Published in 2009, Internet Retailer magazine reported that the fastest growing subset of Ecommerce businesses were Manufacturers moving to the “direct-to-consumer” model or B2C. Top-500 manufacturers like: American Apparel, Estee Lauder and Apple were spinning up retail operations using Click and Mortar tactics. Since then, the niche has experienced positive velocity toward an even larger portion of market-share and remains as one of the more potentially energetic parts of Ecommerce.
As one looks out at the ecosystem of Ecommerce, both what is and what could be, it is clear that Manufacturers are one of the last frontiers to use Internet Commerce to innovate their businesses. As more and more major manufacturers discover the efficiency of controlling brand and creating greater margin through the Internet, the trend will only continue to grow.
For instance, W.W. Grainger, a top-20 Manufacturer pulling in billions a year, completely revolutionized their revenue model through creating a direct-to-consumer website and marketing strategy. Over the next few years, Grainger aims to make their online presence account for some 40 – 50% of all revenue. Obviously, not all brands are set to make that transition but in general, moving from Manufacturer to Retailer doesn’t have to be a difficult process. In fact, the path from Manufacturer to Retailer typically starts with Ecommerce as it offers a low-barrier to entry and can be cheaper to build and maintain.
A Personal Example
Before Snap came into existence, many of our team worked (and work) with a company called Probus Online. Snap Agency and Probus Online are sister companies and Snap still maintains the Digital Marketing for Probus’ Ecommerce.
Probus is a Manufacturer and Internet Retailer that owns seven different brands and online stores. Over the past decade, Probus has expanded from directory-based sales channels, such as eBay and Amazon, into operating multiple .com presences. In fact, Probus was awarded Inc. 5000 awards (#642) and Fast50 (Minnesota, #4) awards for continual growth and velocity. These function as credibility in the explanation of how manufacturers can become great retailers.
Why it’s a Great Idea to Become a Retailer
Overall, most Manufacturers know about the benefits of becoming a Retailer. In case this is your first foray into learning about the strategy, here are a few reasons it could be beneficial.
Create new streams for revenue with higher margin
The world continues to move toward being Internet-Based 100% of the time. In adding a presence onto the Internet, there becomes one more channel in which customers can find and buy your product. With the Retailer portion removed, the potential for greater margins is much more accessible.
Monetize existing brand devotion
Through years and work with Retailers, your brand may already be known by many and is being searched for online today. By having an Ecommerce channel to absorb such searches, you are responding to consumer need faster than a retailer could.
Enhance competitive lead
There is a sense of completeness, support and footprint when a Manufacturer has both Retail and self-service channels. Through an Ecommerce channel, footprint grows and allow for a competitive advantage over other both in Brand and in how results are displayed on Search Engines. Remember, there are only so many spots on page 1 for a product. What if you could have a result in all of them?
Gather valuable customer data to improve your products and marketing
Over the past few years, there has been continued push to utilize “Big Data” to make better and more predictive decisions about customers, businesses and the world. As a Manufacturer, feedback regarding your product is filtered through Retailers and may lose the spirit of what Consumers are actually wanting. In having your own Ecommerce channel, the Manufacturer is now able to learn, grow or shrink products or even categories based on first-hand feedback from Consumers.
Opportunities Needed to Become a Retailer
In general, the path from Manufacturer to Ecommerce Retailer follows the same route as those moving into the Ecommerce space for the first time. There are new systems, operations and resources that will help transition and grow an Ecommerce plan. Below is a compilation of frequent opportunities for growth and recommendations on how to use them as springboards for the move into Retail. This can also serve as a checklist of things to consider when moving into the Ecommerce space for the first time.
Beyond some very large Ecommerce Retailers, marketing and advertising will all be completed through Internet Marketing. If you’re a pure Manufacturer, you’ve probably spent very little time outside of traditional B2B sales to create lead opportunities for a consumer interaction. Digital Marketing will change all that quickly and efficiently.
For the majority of Manufacturers, this move into Online Marketing should be an exercise in building off of the strength of your name. Think about it, your brand is most likely well known by the exact market whom you are going after, the channel by which the consumer will purchase is just changing.
For Digital Marketing, I would recommend taking a look at a few different tactics to ensure that your reputation is rounded, expansive and uniform in the most popular places on the Internet. These will not be a process-oriented explanations but general overviews of strategies to investigate as you move into non-traditional marketing.
PHASE 1 – UNDERSTAND ONLINE SEARCH
Online searching divides into two large service categories: SEO and PPC. Both are focused on taking user intent, i.e. a person searching for a particular product or service, and nudging a Search Engine to present the Manufacturer’s Ecommerce experience to that searcher. Said another way, Online Search Marketing is the science and art of meeting a potential customer exactly at their time of need for your product.
There are more than enough resources regarding SEO and SEO Services, but the long story told briefly is that SEO or Search Engine Optimization is creating relevance between your website, an online searcher and the search engine. In creating certain types of content, backlinks and media, one can create a relationship between a Product/Service and a potential customer. This model resides on something called Organic Listings or listings that are “free” to appear on a search engine. Free is a relative term because it can take hard work and man-hours to create that relevant relationship.
A few strategies to consider:
If already in retail stores, start with your own Brand Keywords. It’s far easier to rank for something in which one is already highly relevant than to start from scratch.
Create unique content often and at all levels of the Ecommerce store. On your blog, category pages, product copy and even the Home Page, adding content often and in unique ways makes relevance easier to achieve. One of the issues we often see is that product descriptions are similar to what is on other brands Retailer Ecommerce sites. Search Engines love unique content and if you’re sharing what is already being used on other Ecommerce sites with your Retailers, it could be detrimental to your rankings. Create something unique and you’re in good shape.
Creating backlinks and Offsite Relevance is a quick win. Given that you have an existing product in the marketplace, there are probably many folks already talking about it. Find these thought leaders and encourage links to your Ecommerce site and other channels.
In the same vein, PPC or Pay Per Click, is the “paid” version of meeting a potential customer exactly when they need your product. Relevance is still very important to this potential customer and the search engine but the path to getting there centers around paying the search engine to be a part of that triangle. A few deeper levels of our own PPC Services and PPC in general, can be found on our site.
A few strategies to consider:
You own your brand. Defend It. Starting with branded keywords is a great way to understand how users might utilize your website. Learn from this to make a better user experience and more conversive copy for ads. Remember, if you trademark the brand, you can tell others to stop advertising against you.
Conduct Primary Market Research. PPC is a quick and sometimes cost-effective way to research how your prototypical client uses the Internet to find your type of product. In testing copy, imagery, landing pages and things of that ilk, it’s possible to lay the entire framework of your SEO campaigns quickly.
Focus on Return on Investment.. There is no other channel wherein you can tell with quantitative exactness what is working and what is not. Use that assurity to make smart decisions on how to spend your budgets.
PHASE 2 – DEVELOP THE BRAND THROUGH EXPANDING THE FOOTPRINT
Your Ecommerce store can become a hub of activity for all your Digital Marketing. In doing so, you’re creating a plethora of ways to either learn, interact or share the brand through a gamut of channels. In this phase, the goal is to allow other websites the delegate power to bring traffic to your Ecommerce website or create a purchase outright. Again, these are blanket level statements surrounding strategy and tactics, not everyone is a good fit.
Though the explosive growth of these channels has slowed recently, they are still ground-zero for a brand’s own sharing of reputation and expansion. Through paid ads or consistent outbound engagement, an Ecommerce company can quickly and efficiently learn about their existing and potential customers while marketing using what is learned.
There are obviously many channels to attempt to use but what we’ve found is that the best channel is the one in which you, or your teams, will be the most active in creating and responding to customer engagement. This engagement is how Ecommerce can truly bring social shopping and influence into the process of selling.
A few things to consider:
Social media is advertising. The channels weren’t designed to provide immediate Return on Investment; they were made to allow for conversation between companies and their customers. Getting top of mind is an important part of the purchasing funnel.
Your brand. Your voice. Maintain the clarity and quality of your brand by focusing on how you want to sound to the outside world. Though your product may have been purchased through other Retailers prior to moving into Ecommerce, customers may not know how you sound and “react” to them. Social media is a great toe-in-water to sharing your brand and voice.
Many Manufacturers will not compete on price with retail partners, and will sell at full MSRP. While this may reduce your competitiveness, at times, your margins will not suffer. Having these margins can allow for passing through to affiliate partners or those that promote your products on their popular product review blogs, shopping portals, newsletters or other web sites. That cut of margins will be significantly less than what Retailers absorbed and have the benefit of only growing your brand.
A few things to consider:
Choose a platform you trust. There are many affiliate marketing platforms for Ecommerce. Try to choose one that operates transparently and easily. The easier it is for the affiliates, the easier it is to get more folks selling your product.
Decided a commission structure. How will you determine the cut that affiliates see for their sales. We push for a variable model as it encourages higher margin, more expensive items while giving opportunities to pad with lower-priced models.
Give affiliates a starting point. In the same vein of making it easy on affiliates, providing them with creative and copy for your categories and product will make getting off the ground as fast as possible. There may be other bidders in the space, so the easier it is to work with you, the more likely it is an affiliate will place your ad over others.
You’ve probably heard of eBay and everyone is aware of Amazon. These large shopping centers can generate traffic and feedback very quickly for products that have some brand awareness or competitive pricing. This within itself is an entire blog article of how to market, optimize and use 3rd party channels but the brief strategy is to use them as a test-bed for minimum viable product (MVP) testing and market analysis or as an entirely new channel to expand the footprint of your brand. Having all search results on a page: Bought, Organic and 3rd party store looks pretty great to your customer and provides confidence.
PHASE 3: SUPPORT SERVICES
There is much depth to rounding out one’s support services to give proper competitive advantage, customer service and generally less headaches, so this section will be short. But it’s important to note that these things must happen to ensure that the Ecommerce channel can be operated.
Fulfillment and Logistics
Once a purchase is made online, what should its journey be to the customer?
When an item is purchased online, how is it tracked out of inventory? How will you manage inventory from multiple storefronts, POS systems and other Retailers?
Who will assist customers with their shopping experiences, returns and exchanges?
How will you maintain products within your catalog? How can you maintain the quality of your products as they display on the Ecommerce channel(s)?
Where will information regarding customer purchases and historical data be kept and used?
Resources to Oversee it all
Who’s actually doing the work?
PHASE 4: NEXT STEPS
Moving into the Retail space via the Internet is an efficient way to quickly grow your business. Though it’s not for everyone, it is the largest opportunity in the consumer market and the lowest time-to-live of the channels. As you churn through learning more about moving from Manufacturer to Retailer remember that the most important part is planning the journey so that hiccups and bumps are avoided prior to getting there. Creating a strategy using the points above is a great way to start the conversation.
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