Supply chain agility in the age of the influencer

There’s a growing need in the race to win the online channel for both traditional consumer goods brands and digitally native brands – maximizing the potential of social media, in particular influencers.?

More money than ever is being spent on paid social ads ($151 billion on social ads in 2021 according to Digital Media Stream). But are businesses thinking enough about the impact boosting their social presence will have on supply chains? Peak's Tom Latham explores.

Size of the prize

According to figures shared by Statista , the total value of the influencer market worldwide grew from $9.7 billion in 2020 to $13.8 billion in 2021 and is projected to reach $16.4 billion in 2022.

Companies such as Estee Lauder, Revolution Beauty and REFY Beauty have led the way within their use of influencer marketing.?

Even in 2019, Estee Lauder announced it was spending a whopping 75% of its marketing budget on social media influencers (The Drum ).?

Fast forward and REFY announced in September 2022 on Linkedin that they finished their financial year with revenues of eight digits, an achievement unheard of for a business in its second year of trading. Meanwhile, Revolution Beauty’s earnings jumped 73% in May 2022 compared to the prior year (Charged Retail).?

Influencers fulfill a function brands need in an increasingly online world. Visiting cosmetics counters for advice isn’t the preference of many consumers post-covid, and the rise of “how to” guides by influencers not only fulfills this function, but enables many health and beauty businesses to reach a wider and more diverse audience. As a result, influencers now play an essential role in a customer’s journey.

What about stocking out?

While businesses in the space have a huge opportunity to reach their customers and maximize sales through influencer led promotional activity, it comes with challenges.

The Health and Beauty sector has always been sensitive to promotional and seasonal activities. It is commonplace for many businesses to plan their year around several key influencer led product launches alongside their core product range, often to incorporate a broader and diverse range of shades.?

There are also many instances where an influencer will spontaneously use a product, which then drives traffic to a companies website. If this hasn’t been planned for, this could lead to missed sales opportunities and can be damaging to a company's brand.

From a supply chain perspective, this means continuing to add SKUs, creating more complexity for planning and often sparking a constant chase for the silver bullet of cold start forecasting. It means collaborating with the sales and marketing teams to ensure promotional activities such as markdowns or bundles align with the required stock cover. All of this layered on top of industry agnostic supply chain constraints, such as fuel shortages and rising production costs, means that demand and supply planning is extremely difficult.

As well as the bottom line, stock outs hurt brands in other areas too, namely awareness and repeat purchase rates.

Using data to optimize supply chains

An optimal and agile supply chain is an essential competency to capitalize on the growing and diverse opportunities offered by influencer marketing.?

This blog comes hot on the heels of an illuminating fireside chat with Peak’s áine McTiernen and Coty’s Sally Stuart. In many ways, Coty’s challenges are typical of those being felt across the industry. Varying factors such as new product launches, influencer marketing and markdown activity lead to what they coined ‘spiky demand’.?

What particularly interested me about that discussion was the focus on data to overcome these challenges. Through leveraging data and using an AI forecasting app on Peak, Coty’s planning teams are able to be much more proactive and strategic in their decision making.

And it’s not just the influencer channel that benefits from a data-led approach. Revolution Beauty’s Adam Minto has spoken in various forums (such as the CEW Tech Beauty Summit and in Charged Retail ) of using DTC (direct to consumer) channels for data capture. He rightly points out that the data captured is a key indicator of who and where your customers are, which of your products they like and in what combinations. For so long, traditional CPGs have been once removed from their target audience. Using the first party data gathered from the DTC channel to inform future influencer marketing campaigns is key to winning in the online space.

The prominence of influencer marketing both online and in store is here to stay. Subsequently, the lack of data is often no longer an issue. The issue that a lot of Health and Beauty businesses have now is breaking down data silos and harnessing their data to make optimal decisions, both within their demand and supply planning and beyond.

On Peak, users can deploy AI applications to take them from data ingest through to an actionable outcome, just as Coty has done with its demand forecasts.?

We’ve experience working with leading names in the retail and consumer goods industries as well as digitally native challenger brands, helping these businesses leverage their growing (and often untapped) data to drive commercial objectives? across the value chain.?

Every business we speak to underestimates the value of their data. How could yours help you win in the age of the influencer??