For decades, manufacturers and distributors have been at the mercy of their retail partners - to handle everything from sales to service.
While these partnerships continue to be important in sustaining brand awareness, revenue channels and even logistics like maintenance and repair, consumers are pushing traditional business-to-business companies in the direction of selling directly to them, according to Ranga Bodla, wholesale distribution lead for NetSuite. This push is happening thanks to the evolving expectations consumers have about accessing a company when, where and how they want.
Today's modern shoppers not only research their purchases on various digital properties (ecommerce stores, marketplaces, brand websites, etc.), of course, but they also turn to social media to connect with a company they like, voice their opinions and ask for help. It's now the responsibility of a manufacturer or distributor to be ready and willing to field customer service inquiries throughout the Web and offer ways to easily get their products in the hands of those who want them - without any barriers.
Traditionally that has been by offering a "store locator" on a brand's website to provide options of where to buy the products, but Episerver VP of Product Management, Bob Egner, warns that doing so serves as a stop sign for sales.
When a consumer is looking at a "store locator," they are indicating strong intent to buy a product. Turning store locators into "buy now" options instead, removes friction from the buying experience. Doing so, however, can create channel conflict, which is the main reason B2B companies are still only considering selling directly and some have opted not to altogether (see sidebar).
According to John F. Fisher, global head of industry marketing of SAP Hybris, if a B2B company has traditionally worked through distributors to sell its goods, and suddenly starts selling directly, it puts a strain on the relationship with the distribution network partner. In other words, they now appear to be in competition with the partners they have long relied on to get their products into the hands of end-users.
Some of the ways traditional B2B companies have reduced channel conflict is by not competing on price (never discounting their products whereas retailers have a "race to the bottom" according to Egner of Episerver), offering exclusives on their website (e.g. new colors, fresh-from factory options) and, above all else, keeping an open dialogue with sales partners.
"The irony is usually the channels and partners know that B2B companies are looking at going direct - so it's not a matter of if, but when," said Fisher of SAP Hybris. "Once you commit to going direct, the best thing to do is to begin a dialogue with the channels about that decision and work with them to find ways of protecting them in certain circumstances (service contracts, geography, timeline, etc.). The worst move is to surprise your partners by launching a website that competes with them without their prior knowledge."
For many manufacturers and distributors the benefits of selling direct are outweighing the risk of losing sales partners, however. In large part this is because of customer convenience (removing roadblocks) and, according to Fisher, the upside in margin, as well as building long-term relationships with customers.
As for the benefits of selling direct, Bodla of NetSuite adds brand control to the top of that list because even without selling direct, consumers only identify their purchases with whose name is on the product, not who sold it to them.
By selling direct, the distributor or manufacturer can not only control the documentation about the product (e.g. manuals, how-to videos, etc.) and provide access to loyalty and warranty programs, but also glean valuable insights from the data produced by customer service interactions, sales history and patterns and more to inform product updates, content creation, marketing campaigns and other critical business decisions that ultimately impact a company's bottom line and a customer's experience. This direct connection to the consumer provides more demographics on who is actually buying their products - information that, believe it or not, many manufacturers and distributors have not had access to in the past.
The considerations for selling direct to consumers don't end at channel conflict and the benefits of doing so, however. As more manufacturers and distributors look to provide business-to-consumer options, upgrades will need to be made to their B2B experience as well. It has been well reported that business buyers are bringing their B2C-like expectations with them to work, but now with more manufacturers and distributors selling directly to consumers, business buyers will take note of the likely better experience the brand is providing their consumer counterparts.
The B2B side of the company will need to be just as easy to order from. B2B product pages, imagery, inventory and other ordering options will need to have similar functionality as the company's new B2C experience. Choosing an ecommerce partner that seamlessly integrates both B2C and B2B in the back office, can help a manufacturer or distributor with this sure-to-arise issue.
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