What might seem like an oxymoron, branded manufacturers are starting to sell online on their websites and making dealers more loyal. Rather than competing online, brands and retailers are partnering to sell in and sell through more product while giving consumers more options to buy on their terms boosting conversions and revenue. This new form of commerce is opening up possibilities such as same day pickup/delivery, last mile assembly/service, and free local returns for consumers. Other than these obvious benefits for consumers that increase conversions, why else would a manufacturer want to combine their online and physical retail channels? It comes down to loyalty and sales.
Do Retailer Relationships Still Matter?
Dealers stock and promote the brands they have the best relationships with and that can drive consumer demand. The products dealers gravitate towards and promote to consumers on the showroom floor are from vendors they buy into and trust. Nothing says trust like sharing consumers, sales, and data across channels to ensure both parties improve their performance. With 9 out of every 10 sales happening at physical retail, dealers quite simply are able to address more consumers in their respective trade area than a manufacturer ever would be able to directly. Think about it, if you could influence the channel where the vast majority of sales, revenue, and consumer discovery happens – wouldn’t you?
Using eCommerce to Build Dealer Relationships
‘If I commit to you, how do I know your products will sell?’ is often a question most account managers hear when trying to open new accounts. Selling the same way as everybody else is going to lead to average returns at best. Selling in a new way that rewards dealers for buying and displaying your products will increase the chances of success when calling on new accounts as a novel way to show you want to earn their business and more importantly their trust to develop the relationship as partners.
Once in store, helping to sell through inventory only fuels the loyalty further making dealers want to continue to do more business with you. By increasing the collaboration between brick and mortar retailers and your company, inevitably working closer together will increase the understanding of one another and the relationship to grow.
What Better Relationships Mean to the Bottom Line
Consumers are more often buying into the values, beliefs, and relationship they craft with a brand, dealers are no different. They also want to buy into companies they understand and respect to see themselves as partners rather than an advertising medium. Too often we see a brand fail in their retail pursuits where companies simply pump inventory into the channel with no sell through support and wonder why dealers don’t re-order. A lot of time, energy, and resources are spent with a one time flash in the pan worth of sales and no recurring revenue.
Stronger dealer relationships lead to recurring revenue you can bank on and stability for your company. Selling your hot new item into retail is a very tricky proposition if not done right. Setting yourself up for success also means staying in store and how you anticipate supporting those dealers who make commitments to your company. Having commitments every year from dealers allow your company to take more risk as you have money in advance to plan budgets around. Selling direct to consumer only is like putting yourself on a treadmill. You will always be looking for your next sale and not sure where it is going to come from leading to discounts devaluing your brand and its products in the market.
Place Yourself in Your Dealers Shoes
Just the same as how software companies have moved towards a recurring monthly revenue model called SaaS (Software as a Service), retail relationships offer a similar concept that if done correctly can lead to sustainable recurring revenue year over year with nominal maintenance to keep the relationship going. If your software vendors didn’t maintain, update or place any effort into your future success would you stay loyal or would you be open to switching?
How about another example that might be more relevant to you. If you bought from a supplier of yours and then they turned around and started selling directly to your dealers how would that make you feel? Would you consider switching away from that supplier who is now also your competitor?
Conclusion
Playing both sides of the fence with respect to retail and consumer direct is a dangerous strategy and without the right tools in place to manage the conflict can hamper relationships restricting market potential. The biggest and best brands (Trek, Michelin, Goodyear, etc.) are looking to forge stronger relationships with their retail channel partners. In doing so it ensures they address more of the market and can eventually squeeze out competitors from the channel completely restricting rivals only to consumer direct business restricting market potential and revenues.
