For many companies, pursuing a multi-brand business strategy is a no-brainer.
In simple terms, a multi-brand business owns more than one brand and has developed a plan to manage them all under a single umbrella.
The scope of a multi-brand strategy can vary greatly. Sometimes, it encompasses more than 2,000 distinct brands, like in the case of Nestlé. Other times, a boutique operation might own just a handful of brands.
There are signs that the multi-brand business model is only gaining momentum. 2021 was a banner year for mergers and acquisitions, with 62,000 such deals taking place. That’s up a whopping 24% from the previous year. With this level of activity, it’s clear that multi-brand companies continue to expand.
Broad underlying economic factors support the sustained popularity of multi-brand business strategies. “Economic optimism remains high, there’s a strong deals pipeline, capital is in abundance, and companies across all industries badly need technology,” notes PricewaterhouseCoopers.
But those are just a few macro reasons for the continued popularity of multi-brand business strategies. Here are five specific strategic advantages of the model:
1. Increased market share
More brands bring more products, and more products take up more shelf space, whether virtually or in-store. This helps a company squeeze out the competition while reaching new customer segments with the potential for a more diverse product lineup.
2. Internal brand competition
From a management perspective, owning multiple brands can improve the performance of each. The sub-brands compete against rivals as well as their counterparts in the multi-brand strategy. This drives performance, and the parent company reaps bigger rewards with their success.
3. More cross- and upselling opportunities
A company grows its existing customer base when it acquires additional brands. That opens the door for increased opportunities to cross-sell and upsell, especially if the parent company buys brands with products that have strong ties to its own offerings.
4. Broader (and deeper) customer insights
The acquisition of new brands includes data, which can be aggregated across the entire multi-brand business. With better data, you’ll be able to craft personalized campaigns, which consumers today demand. Personalization is something that 71% of consumers expect, while 76% are frustrated when it’s absent from their buying experience.
5. Resource-sharing potential
By implementing a multi-brand business strategy, the parent company can leverage shared resources across brands to cut operational costs. Trimming overlapping responsibilities creates a leaner operation.
With all the competitive advantages of a multi-brand business strategy, it’s easy to see why they’re so popular, what’s more difficult: executing one effectively.
The biggest barrier actually stems from what makes a multi-brand business so compelling in the first place: the fact that it brings together unique brands, each with its own way of doing things.
More variety is great when it comes to SKUs. But when each brand has its own systems and strategies for ecommerce, warehousing, inventory, and accounting, it’s a recipe for data silos and redundancies.
Yet the prospect of unifying multiple brands can seem daunting. Concerns over complexity and disruptions to business lead some companies to maintain disjointed networks—even if it means foregoing many advantages of a multi-brand business strategy.
For a multi-brand business to succeed, brands must be seamlessly connected behind the scenes. It doesn’t matter how different they may appear to customers, or if the brands are in entirely different segments, like business-to-business and direct-to-consumer.
Here are two major ways that Nautical’s multi-vendor ecommerce platform helps multi-brand business owners accomplish this goal:
1. It’s purpose-built for multiple storefronts. You can attach multiple storefronts to a single, unified backend. While customers get curated retail experiences, Nautical’s dashboard gives the multi-brand business owner a full view of key metrics and data — from product and inventory management to financial reports — at a glance.
2. It’s fully scalable and works on-the-fly. Nautical has a full suite of ecommerce integrations and syncs to your existing stores for a smooth transition to your platform, whether you migrate all your brands at once or one at a time. It’s also quick to set up from scratch, doesn’t require bottomless IT resources, and grows with your needs.
SkyX began as a manufacturer selling vaporizers exclusively to wholesale distributors, but the company’s founders saw the potential to expand as a multi-brand business. However, as the company launched several direct-to-consumer product lines, it found itself with disconnected sales channels, a lack of transparency, and administrative inefficiencies.
The popular ecommerce platform that SkyX had adopted lacked the flexibility required. “Nothing was off-the-shelf or ready-to-go that was easy and customizable for the person who’s building it without a huge web development team,” co-founder Kylie Halperin recalls.
After shopping around for an alternative, SkyX landed on Nautical to merge multiple brands. Nautical’s ability to unify SkyX’s direct-to-consumer sites and B2B wholesale portal was one major selling point. “The scalability of it was important for us as well,” adds co-founder Martin Steinbauer, noting how simple it is to add new brands.
The platform has given SkyX room to grow its business — including its bottom line — without increasing overhead. SkyX entered new territory — selling directly to retailers — because they now have the option to set custom wholesale pricing for specific customer accounts and to accept credit cards.
“We’ve probably lost hundreds of thousands of dollars not having Nautical already set up as a wholesale portal because store chains like to pay with a credit card,” says Halperin. “We weren't able to provide them a credit-card option, and now we can.”
The wrong ecommerce platform can hold back your multi-brand business in the present — and rob it of strategic opportunities for the future.
To execute a game-changing multi-brand business strategy, you’ll need the kind of insights and connectivity that can’t be gleaned from a patchwork of different systems and workflows. Make sure you have equipped your team with the data they need to make strategic plans for your brands.
Fortunately, Nautical’s multi-vendor platform is easy to integrate, quick to launch, and doesn’t require a whole ecosystem of third-party apps just to meet the basic demands of companies with multiple brands. With Nautical, you can focus on growing your multi-brand business and taking it to the next level.