THE ONGOING REVOLUTION - SHOULD BRANDS SELL DIRECT TO CONSUMERS

VIA E-COMMERCE?

By: Bill Napier

June 20, 2016

There's a revolution underway in the industry. Here's why.

Just a few years ago, when e-commerce companies would solicit our products to sell

them on-line, our canned answer was, "Hell, no; it would ruin our distribution and our

relationships with our existing retailers"

But all that is changing now because so many manufacturers are opening up

distribution to anyone because “they need more business.”

The results are causing big problems. Relationships are stressed and many once loyal

retailers are feeling betrayed. But before we go too far, let’s take a closer look at the

retail network.

• First, I would estimate that more than 30% of furniture retailers don’t even have a

website loaded with products. If there are 29,000 retail storefronts, that’s 8,700 retailers

who are invisible to 83%-plus of consumers that use the Internet to start their pathway

to purchase.

• Second, of the 70% that do, (approximately 20,300), I’ll bet that 30% or more of those

retailers do NOT offer e-commerce. That’s another 6,000 retailers who refuse, for

whatever ridiculous reason, to embrace an e-commerce solution for those consumers

that may want to buy on-line.

Yes, I know most consumers want to buy locally, but what if they’ve come to your store

— touched it, sat in it and loved it, but needed to delay the purchase? They are forced

to come back and go through a process they don’t want or need. Guess what happens

next? They find it on-line with a competitor that does embrace e-commerce, and you

lose!

• So, if my math is correct, that leaves approximately 14,000 store fronts that get

today’s consumer, which is roughly half of all our retailers.

With that said, can you blame the manufacturers for wanting to show more and sell

more — everywhere? Yes, and no.

Yes, I can blame the manufacturers for two simple reasons:

1. Most do not have their product standardized so retailers can access an API feed

for their POS systems and websites. That is INSANE to me, and I blame the

marketing person/department and their IT departments.

2. Manufacturers that don’t have this as job No. 1 will fail. Not a question of if, but

when.They don’t help their retailers with content, selling tools and more so

today’s digital consumers can engage with their brand/products.

No, I don’t blame them for selling to the ecommerce companies for these two simple

reasons (doing the math).

First, if 30% of their retail distribution doesn’t have a digital presence with a website to

generate sales velocity, a responsible manufacturer can’t wait for them to get one.

Second, when you add the other 30%, that refuse to embrace e-commerce, especially

when the consumer has voted with their dollars, yes, the manufacturer is going where

the consumer is.

The bottom line is manufacturers have financial obligations to their stakeholders, and

those need to be met to stay in business.

Smart retailers have embraced e-commerce. Many now come to markets with e-

commerce-only buyers because they know: When you show more product, give the

consumer the information they want, when they want it and how they want it, the chance

of them buying from you goes up exponentially.