THE ONGOING REVOLUTION - SHOULD BRANDS SELL DIRECT TO CONSUMERS VIA E-COMMERCE?

By: ​Bill Napier
To sell e-comm or not, there is no question
June 20, 2016

There's a revolution underway in the industry. Here's why.

Just a few years ago, when e-commerce companies would solicit our products to sell them on-line, our canned answer was, "Hell, no; it would ruin our distribution and our relationships with our existing retailers"

But all that is changing now because so many manufacturers are opening up distribution to anyone because “they need more business.”

The results are causing big problems. Relationships are stressed and many once loyal retailers are feeling betrayed. But before we go too far, let’s take a closer look at the retail network.

• First, I would estimate that more than 30% of furniture retailers don’t even have a website loaded with products. If there are 29,000 retail storefronts, that’s 8,700 retailers who are invisible to 83%-plus of consumers that use the Internet to start their pathway to purchase.

 •  Second, of the 70% that do, (approximately 20,300), I’ll bet that 30% or more of those retailers do NOT offer e-commerce. That’s another 6,000 retailers who refuse, for whatever ridiculous reason, to embrace an e-commerce solution for those consumers that may want to buy on-line.

Yes, I know most consumers want to buy locally, but what if they’ve come to your store — touched it, sat in it and loved it, but needed to delay the purchase? They are forced to come back and go through a process they don’t want or need. Guess what happens next? They find it on-line with a competitor that does embrace e-commerce, and you lose!

 •  So, if my math is correct, that leaves approximately 14,000 store fronts that get today’s consumer, which is roughly half of all our retailers.

With that said, can you blame the manufacturers for wanting to show more and sell more — everywhere? Yes, and no.

Yes, I can blame the manufacturers for two simple reasons:
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1. Most do not have their product standardized so retailers can access an API feed for their POS systems and websites. That is INSANE to me, and I blame the marketing person/department and their IT departments.
2. Manufacturers that don’t have this as job No. 1 will fail. Not a question of if, but when.They don’t help their retailers with content, selling tools and more so today’s digital consumers can engage with their brand/products.

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No, I don’t blame them for selling to the ecommerce companies for these two simple reasons (doing the math).

First, if 30% of their retail distribution doesn’t have a digital presence with a website to generate sales velocity, a responsible manufacturer can’t wait for them to get one.

Second, when you add the other 30%, that refuse to embrace e-commerce, especially when the consumer has voted with their dollars, yes, the manufacturer is going where the consumer is.
The bottom line is manufacturers have financial obligations to their stakeholders, and those need to be met to stay in business.
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Smart retailers have embraced e-commerce. Many now come to markets with e-commerce-only buyers because they know: When you show more product, give the consumer the information they want, when they want it and how they want it, the chance of them buying from you goes up exponentially.