This is the year for many consumer brand manufacturers to put more energy into launching or expanding their direct-to-consumer (DTC) channels.
Clear benefits such as increasing brand equity, higher profit margins, and more control over the purchase experience make this strategy very appealing for many consumer brands. However, many of these brands run into challenges when their “most important customers” are competing in the same space. These most important customers are the brands’ retail distribution partners.
So how do consumer brands continue to maintain a relationship with their retail partners while reaping the benefits of providing a direct-to-consumer distribution method?
Forrester Research has found that DTC channels may not negatively impact these relationships. In fact, they may have the opposite effect. More than half of manufacturers who report selling directly to consumers on their own e-commerce sites claim it has had a positive effect on relationships with other sales channels.
Conclusion? Channel conflict may not be all it’s cracked up to be. According to Jack Love, publisher of Top500Guide.com, don’t believe the hype. He argues that CBMs who go direct-to-consumer with prices comparable to their e-retailer partners are pumping up total product sales and profits, thereby hammering the “final nail in the channel conflict coffin.” Instead of viewing retail partners as competition, those CBMs who extend olive branches to their partner websites and make enhancements to their own in service of an exceptional consumer experience make the smarter (and more profitable) play.
Not only could it have a positive effect on these distribution relationships, it has an obvious positive impact on your customers.
- 82% of consumer brand manufacturers said selling directly to consumers improved their customer relationships.
- 76% reported it has improved customer experience.
Need more convincing? The Forrester study also found DTC channels impact brand awareness and sales for channel partners significantly.
Retailers report being able to focus on items that are profitable while letting the manufacturers themselves offer the lower-volume products. Having their own channel can also give consumer brand manufacturers the ability to test new products before passing on new items to retailers.
If a direct-to-consumer channel is an important part of your retail marketing plan in 2015, then check out our Consumer Brand Manufacturing Marketer’s Playbook for an extensive list of tips, trends & questions for improving your brand and business.
*Stats from Forrester’s report shared on InternetRetailer.com