Helping Manufacturers Sell Direct to Consumers

To Improve the Customer Relationships

Why Manufacturers Can No Longer Afford to Wait to Sell Direct to Customer

Posted by on Jan 10, 2015 in Uncategorized | 0 comments

Aug 05, 2014 5:08 PM  By

From Multichannel Merchant

In 1984, CompuServe became one of the first entities to make online shopping possible with its Electronic Mall. Yet thirty years later, many branded manufacturers are still tiptoeing into the ecommerce waters. Why aren’t more brands diving in?

It is certainly not for lack of opportunity. Forrester Research states that 60 percent of all U.S. retail sales will involve the Web by 2017—as much as $370 billion annually. Moreover, a survey by PwC shows that 52 percent of online shoppers in the U.S. are already going directly to brands and manufacturers websites with the intent to buy, driven by a greater assortment, and brand loyalty.

On top of the undeniable growth prospects, direct-to-consumer (DTC) selling offers manufacturers other important advantages. Because many shoppers prefer to make their first stop at a manufacturer’s website when they are researching a product decision, why not capture the sale when they are there?

Adding a purchase capability to their site and taking the sale direct gives the manufacturer, instead of the retailer, the chance to learn first-hand what consumers are shopping for—and why. The business intelligence gathered about buying trends, regional preferences and product positioning can be used internally as well as shared with your retail partners, thereby strengthening the complete channel.

Despite the selling advantages and business opportunities associated with going direct, many manufacturers are still reluctant to jump in for fear of alienating their traditional channel partners. Contrary to the lingering myths, however, DTC does not harm channel partnerships—in many cases it strengthens them. It is not inconsistent for a manufacturer’s website to offer consumers an option to purchase directly as well as a “where to buy” capability that redirects them to a retail partner’s website or local brick-and-mortar store. T

he fact of the matter is that consumers will buy from the channel that best suits their needs and interests—so it only makes sense to make it as easy as possible for consumers to purchase your products according to their preferences.

More often than not, “channel conflict” is an objection raised by internal sales organizations rather than by the retail partners themselves. Many industries—consumer electronics and apparel manufacturers chief among them—learned years ago that DTC commerce can co-exist with retail partnerships. Now, dozens of other categories, including hobby and toys, power tools, home and personal appliances, health and beauty, and sporting goods are learning from their predecessors.

Establishing a robust and competitive DTC presence, however, does involve effort. Sufficient resources must be allotted to support not only the operational aspects of the ecommerce site, but also provide a solid marketing foundation.

Manufacturers’ ecommerce sites must play well with their brand identity as well as the native demands of the Internet; e.g., SEO, social media and so on. Of course, reliable supply chain logistics and customer service capabilities are essential as well. The manpower and expertise required for these functions are why many manufacturers often choose to partner with an outsourced ecommerce services provider.

Regardless of whether internal or external capabilities are brought to bear, perhaps the most difficult question about DTC e-commerce involves how to price your products. Many manufacturers assume they must publish full MSRP pricing in order to protect their channel partners. There are risks to your brand to pursue such a strategy.

Consumers go to a manufacturer’s website for a wide range of reasons. While they may only be conducting research or searching for the latest product information, many want to buy directly from the manufacturer and often are willing to pay a slight premium to do so. However, if your retail partners sell the same item for 20-40 percent less than the price on your site, your customers are likely to feel insulted.

If you’re lucky, they might go on to purchase your product from one of your retail partners. But they’re just as likely to abandon the sale altogether—or worse, buy your competitors’ product. Think of it this way: your website is a direct extension of your brand. Damage your visiting consumer’s experience and you damage your brand.

On the other hand, pricing that meets or is only slightly above the average retail price gives the consumer options. They can choose the channel that is most convenient or attractive to them at the time, which supports your entire channel ecosystem.

Manufacturers have inherent advantages that consumers are drawn to. It’s important to leverage those opportunities in order to offer buyers options that no retailer can match. In addition to accurate and timely product information, manufacturers can deliver an “endless aisle” of product assortment or include unique bundles and closeout items.

Retailers have only so much shelf space – where you are competing with other top selling brands as well as the retailer’s in-house brands. As a manufacturer, you have many more options with your ecommerce site.

DTC selling is clearly going mainstream and offers the ability to forge relationships, gain important customer insights, increase channel revenue and protect brand loyalty. By providing a complete and fulfilling experience, product manufacturers can better serve their customers’ long-term interests—as well as their own.

Alex Becker is Global Vice President & General Manager, Branded Manufacturers for Digital River.

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FTC: State Bans On Tesla’s Direct Sales Model Are Hurting Competition

Posted by on Jun 6, 2014 in Uncategorized | 0 comments

The Federal Trade Commission is now supporting Tesla’s Direct Sales Model.  The government agency is arguing against the state bans on Tesla selling direct to consumers.

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Richard Branson Reveals His Customer Service Secrets

Posted by on Apr 26, 2014 in Uncategorized | 0 comments

From Forbes, contributor and communications coach, Carmine Gallo, learned 7 valuable customer service lessons in a day with Richard Branson and the Virgin America team.


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Sharing the Story

Posted by on Dec 31, 2013 in Uncategorized | 0 comments

Potential customers in today’s world are bombarded by unmeasurable amounts of technology and noise.  But they are still humans (so far).

And humans love a great story.  Storytelling is one of the age-old experiences.  It is how we know our history.  Our ancestors shared stories among the generations, through speaking and the written word.  Newer technology allows for storytelling via audio/video recording, photography, and the internet.

The entertainment industry still draws a lot of viewership in books, television, and movies.  All are a means to tell a great story.  The so-called reality shows have generally been a huge hit as viewers see the story of supposedly real people.

The same applies in business.  Potential customers care about the story.  The marketing department at Apple has grown their brand with the sharing of the story of their founder (Steve Jobs) and create buzz stories with each new product launch.  (They mostly manufacture overseas, and work hard to suppress that story.)

Today’s customers still love a good story about how the company was founded, how it gets materials, where it operates, etc.

A good story builds trust for the brand.

Trust is important as a customer exchanges money for value.

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Direct Mixers & Tanks

Posted by on Dec 21, 2013 in Uncategorized | 0 comments

Mixer Direct is a company that manufactures and sells equipment direct to the end user.  They work directly with these end users to design and manufacture large industrial tanks and mixers customized to a customer’s application.

Working direct ensures that the customer has good communication on project details and requirements.  Efforts are streamlined when it comes to designing and building the equipment.


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Dress Suits Direct

Posted by on Dec 14, 2013 in Uncategorized | 0 comments

Sellers of men’s dress suits that have been embracing a business model that is direct-to-consumer and eliminates the storefronts.  One of the ways to accomplish this is to visit the customers at their home or work, along with having pop-up storefronts.

Per the article in Business in Vancouver,

Because of potential errors caused by customers attempting to measure themselves, Indochino has been increasing its pop-up stores – temporary storefronts where customers book appointments to be measured by an on-site Indochino tailor.

Vucko, Indochino’s CEO, said the company will operate 10 pop-up stores in 2013. Last year it had four.

The pop-up stores are part of Indochino’s strategy to be the first online clothier to offer mass-customized products.

Pop-up stores are a concept that would relate to many other businesses as well.  The concept allows for companies to concentrate on events where their customers are in higher numbers.  Brands can travel to the customer, rather than the customers needing to find the brand.

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NeXus RV Motorhome Factory Direct Customer Buying Experience

Posted by on Nov 24, 2013 in Uncategorized | 0 comments

Nexus RV sells Factory-Direct to their customers.

The sales process is shorter and simplified via direct sale to their customer.  Factory representatives can hear directly from the customer during the ordering process and work to meet the customer’s expectations.  Large and expensive luxury goods (like an RV) are perfectly suited for this process.

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