The Drum Awards Festival - Extended Deadline

-d -h -min -sec

DTC Agency Models Ecommerce

The last mile: why has WPP launched an e-commerce management business?

Author

By Sam Bradley, Journalist

June 8, 2022 | 7 min read

Mark Steel, boss of WPP’s new e-commerce management service Everymile, explains why it’s getting into the delivery game, what it will offer brands and what revenue share model it is trialing.

delivery crates in a warehouse

WPP’s new Everymile offering promises full management of the e-commerce process for brands / Unsplash

For businesses looking to expand and defend their interests, vertical integration is a classic strategy. It’s why oil and gas companies historically expanded into exploration, refinement and delivery of petrol products; why Tesla handles both its software and the mechanical manufacture of its cars; and why, in part, WPP launched an end-to-end e-commerce company at the end of April.

The advent of Everymile will enable WPP to offer its clients a service offering that spans the entire e-commerce supply chain, from branding a new product, marketing and advertising it, to a customer actually ordering a product and eventually receiving it.

Mark Steel, Everymile’s chief executive, joined WPP last summer and was working to develop the new firm from the moment he arrived. ”What we’re offering, effectively, is a fully-managed service,” he explains. ”If you’ve got a brand that is ready to go direct-to-consumer (DTC), or maybe they’ve tried it before and it’s been difficult ... Everymile offers everything that’s needed to deliver that.”

Though there may be sceptics that an advertising group can pull it off, Steel’s background should tell you the commitment WPP is making to ensure its success. He’s held a number of digital operation roles, most recently at Google and prior to that a 20-year stint at Argos (and then Sainsbury’s post-merger) where he led all customer and commercial activity.

At WPP he’s starting from scratch. He says the company’s services will soon offer ”everything you need from identifying the audience driving traffic to the technology needed for both the website and, crucially, the stuff that happens behind the website such as payment management. We’re not providing you with a technology platform or some kind of consultancy, it’s an operational service. We manage everything end-to-end.”

Businesses that are also clients of WPP’s creative agencies, or the media buying and planning capabilities of its media firms, could come close to managing a huge part of their operations through the holding company.

Companies that want to expand their e-commerce or DTC operations, Steel says, are often faced with limited options. ”You’re effectively stuck with two choices as a brand. You either build it yourself, but that’s fraught with challenges: it’s incredibly expensive with a high upfront cost, it’s often slow and you’re often managing many different third parties. Or you can outsource to one of the platform providers, but you’ll lose control of the brand experience because platforms optimize for one-size-fits all; you don’t get a huge amount of influence over how it is developed or how your data is used.”

Instead, Steel argues, Everymile’s bespoke solutions, which include its own proprietary e-commerce platform, can provide a third way.

He declines to reveal the headcount of the new business, but says it is based primarily in the UK, and is ”small” and hiring as they grow. In the meantime, it’s ”tapping into the extended WPP family on a regular basis,” particularly VMLY&R Commerce and Wunderman Thompson.

Bespoke DTC

Growing a bespoke services business at the speed and scale required by WPP’s ambitions (and those of its shareholders) isn’t easy, though. ”Some parts of DTC are fairly consistent, no matter what the product is,” says Steel. ”Take something like managing orders – you need to be able to track and manage the operational challenges of fulfilment and logistics. There are nuances to that depending on the product, but it’s fairly consistent in terms of the skills and processes needed to deliver that.”

The bespoke element of Everymile’s offer tends to show up in ”the consumer-facing parts” of a client’s DTC approach.

While Steel won’t share the names of any founding clients, he says Everymile will be targeting brands coming fresh to the DTC scene, or ones that have tried and failed previously. ”We’re having a number of conversations in that space, we’ve got a lot of conversations with brands that either are doing it or have tried to do it and found it really difficult, and want to find a better way.”

Larger consumer goods firms often prioritize managing their commerce operations entirely in-house, he adds. But smaller, nimbler firms can be more open to outsourcing. ”There are other markets and product categories where they prefer to work with a partner,” he says, and there’s opportunities for Everymile there.

Revenue share

WPP has opted for an unusual pricing model for Everymile, with no retainer fees or standard rate cards, instead going for a framework based directly on performance.

”Effectively, it’s a revenue share model,” explains Steel. ”We provide everything you need to drive e-commerce for your brand, and we share a percentage of the revenue that we drive on your behalf. So, we’re incentivized to drive sales, to drive strong commercial outcomes. When we’re successful, and when we do a great job, we’ll do well out of that relationship.”

He suggests the model can provide cost savings to brands that might consider building their e-commerce architecture in-house. ”This is building on our existing capabilities and investments in e-commerce. So the challenge of that investment that a brand would need to make, we’ve already done that. And as we grow over time, we’ll be able to bring to clients a level of scale that they would find difficult to achieve on their own.

”We’ll be able to bring a really cost-effective answer to some of those questions delivered through that shared revenue model, rather than on an individual basis.”

Given the rise in inflation in most major markets around the globe, the option to avoid or defer major investments will be appealing to clients, he argues. ”If you kind of look at what’s happening now in the in the e-commerce world and in the broader marketplace, huge inflationary pressure coming through into anyone running e-commerce, if you are doing that as an island on your own, then you’re going to face the full brunt of those inflationary pressures,” he says. ”Cost of acquisition is a challenge for a lot of these businesses, and we can help.”

Steel believes the launch has given WPP a head start in the DTC and e-commerce services market, an area of increasing competition between agency groups.

”In terms of competition, our offer is unique. Relative to our industry we’re absolutely the first of its kind. That’s not to say competition doesn’t have parts of the jigsaw puzzle, but this is the first to offer the whole end-to-end managed service.”

DTC Agency Models Ecommerce

More from DTC

View all

Trending

Industry insights

View all
Add your own content +