If you are a producer, if you produce with your own brand, you feel like you were drifting carried by the growing wave of eCommerce and you often ask yourself: Where is my direction? Which course do I take to sell my things?
Retailers have adapted to eCommerce and, at this point, think that they can also sell products online.
But for manufacturers, for brands, it’s different.
Each brand has different needs to dictate what to do: sell directly to consumers? Adjust the relationship with authorized dealers? Both things?
In short, the transition to online sales is complicated.
The good news is that if you’re a brand, you’re not alone.
In recent years, many brands have worked at the strategic level, many have been helped to understand and manage the difficult relationships that arise between them and their dealers.
- What are the right questions to ask for your brand?
- Why do brands go directly to consumers?
- Is there a risk to sell directly to consumers?
- How to create a mixed strategy between a traditional model and a model of direct distribution to consumers?
- How to create a joint proposal between brands and resellers to mitigate channel conflicts?
Are you asking the right questions?
The overwhelming changes in retailing have put manufacturers in a vulnerable position. eCommerce has broken down many barriers and increased competition. Retailers’ loyalty is in decline. The market becomes more competitive.
Retailers ask these questions:
- Can I have a cheaper alternative?
- Can I build my product?
- Can I change suppliers to meet a bigger request?
But there is a more important question to ask: Who is my client?
And if the answer may seem obvious, it’s not as obvious as expected. Among other things, the answer changes between people within the same company.
Take for example a company that produces products for children.
- The marketing director could say that the customer is the parent, the person who physically purchases the product. Without parents, no transactions.
- The sales manager might say that it is not sold directly to parents, but to retailers and therefore they are their customers.
- The product manager would legitimately add that the customer is the child who uses the product, designed exclusively for his comfort.
Who is right? This particular situation illuminates the difference in perspective. They are all right.
The “customer” can be the consumer. It can be the retailer. It can be the user. In fact, it’s probably a hybrid of all three.
For the brands sell directly
Selling to consumers directly is a necessity and in many cases an insurance policy. In my experience, brands are not trying to undermine their retail partners. Many brands choose to sell directly to reduce risk, ensuring that a customer can buy that product regardless of the commercial position of the retail channel.
But there are also other reasons, and the most appropriate reasons and on which to set up long-lasting processes can be:
1 – Inform customers
Know customers and connect with customers. Your brand must be able to tell its story. Customers need to understand your products and the reason to buy from you. If you do not communicate the value of your brand, it’s hard to expect the customer to make an informed decision about why you’re buying your product.
2 – Learn a lot about your consumer
Having direct access to information on consumer behavior, without which it is difficult to adapt your product and marketing to meet customer needs. Too often the most critical data about your products – consumer behavior and demographics, are held by others.
3 – Have feedback on the product
Product feedback has always been a key ingredient for product development. But if the information does not return to the brand, important pieces are lost. And it’s hard to connect with customers if you’re not who sold the product.
Is there a risk to sell directly online?
Selling directly reduces the long-term risks of a sale that is based solely on specific vendors. However, the risks of tense relations with these subjects increase, partly because the retailer thinks that they will soon be cut off from the equation of sale.
No brand is able to afford the immediate loss of income that is created due to the loss of its consolidated business relationships.
Furthermore, losing the retail network is not in the best interest of consumers, as it would limit the places where to buy the product.
Channel conflict is often cited as the main reason why brands do not want to sell directly to their consumers, regardless of whether a new direct channel could offer value or convenience to the consumer.
It does not necessarily have to be this way.
There are solutions that can provide a common value for the brand, for retailers and for consumers. It only takes cooperation.
A common proposal
The worst thing that can happen between a brand and a retailer is an embarrassing silence.
Like any good relationship, a healthy collaboration between a brand and a retailer is all about communication, communication and communication. But how can a brand create a joint proposal that keeps both parties happy and the customer still at the center of the strategy?
Here are some proven directions to discuss with your dealers so that you can cultivate a friendly relationship …
1 – Provide more options for the buyer
Brands should make it easier for buyers to become customers. Brands should provide the customer with the opportunity to purchase directly or from an authorized retailer through a “Where to buy” option. In this way, the retailer has the same opportunities to capture the customer as the brand.
2 – Show the value of your retailer
As part of the purchase process, provide information to the customer about the value the retailer brings. This could be something similar to the next day delivery, an extended warranty or even the simple fact that the dealer has been in business since 1937 … Each retailer will have a key differentiated and should be more than willing to provide this value because if they cannot provide it, it is really necessary to ask what value they bring to the customer.
3 – Focus on a product-level distribution
eCommerce efforts can be focused on a specific product rather than on a complete line. It means that you should not use your home page to create offers, discounts and promotions. It is only when customers reach a specific product page that they see benefits and progress towards buying. This strategy allows you to level the playing field between you and your dealers.
4 – Test your direct strategies on special products
It can be difficult for a retailer to stock up on all the products of a brand. In many cases, margins simply do not exist when it comes to complex products or low-cost products.
There are products on which retailers simply do not want to waste time, which should be taken into consideration by brands.
Often, a brand can actually create products that are so exclusive that it would not be feasible for any retailer to keep them physically in stock. Some brands have implemented a direct model on a line of products dedicated to have a distribution of these products. These products are designed only to be sold online and by the manufacturer. Differentiate product lines it’s a great way to ensure that the brand and the retailer are not competing, especially on price.
5 – Collaborate on marketing efforts
Whether it’s providing detailed product information or even retailers, make sure that any marketing effort is designed to work with the retailer, as well as direct-to-consumer channels. There are many content delivery services that will manage the process for you. Regardless of how you collaborate on marketing initiatives, make sure that the client has the same experience.
6 – Share data
Selling online is also about learning how customers interact with your products, such as conversion rates, ideal price ranges, successful promotions and products that can be bundled.
Try to think of a way to share this data with the retail network. After all, if you move the conversion rate, even for a fraction of a percentage, this will make a big difference to the overall sales.
7 – Implement a selective distribution agreement
A selective distribution agreement, which respects the antitrust rules and is not a collection of anti-competitive and therefore illegal rules, allows to decide the criteria that must be satisfied by the retailers, who, in turn, can use the web to assert the their strengths.
In this way, you can use the website to reward those retailers who carry your brand’s value.
Do more with eCommerce
Selling online does not have to be a line drawn to stand on either side of the line. It is not to be decided on which side to stay. And there are always tactics that help mitigate potential conflicts before they happen.
Manufacturers must focus and invite retailers to discuss potential problems with them and then find out how meeting consumer needs could work in everyone’s interests.