December 13, 2017


















Article 8.16

MANUFACTURERS MUST SELL DIRECT – SORT OF

Every manufacturer that has a memorable brand name must be prepared for end users to go to "brandname.com" hoping to find the most informative site for those goods. They will also expect to be able to order any pre or post sale materials or samples. Some end-users may even discover products that they didn’t know existed and will want to buy them then and there. The manufacturer should meet these expectations to protect and improve the brand name’s meaning for both end users and ALL channel partners that sell the product line. Here’s why – plus some related issues:

  1. Avoid the black hole service handoff. If the manufacturer’s site refers end-users to "distributors (dealers) near you" for fulfillment of their expectations, can you hear the grumbling? Most cyber consumers have experienced the following scenario? Brandname.com lists distributors. We call the one nearest us. They are not familiar with the item that we are looking for; they only have a weak knowledge of what they stock locally. They will not do (an expensive paper processing) "special order" for anyone except perhaps a few best customers. This is a negative experience for everyone.
  2. This raises a side issue – what can manufacturers do to help the distributors look better, at least on the web? First, the manufacturer will have to be responsible for developing all web content about their product line to then share it with channel partners’ and new third party portal sites. Where ever the end-user wants to go to be informed the content must be there. Secondly, help all channel partners to secure a domain name and set up at least a simple homepage with a hotlink to the manufacturer’s site. As an end-user clicks through to the main site, however, keep the distributor’s name in frames around the content to make it look like the distributor knows what’s going on with the line.

  3. Shipping all support material directly to the end-user yields faster response time, fewer errors and much less total channel cost in exchange for a qualified lead on the end-user. If distributors are assured that they will get immediate access via "e-leads" to all end-user requests along with attachments for relevant product knowledge and selling tips, they should see the wisdom in these new web-based processes.
  4. If a customer wants to buy something for "full list price" plus freight, so that the manufacturer can actually make a profit on it – do it! But, the site should require the end-user to select a distributor to be responsible for any post-sale service needs or the order can not be placed. This allows for another e-mail notification to go to the selected distributor with copies to other involved channel personnel letting them all know who the customer is, where they live, what they bought and what the channel partners "virtual re-seller commission" will be. These commissions, paid on a periodic summary basis, have three purposes. It bribes the partners not to retaliate by shifting commodity volume flow to competitive lines. It turns special orders from hassles that mostly lose money into profitable business that will motivate partners to promote the special order direct option to end-users. And, it gets partners ready for solving unforeseen problems that will pop up as the digital networked channel emerges.
  5. If new e-tailers or vertical portals appear that seem to be aggregating end-user eyeballs, don’t be afraid to experiment with them. Just make sure that traditional channel partners are re-intermediated and that all players receive commissions equal to what functions they might provide – lead generation, transactional activities before or after the sale and physical fulfillment.
  6. Don’t think that a brand name is so strong that selling direct can be done without re-intermediation. Nike and Clinique have sold items direct that they claimed their channel wasn’t stocking, but both have since softened their stance and thrown bones to important retailers. Proctor and Gamble decided to sell a new brand name of cosmetics direct. AMP, the connector manufacturer that was an early internet catalog pioneer, and Herman Miller, the furniture manufacturer, both by-passed their distributors on some items to some types of customers without re-intermediation. No further PR has been heard on these moves. But, do you think that they found out that - competitive suppliers pushed the FUD buttons of the distributors, distributors imagined the threat to be much greater than it probably was and that a lot of cooperative energy disappeared? Are some incremental internet sales worth these costs – probably not!
  7. Don’t hold back from interacting with end-users to appease channel partners. Levi’s started selling custom fitted jeans direct. Some big retailers threatened retaliation. Levi’s stopped, but the traditional brick and mortar channel partners have been slow and ineffective in telling the Levi story to on-line end-users. The stick and carrot approach of direct interaction with site help, re-intermediation and lead sharing is the right balance.

Manufactures and their channel partners have to put their heads together to co-create new web-based solutions to get the entire product line story and immediate service satisfaction to end-users. Brand-power bully tactics by the manufacturers or reactive, no-change threats from channel partners aren’t the long-term solutions. Sell direct in some support cases, but with re-intermediation.

Merrifield Consulting Group, Inc. Article # 8.16