It often happens that a manufacturing company, when implementing its own e-commerce, is concerned about further joint relations with its distribution network. Is it justified …?
When implementing e-commerce strategies and tools in companies, we usually encounter the following issue: in the minds of sales managers, the idea of increasing the importance of the e-commerce channel raises concerns about:
- cannibalizing already existing sales channels
- maintaining relations and good principles of cooperation with a network of distributors and external partners.
Direct sales in e-commerce, as a rule, usually constitute the culmination of digital marketing activities, which are usually carried out by the marketing department of a given company or by cooperating agencies.
And what determines the strength of the distributor?
In the classic model, it is a network of retail outlets or an own group of traders that can generate sales. However, the distributor, by selling products from many suppliers, engages in promoting a given brand in a very limited way (if at all) (unless it has a clearly defined target that determines additional bonuses). Basically, however, the distributor does not allocate budget for the marketing of its Partners (suppliers).
Direct sales through the manufacturer’s online store, as it is obvious, cuts the distributor out of the sales path.
So how to introduce e-commerce without destroying the relationship with the distributor??
One of the solutions is to use the situation when the manufacturer creates a new line of products, targeted at a separate target group, e.g. a company produces air handling units that are sold through a network of intermediaries. However, small heating equipment, whose recipients are mainly ventilation installers, is already directed to the B2B e-commerce channel.
Another option is to enter e-commerce only in new markets. Having strong distribution relations in Poland, companies launch e-commerce channels in other countries: Germany, UK, Italy, etc. Starting with e-commerce, any subsequent relationships with distributors are built there with different assumptions, taking into account the already existing strong e-commerce channel .
Another option, which we also advise in certain cases, is to bring the final customer practically to the end of the ecommerce path on the manufacturer’s website, but without the conversion. In this case, the process ends by redirecting the customer to the local distribution partner.
In this model, all parties benefit from::
- acquired a new customer online
- guided him through the sales path
- acquired a new lead / user to conduct future marketing automation activities
- gets rid of logistics issues and issues related to direct customer service.
- acquired a customer who does not need to be advised on the purchase anymore,
- carries out the sale
- thanks to a well-thought-out ecommerce path, he selected the necessary products,
- valued and pre-ordered them online, ordered,
- the pick-up or delivery will be agreed locally.
Target customer looking for windows for the house under construction:
Most window manufacturers do not provide prices on their websites, and contact is recommended to place an order, which is discouraging. In our e-commerce model – when visiting the manufacturer’s website, in the window configurator, the customer makes a precise selection:
- veneer colors,
- type of fittings, etc.
At the end of the path, an order is generated with detailed product specification and pricing. The order is generated as visible to the manufacturer’s partner who is in the closest location to the customer.
The manufacturer knows that the issues of assembly and possible changes to the order will be guided by the Partner / distributor. In such a model, the e-commerce system strongly supports the activities of distributors.
It is no secret that distributors’ margins reach 100% of the mark-up on the price obtained from the manufacturer.
What a well-thought-out e-commerce strategy can give you:
- can support distributors,
- will increase the producer’s sales,
- will allow you to gain a new group of customers,
- will show the producer as following the digital transformation trend.