Helping Manufacturers Sell Direct to Consumers

To Improve the Customer Relationships

Emergency Vehicles Direct

Posted by on Oct 26, 2013 in Uncategorized | 0 comments

Arrow Manufacturing in Iowa sells their product (emergency vehicles, mainly ambulances) direct to their customers.

Why do they sell direct?

 

Better contact between the end user and the people building the equipment.

Hear it straight from them:

Their product is one that is low-volume and highly engineered and designed.  They can customize their product to exactly fit their customer’s requirements by discussing directly with their customer all of the require specifications.

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Online Wine

Posted by on Oct 20, 2013 in Uncategorized | 0 comments

Amazon has announced that their wine sales are now available in four additional states: New York, Michigan, Arizona and Louisiana.  Additional states include California, Maryland, Oregon, Texas, Virginia and Washington.

Amazon acts as an aggregator of available products for customers to browse, and creates a trusted and secure website for use by customers wishing to make a purchase.

“Our customers tell us they enjoy our wine-country selection and the convenience of finding detailed information in one place. We want to connect customers with wine sellers around the country and provide a destination where they can learn about and purchase wines directly from great wineries on Amazon.” says Peter Faricy, vice president for Amazon Marketplace.

From the win seller’s perspective, there are advantages too.  Amazon adds exposure and legitimacy.

“While we’re already selling online through our own website, most of our existing customers are from the local tri-state region. By teaming up with Amazon.com, we will be able to reach new customers who may never find us without discovering our labels in the Amazon Wine store,” said Chris Lopez, manager at Black Star Farms, located in Suttons Bay, Michigan. “Amazon is an exciting sales channel for us to increase brand awareness and gain customer exposure. We think customers are attracted to Amazon.com because of the reputation for value and great customer satisfaction, and that customer trust creates a big opportunity for us to attract new customers.”

Many small wine businesses can grow their market and by selling and shipping direct to their customers.  Their supply chain is shortened, as it removes distributors and retailers from the cycle of the sale.  The distributors and retailers add cost and complexity to the end product that are not considered valuable by the customer.

“Amazon.com Wine Store Introduces Shipping to New York, Michigan, Arizona and Louisiana.” Businesswire.com. Accessed 10/20/13.  http://www.businesswire.com/news/home/20131017005447/en/Amazon.com-Wine-Store-Introduces-Shipping-York-Michigan

 

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Educated Customers

Posted by on Jun 22, 2013 in Uncategorized | 0 comments

End users are more educated than ever. Consumers need to feel that the product purchase is a smart one.  Spending hard-earned money is easier when the purchaser feels like they are buying goods that solve a need in their life.  Consumers need some background so that they are educated for their purchase.

Today’s product information is relatively free thanks to the modern internet.  Internet accessibility has made huge leaps and bounds, not only being available in the vast majority of households, but also the increasingly high number of cellphones that have internet browsing capability.   Modern search engines help potential consumers quickly find the background information required to guide purchasing decisions.

Consumer education can come from a multitude of websites.  These include:

  • Information-sharing (Wikipedia)
  • Independent product reviews (Consumer Reports)
  • Sale and product reviews (Amazon)
  • Youtube videos
  • Independent blogs
  • Product sales website

Customers increasingly do their own research before making purchase decisions.  They need to ensure that they are getting a product that solves their needs at a good price, and from a reputable company.

Manufacturers that sell direct to their customers would do well to provide as much information as possible about their product, it’s use, and the general background on the subject matter.  Customers need that information, and will look elsewhere for that information if necessary.

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Direct from Plumbing Wholesaler

Posted by on Jun 16, 2013 in Uncategorized | 0 comments

A business by the name of Ferguson is a 60-year-old plumbing wholesaler in the U.S.  They are a large company, having approximately 18,000 employees.  President and CEO Frank Roach describes in the Newport News, VA Daily Press:

Ferguson had already put in motion its key plan for future growth by venturing into e-commerce with the buyout of Improvement Direct and its online home improvement and decor stores in 2007. As Ferguson is primarily a wholesaler, its online platform was envisioned to serve business customers, although the division is capable of moving Ferguson toward more direct-to-customer sales with Build.com, Roach said. In the past, contractors and interior designers would visit Ferguson’s showrooms to pick out cabinets, faucets, bathtubs, appliances, lighting and other building products.

E-commerce won’t replace Ferguson’s showrooms, but it lowers operating costs as it allows for self-service, he said. Commercial customers can order and track statuses online 24/7 without having to make phone calls.

“We’re not going to wait for the world to get better,” Roach said. “We’re going to get better ourselves.”

from the Newport News, VA Daily Press article by Tara Bozick June 13, 2013. Click here to read more.

Ferguson, as a wholesaler, is working to move towards a direct-to-consumer model.  Eliminating the brick-and-mortar retailer step and allowing end consumers to purchase directly from their online platform should benefit the company.

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Direct Auto Sales Fight in North Carolina

Posted by on May 27, 2013 in Uncategorized | 0 comments

A fight in North Carolina between the North Carolina Automobile Dealers Association  and automaker Tesla may soon be settled by the state legislature.

 

tesla

 

Per the Chris Kardish Associated Press article,

It’s the latest such battle for California-based Tesla, which like other car manufacturers must navigate a patchwork of state laws dictating how its vehicles can be sold. Nearly all states – 48 – require manufacturers to sell their vehicles through dealerships to ensure the companies don’t undercut their own network of franchised dealers, according to the National Automobile Dealers Association.

Tesla says it is cutting out the middleman by allowing people to view different options in a showroom, but then ordering the car direct from the company online rather than buying from a salesman. That approach also allows it to bypass state laws regarding franchised dealers, which have been in place for decades. However, lobbying groups say franchise dealers invest more locally and provide customer service that Tesla cannot.

The bill in North Carolina was mostly routine, simply updating the law governing the relationship between automakers and dealers. But it also changes the law to subject electronic sales to the same scrutiny. It has been unanimously approved by the Senate; the company is set to sit down with the state lobbying group for dealers, the North Carolina Automobile Dealers Association, to discuss a compromise that both sides say is unlikely to be reached. .

Tesla doesn’t yet have a showroom in North Carolina, where it has sold about 80 cars to date. The company recently announced the first quarterly profit in its 10-year history, around the same time Consumer Reports gave its Model S electric sedan a near-perfect rating.

Tesla currently operates 29 stores and galleries across 14 states and Washington, D.C. Customers can order a car online at a sales location or at home but not at galleries, which exist purely to showcase cars in states where auto dealers have launched suits or state law restricts the company from discussing sales in person.

Colorado was the first state to take action against the manufacturer’s stores, passing legislation in 2010 that halts their expansion. Since then, Minnesota lawmakers unsuccessfully pushed for a similar measure. In New York and Massachusetts, dealers have unsuccessfully sued to shut down the dealer’s stores. In Virginia, a judge recently rejected Tesla’s request for an exception to laws that prevent manufacturers from operating dealerships in most cases.

But the automaker can sell in every state because transactions legally take place in California. The North Carolina law, however, prevents customers in the state from making electronic purchases directly through manufacturers, said Diarmuid O’Connell, Tesla’s vice president of business development.

“This would be the first place to my knowledge that Internet-based communications with our company would be circumscribed,” he said.

Tesla, as a upstart automaker, has worked to build a successful business by selling direct to their customer.  This benefits Tesla by removing the requirement of building a large distribution and sales network.  It has largely proved successful, and is a model for other upstart manufacturing companies to follow.

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Not About the Experience Anymore

Posted by on May 25, 2013 in Uncategorized | 0 comments

In the good old days of retail stores, luxury retailers made the sale because of the experience of their consumers.  The look and feel of their location, decorating, environment, etc were all part of making a sale of high-end goods.

Times have changed as new forms of advertising inform customers more about the features, benefits, and luxury of the actual product.

Via Forbes Magazine:

(The) new luxury experience is in ownership. People want nice things more than
they want nice service. The luxury industry was shocked when it learned that
luxury consumers loved to (shop) at Costco, a warehouse style store that is
anything but fancy but also sells luxury vacations, furniture, high-end
timepieces, and $100,000 pieces of jewelry. A feeling of disgust fell on the
faces of luxury brand executives when they saw their goods sold via online
auction side eBay or Amazon – arguably the world’s largest shopping mall.
That however was in the beginning, and luxury brands are feeling friendlier to
places like eBay and Amazon because sales numbers prove their fears to be
without merit. The real fear however was that these mainstream shopping
experiences would devalue their high-priced goods, because they were not
being sold in a luxury environment. Nevertheless eBay and Amazon continues
to sell high-value goods at large volumes. Gucci for example has made
Amazon.com their official authorized online retailer.

Consumers at all price levels want good service that is hassle-free and simple.  They are very informed and do not need a salesperson to steer their decisions.

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Seven Reasons to Shorten the Sale to the Customer

Posted by on Apr 12, 2013 in Uncategorized | 0 comments

American Manufacturers must turn the clock back 180 years, before the start of the Industrial Revolution. Consumers purchased their goods and materials directly from the people that made them. There was no question as to the identity of the maker. If a custom was required, it was not a problem. If the the item broke prematurely, it was easy to return for repairs/replacement.

blacksmith

Businesses are returning to their roots.  It is now very easy for businesses to design, market, and sell products directly to consumers. Manufacturing can be internal or contracted out, advertised and sold directly over the internet, and shipped via UPS, FedEx, or the U.S. Post Office. Avoiding traditional sales, marketing, and distribution channels provides several benefits. Many small companies do this, as do the likes of Apple, American Airlines, Proctor & Gamble, Dell, etc.

 

American Manufacturers gain several benefits from the reduction of size and complexity of their supply chain to the end user. Manufacturers historically have been very interested in profitability inside their factory walls. By considering the flow of their goods when they leave the factory walls, they are finding new benefits through the reduction in the size of their supply chain to the end consumer. The structure of the modern Internet has allowed for ease of advertising, contact, communication, and payment. The modern American logistics market allows for fast and inexpensive delivery of goods directly to customers.

delivery truck

Here are seven benefits for OEM manufacturers that shorten their supply chain:

 

  1. Customer Satisfaction

Customers that are able to communicate easily with the manufacturer of their goods tend to have more positive experiences. Consumer preferences can be accommodated when they can be easily voiced by the consumer and fulfilled by the manufacturer.

 

  1. Quality Control

Reduced inventory in the supply chain is easier to control should there be a quality problem. Smaller supply chains result in fewer warehouses holding goods that would require inspection should a quality problem occur. Customers who receive their goods faster help to identify quality control problems sooner. Manufacturing problems that leave the factory are recognized in a faster manner.

 

  1. Market Response

Shorter supply chains allow for the market to interact with the product sooner and provide feedback on its attributes. The introduction of new products to the market is faster and easier with more direct access to end users. Quick feedback can allow for faster adaptation to market conditions.

 

  1. Customization Opportunities

Shorter supply chains coupled with greater interaction with the end users allow for more opportunities to provide customization to the customers. This may include product attributes, quantities, product mix, etc.

 

  1. Faster Payment

Cash flow cycles from the customer back to the manufacturer are shortened along with the supply chain. The reduced number of entities owning the products along the supply chain will translate into a reduced number of entities to buy and sell the item on terms before the cash reaches back to the manufacturer.

 

  1. Competitive Advantages

Lower inventory levels and more efficient distribution networks provide financial advantages as compared to other products/manufacturers in the same market.

 

  1. Product sell price

The ability to keep a stronger hold on the distribution network reduces competition among resellers that can work to drive down product sell prices. Resellers may also offer the same product from multiple manufacturers and compete them against each other.

 

The above are 7 reasons for OEM Manufacturers to work towards closer relationships with their customers.

 

The How:

 

–One piece flow: Allows for fast manufacturing of customizable products. Not waiting on batches of similar goods.

 

–Flexible production: Value Streams that are adaptable and flexible to compensate for the various operations that are required for special features and benefits.

 

–Design for Manufacturing: Designed so products can be manufactured in a cost effective manner.

 

–Disposable Packaging for Direct Delivery: Depending on outside logistics companies doesnt allow for returnable packaging. Packaging needs to be presentable to the customer.

 

–Lean Accounting: Traditional accounting encourages batch production, high inventory levels. Very counterproductive. Instead, consider lean accounting. The important things to measure include Inventory Turns, Machine Downtime, First Pass Quality, Dock-to-Dock times, etc.

 

American manufacturers must turn the clock back 180 years, before the start of the industrial revolution. Consumers purchased their goods and materials directly from the people that made them. There was no question as to the identity of the maker. If a custom item was required, it was not a problem. If the the item broke prematurely, it was easy to return for repairs/replacement.

 

American manufacturers gain several benefits from the reduction of size/complexity of their supply chain to the end user. Manufacturers historically have been very interested in profitability inside their factory walls. By considering the flow of their goods when they leave the factory walls, they are finding new benefits through the reduction in the size of their supply chain to the end consumer. The structure of the modern Internet has allowed for ease of advertising, contact, communication, and payment. The modern American logistics market allows for fast and inexpensive delivery of goods directly to customers.

 

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