Creating online synergies between manufacturers and retailers boosts Connective Retailing
Wise manufacturers see their retailers as key allies, with networks, real estate, and expertise to sell things better than they can – but the temptation to go direct is real.
Our previous post discussed the perils of manufacturers being left out of the sales process. When retailers alone understand customers’ buying choices, manufacturers have poor information on which to base development and stock control decisions.
So why would a manufacturer not set up shop online? Because there are risks.
Profit, or rather, the loss of profit, is the foremost risk. A manufacturer can get caught between the slow ramp-up of direct sales on the one hand, and indirect sales plummeting because alienated retailers will recommend and promote competing brands. Stepping on the retailers’ toes may not be the best strategy.
The logistics involved with direct sales follows as a close second. The manufacturer will have to learn all about deliveries, warranties, returns, servicing and support. Customers expect all of these services to be top-notch. When logistics fall below anything other than excellence, customer find their loyalty to the brand slipping away.
So it turns out that selling through a retailer is not a bad idea after all. The reality is that manufacturers and retailers need each other.
But what about getting closer to customers? Is that not more important than profit, logistics and keeping legal? Of course it is. The good news is that manufacturers can have their cake and eat it, because Connective Retail is about creating win-win-win situations.
When manufacturers embrace Connective Retailing, they build manufacturer-retailer partnerships that maximise individual strengths. E-commerce can be refined through collective knowledge, promotions can be co-branded and measured, and new data can be added back into the pool of knowledge.
When manufacturers and retailers work together to get closer to the customer, the outcome is better products, good margins, and happier customers.
Read more about this idea in our whitepaper “Sell direct without selling directly”
Photo by Curtis Malinowski.