An e-commerce executive at a brand manufacturer that sells through a network of dealers told me recently that his company took a long look at direct-to-consumer sales. The exercise wasn’t just driven by the profit motive, however. It was more about competition and shopper expectations. “We don’t sell direct now, but that’s the calculation we all have,” the executive said. The key question for many manufacturers is whether they are prepared to compete on the e-retailing benchmarks for customer service and marketing set by Amazon.com Inc.
The manufacturer chose to remain with its business-to-business sales model, but the executive says all manufacturers have had, or are having, the conversation about direct sales.
Trek Bicycle Corp. had a similar internal debate driven by consumer expectations. Offering online ordering is a sign of the times for Trek, said Toni Gnewuch, digital marketing manager. “We are giving consumers options to shop the way they want to shop,” but the company’s focus is still on selling through its retailers in the U.S.
Fear of damaging dealer loyalty keeps some manufacturers from selling directly to consumers. Trek addressed the issue with a hybrid version, requiring TrekBikes.com customers to choose a local dealer to assemble the high-end bikes after completing a purchase online. The dealer gets a commission on the sale, the buyer’s store visit can lead to additional accessory and apparel sales, and the maker is assured the precision-made bikes are properly assembled.
Tuning into consumer wishes and expectations clearly has a new urgency for some manufacturers, but the momentum has been building in recent years. A Forrester Research Inc. survey of 67 sales channel managers at brand manufacturers two years ago found the top three reasons for developing a direct-to-consumer online channel were:
- Building a closer relationship directly with the customer (62%);
- Satisfying the demand from consumers (49%); and
- Improving pricing/margins (42%).
In a world where shoppers increasingly look to the internet for products, can manufacturers be certain website visitors will take that next step to find a dealer, or is adding a shopping cart inescapable?
Exploring the kind of tactics that Trek and others have adopted are worth considering as ways to find the answers to those questions.
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