demand continues to evolve, so should your strategies to meet their expectations. DTC models are a good start but optimizing them through generative AI technology will allow your organization to be more agile and respond quickly to market insights while delighting shoppers every step of the way.