E-tailers, the online e-commerce sites that sell products, have a powerful advantage when compared to their brick and mortar cousins. Because they collect detailed information about every shopper, and their movements and actions through a website, they can use that data to influence manufacturer’s product lines, designs, and production schedules.
Gilt.com works with over 650 manufacturers of high products, mostly in women's clothing such as Vera Wang. They require membership to browse and buy, and these memberships also collect personal information. E-tailers may ask for information like name, address, occupation, age, and household income.
This effectively limits the power of brand, but in a different way than what we see in the big box retailers like Wal-Mart and Home Depot. They have become so large, and so dominating in their market, that they have become the choice instead of the actual brand being purchased. While a consumer class home remodeler may have previously searched for a specific brand name at one of many stores, they now will buy from many different brands in one store. So while your town used to have a Maytag store, selling only Maytag, it now has a Best Buy or Sears selling many brands. Sears even promotes itself as "Brand Central", but in doing so they effectively water down the value of the manufacturer brand, and increase the value their own branding.
But nowhere is this clearer than the e-tailers. They have similar, though slightly different capabilities the brick and mortars do.
The B&Ms have tried to use some technology to increase their capabilities. In addition to the shopping basket analysis to identify complementary products (products purchased together, like soft drinks and chips), they are also very effective at using data analysis on products sold, returned, price points, and where the product was positioned in the store. These are all internally set or collected data points, but they also use external or third party data such as local household demographics and temperatures. And they have a new weapon developed in the last decade: The frequent shopper cards hanging from your keychain or in your wallet. When you sign up, they collect information about you similarly to the e-tailers, and when you make repeated purchases using the cards, they understand your personal interests. This allows them to combine all of their data, your purchases, and your personal info to shape future offerings, and even products.
In both cases, they know about you and your key factors. This allows them to predict new directions, and growth or contraction in certain areas. Many B&Ms attempt to make stores more effective for their location and local demographics. Best Buy operates four different store types (personas) that vary in layout, product mix, and specialties. They may cater to suburban, urban, ethnic groups, or affluence based on the area the store operates in. As these local demographics change, for example getting older or less affluent, the store may change its product mix and specials, eventually morphing to a different store persona. They do this based on new external data that has been combined with historical internal data. This allows them to stay relevant and same store sales to grow, a key performance measure for retailers. In this manner, both e-tailers and B&Ms have similar capabilities, though the e-tailers use more global demographics data, while B&Ms use localized data (though they also use national data to understand how local demographics changes will affect sales).
But the e-tailers have the advantage of watching you shop. They see what led you to the website (a search term, search ad, or clicking a link in an email), and everything you looked at. They see the items you looked at in order, what you added to a wish list or emailed from a site generated email service, what you put in your basket and then removed, and what you rated or reviewed. They are doing the equivalent of watching your every move as you walk through a B&M store. What caught your eye, what size or color you viewed, how long you viewed it, what you showed somebody else for some reason, what you put in your cart and then took back out, and what you thought about it when you got home. All of this information can be used to entice you in the future with same or different products.
And in all of these cases, they know more about you than the manufacturers. A fashion designer like Vera Wang can look at what people wear, do surveys, read critical reviews, and see what sells. But they do not know nearly as much about their customer as the distribution partners do. They have soft data that may play out, but the B&Ms, and especially e-tailers have hard data about customers.
And this ultimately allows the e-tailers to shape the products the manufacturers create. They can more quickly predict changes, and even "remodel" with all new products in different ways in minutes. When the e-tailer shares this with manufacturers, it allows them to change production schedules and product directions more effectively to meet, or even create market demand. And this is good for the consumer, but keeps the e-tailer in a growing place of power and prominence based on data they collect and analyze, and their powerful relationships with real customers.