E-commerce Spotlight: How Branded Manufacturers Can Use Retail-Integrated E-commerce to Make Consumers, Affiliate Retailers and Themselves Happy
Are you a branded manufacturer looking for the best way to sell your products online? If so, you know it's a complex decision—you recognize you have to sell online to keep up with consumer expectations and demand, but you want to be sensitive to your valuable distributor relationships.
Because of this conflict, many brands just hide their head in the online sand, hoping e-commerce will pass. It will not. In fact this year, e-commerce sales are expected to exceed $180 billion dollars. To avoid missing out on their share of that revenue, brands typically implement one or a combination of four strategies for selling online:
- refer shoppers to their retailers through a dealer locator;
- refer shoppers to their online retailers through direct "product-to-product" links;
- bypass retailers and sell direct to online consumers; and
- sell direct to online shoppers and use their retailers for fulfillment ("retail-integrated e-commerce").
Each of these solutions impacts consumer satisfaction, distributor relationships and bottom-line sales in different ways.
When it comes to adding e-commerce functionality to your branded site, branded manufacturers have more to consider than the typical online retailer. Essentially, you have two customers: your retail partners and the end consumer. Many brands facing the decision of whether to sell online think they have to choose between pleasing one or the other. They can either please their retailers by not selling online (brands selling online are essentially competing with their retailers for sales), or please consumers by making it easy for them to buy direct from the brand's website.
Your first two options noted above, dealer locators and product-to-product links, direct customers away from your branded website to a retailer's website or store to purchase. In the second case, shoppers looking at specific products on your website are directed from the product page to a retailer's website, where they can make their purchase.
These options exist because brands want to give customers a buying option and still support their retail partners. However, shoppers end up frustrated when they have to leave the brand website they trust for an independent site they are unfamiliar with or, even worse, start calling the stores from the dealer locator to find out if they stock their desired items. Many shoppers simply jump ship when they are directed away from the brand website. And worse yet, with these strategies it is possible a shopper will go to the retail shop or website with intention to buy your product, but end up buying a competitor's.
To avoid some of these pitfalls, some brands go with option three above, selling online direct to consumers. Consumers love this option because they are able to buy direct from the brand in a single, convenient experience. The problem with this model is that it cuts out your biggest customer, your retailers. Retailers aren't happy when they start losing sales to your website, and, in many cases, they will reduce or stop buying from you. In a recent survey conducted by Shopatron, 64 percent of retailers confirmed they would reduce or stop buying from brands that decided to sell direct on their website. So, while you are pleasing end consumers by selling online, you have to be careful you aren't shooting yourself in the foot by permanently damaging valuable retail relationships.
A better option for many brands is the fourth, "retail-integrated e-commerce." Retail-integrated e-commerce looks like a typical e-commerce website to the consumer. Shoppers come to your branded website, research products and make their purchases. It's what happens behind the scenes that makes this solution unique. Once the sale is completed, the transaction is handed off to a retailer in the buyer's area who fulfills the sale, either by shipping the item to the customer or hosting the customer in-store for order pickup.
With this option, the consumers are satisfied because they were able to make their purchases quickly and easily, you are happy because you have gained another customer for your brand, and your retailers are happy because they ultimately make the profit off the sale. Retail-integrated e-commerce also has the added effect of recruiting new dealers and encouraging current retailers to stock more of your products to fulfill online orders. In a recent survey conducted by Shopatron, 46 percent of retailers said they increase purchases for brands that send them online orders.
Ultimately, when brands make the jump to e-commerce, they see an increase in sales both online and in retail stores.