Should brand manufacturers open their own eCommerce stores?
Although eCommerce is most commonly associated with retailers, this may not be the case as time progresses. For example, it is not unusual to see magazines opening their own marketplaces, where they can sell products featured in publications straight to readers. Product manufacturers are also following suit, allowing them to maximize margins by selling their goods directly to customers instead of relying solely on third-party retailers.
Of course, this can create some awkward relationships with sellers – no retailer likes to hear that manufacturers may be moving to cut them out of the loop. Additionally, there is no doubt that long-standing retailers have closer connections with buyers than many brand manufacturers do – when customers need to make a purchase, most go to their favorite retailer and not to the manufacturer’s website.
The perks of selling directly to customers
That being said, business-to-business industry analyst at Forrester Research Andy Hoar recently asserted brand manufacturers may want to consider opening their own eCommerce stores, as it can be worth the hassles they will likely encounter along the way.
Opening an eCommerce store may enhance brand loyalty and drive more exposure for a manufacturer’s broader product lineup.
Hoar told Internet Retailer there are several advantages to doing so, notably the fact they get direct access to their customer base, which is not possible when going through a third-party middle man. Additionally, it may enhance brand loyalty and drive more exposure for a manufacturer’s broader product lineup. By opening their own online store, manufacturers are also fostering greater Web traffic, which could help in other areas such as recruitment as well.
Several manufacturers have had great success with this direction. Hoar pointed specifically to Bose, who is known for producing audio devices and other consumer electronics equipment. While Bose does utilize third-party merchants such as Amazon and Best Buy, it has also opened its own eCommerce store. Bose benefits through positive user reviews on the major marketplaces but opening its own channel allows the company to improve direct relationships with customers as well.
Numerous other brands have taken a similar approach. For example, New Balance sells shoes straight from its website to customers. Cosmetics brands are also keen on selling products directly to customers. At the end of the day, it ultimately comes down to the strength of the brand as well as how well they understand shopper needs.
Opening a marketplace or online store
Of course, opening an online store or marketplace is a significant challenge in and of itself. Brand manufacturers may need to make significant investments into website design, changes in order fulfillment and inventory management and other direct to consumer eCommerce operations.
Fortunately, while this is an expense, it does not have to be a huge one, particularly with cloud solutions that allow brand manufacturers to scale up alongside customer demand.