This 18 slides presentation provides insight why manufacturers should not rely only on distribution channels for sales. Read about 9 reasons why they should engage in direct-to-consumer E-Commerce and how to avoid channel conflict with existing sales channels. Connect with me on Linkedin: www.linkedin.com/in/olafjonsek/

1. Manufacturer-driven E-Commerce
Solving channel conflict

2. The problem: Channel Conflict
Many manufacturers want their brands to
capture the power of the internet and sell
online.
At the same time the manufacturers do not want
to create conflict with other distribution
channels, as these partners are necessary and
viable for any manufacturer to maintain and
gain success.
Solving Channel Conflict
Page 2

3. The Solution: Managing the conflict
Manufacturers can build and grow a branded
E-Commerce solutions while maintaining channel
harmony.
There are several
advantages for
manufacturers to
engage in direct
E-Commerce.
Solving Channel Conflict
Page 3

4. 9 Reasons for Manufacturer-driven E-Commerce
Customer Satisfaction
Profitability
Inventory
Exclusivity
Ownership of Customer Data
Customer Feedback
Trust
Continuity
Brand Equity
Solving Channel Conflict
Page 4

5. Engaging in E-Commerce: Customer Satisfaction
63% of web users (brand loyalists) visit the
manufacturers website several times per year*
20% of online shoppers come to manufacturer
websites specifically to buy products*
Customers rely on the manufacturer to serve
their requests for
Upgrades / downgrades
Compatible devices and accessories
New product launches
Online purchase
*Channel Intelligence Referral Site Survey
Solving Channel Conflict
Page 5

6. Engaging in E-Commerce: Profitability
As the manufacturer you are not expected to sell
below MSRP. Your shoppers do not expect
discounts and rebates.
By selling to the end-user directly you increase
your margins significantly.
Solving Channel Conflict
Page 6

7. Engaging in E-Commerce: Inventory
Retailers manage & control their own inventory
Manufacturer can not guarantee that retailer will
have requested item in stock – customers could
decide to buy placebo product
Customers expect Manufacturer-driven web
stores to have inventory when retailers are outof-stock
Solving Channel Conflict
Page 7

8. Engaging in E-Commerce: Exclusivity
Retailers are focused on the sale, not the
product
3rd party retailers will
promote other brands
Example:
Even though the visitor searches
‘Nike Heart Rate Monitors’, the site
suggests other brands and
products by LifeSource, Omron,
Timex, Polar, Reebok, Sigma…
Solving Channel Conflict
Page 8

9. Engaging in E-Commerce: Ownership of Customer
Data
Limited end user data on sales through the retail
channel.
As a leading brand you can not rely on retailers
to engage with the customer and continue to
promote you brand and products
Only by selling to the end-user directly you can
generate a marketing database that allows
optimizing the customer lifetime value.
Online stores are the ideal instrument to collect
and apply customer data.
Solving Channel Conflict
Page 9

10. Engaging in E-Commerce: Customer Feedback
Developing consumer products and services
requires direct feedback to get optimal results
Selling to the end-user directly enables you, the
manufacturer, to get unfiltered feedback by your
customers.
E-commerce enables you to get instant
feedback while saving cost by avoiding
3rd party market evaluations.
Solving Channel Conflict
Page 10

11. Engaging in E-Commerce: Trust
Online shopping is still clouded by fear of fraud,
product piracy and identity theft
Online surfers seek trusted brands to deal with –
they go to the manufacturer website
Sending these shoppers to 3rd party retailers
might cause their risk aversion lead to
abandoning the shopping experience
Solving Channel Conflict
Page 11

12. Engaging in E-Commerce: Continuity
In times of economic instability a manufacturer
can not rely on retailers to continue the
customer relationship
Solving Channel Conflict
Page 12

13. Engaging in E-Commerce: Brand Equity
E-Commerce has become an essential part of
our economy. Showing investors and customers
that you are equipped for the future is essential
for the value of your company.
Proving yourself as
E-Commerce-centric will
impact not only revenue
but create trust in your
market positioning.
Solving Channel Conflict
Page 13

14. Solving Channel Conflict
Do’s and Dont’s
Unconditional pricing
Reward
Host
Solving Channel Conflict
Page 14

15. Solving Channel Conflict:
Unconditional pricing
Don’t
As the manufacturer, do not sell below MSRP. The
result would be further reductions in offline channels.
Do
Offer products on your store at MSRP with little or no
discounts.
Offer rebates on shipping or accessories
Offer parts and accessories not offered through
channels
Solving Channel Conflict
Page 15

16. Solving Channel Conflict: Reward
Don’t
Even though you will increase your margin, do not
retain all profits.
Do
Offer commissions to your retailers or affiliates for
sending online shoppers into your cart. This solution
provides revenue to retailers without them having to
carry your inventory.
5% to 10% commission is industry standard
Solving Channel Conflict
Page 16

17. Solving Channel Conflict: Host
Don’t
Regulating the market, prices and product display will
consume too many resources.
Do
Within your manufacturer-driven E-Commerce site,
setup sub stores for your retailers (sub-sites). There
they can brand their sub-stores but display your
products. You control display and brand promos.
Solving Channel Conflict
Page 17

18. About
Olaf Jonsek
www.linkedin.com/in/olafjonsek/
Solving Channel Conflict
Page 18