July 27, 2011, 1:36 PM

Brands that sell directly to online shoppers risk losing business from retailers

A Shopatron survey says 64% of retailers would change their brand buying habits.

Thad Rueter

Senior Editor

Lead Photo

Retailers don’t take kindly to competition from brands and manufacturers, according to new survey results from Shopatron Inc.

The e-commerce technology and services provider found that 64% of retailers would reduce buying products from brands, or stop those purchases altogether, if those brands began selling items directly to consumers over the web.

Shopatron based its finding on a survey of 958 retailer clients conducted between April 14 and May 16.

Were a brand stocked by retailers to start selling goods directly to online shoppers, the survey says that:

• 11% of retailers would stop buying from that brand;

• 19% would buy as little as possible from that brand;

• 34% would reduce their buying from the brand;

•13% would not change their buying habits.

Additionally, 23% of respondents were unsure what they would do.

A similar survey from 2009 showed that 51% of retailers would buy less from brands that began selling over the web, says Shopatron, which attributes the increase in potential retailer annoyance to the growth in the number of brands selling directly to online shoppers.

“Not every retailer has the luxury of dropping brands completely when they go direct,” says Ed Stevens, founders and CEO of Shopatron. “Still, as this survey clearly shows, brands lose sales with retailers when they go direct-to-consumer.”

Comments | 5 Responses

  • Not sure that 'research' like that is meaningful. Of course retailers would say that. Would they do it? Can they do it? Why are they not doing it? If men were 'surveyed' whether a husband would hit his wife, only a nutcase would say yes, but statistics prove otherwise. (I know it is not the same type of question, but I am trying to point out that people will respond to a question like that the way they are expected to answer and it has no relation to what happens in reality.)

  • When manufacturers receive this data it *becomes* meaningful. This data alters the habits of manufacturers (not retailers) when deciding whether or not to sell direct online.

  • I am a retailer Powersports Dealership (Polaris, Suzuki, Can-Am, Ski-Doo, Sea-Doo); I HAVE changed my buying habbits, and possibly more importantly my marketing habits. 1) if a distributor/manufacturer allows consumers to order from his site he has changed the 'ROI' on my advertising because instead of competing with other retailers for the customer's business - where I can hold my own; I now compete with the distributor/mfg for that product. Consumers somehow believe they get a better experience buying mfg direct; even though my experience has proven otherwise. 2) I agree that we can't 'choose' to stop buying everything. In the case of Can-Am there are many 'captive parts' that must be purchased from them; so we still do so. But in the case of Polaris; why would I stock a bumper that someone could look at in my showroom and then buy online from the mfg when he got home? Instead I stock a bumper that can only be bought in a showroom or on my website; and why would he drive to another dealership, or website when he already knows me? So even if the mfg makes double the margin (distributor -> retail rather than distributor->dealer) he has the additional overhead of customer service; smaller average order size, increased retail marketing spend (or at least lower retailer ad spend). So in the end it may be a zero sum gain - I keep hearing from these OEMs how it is such a small part of their business; yet they continue to do it. Yamaha never did it; Kawasaki did it and stopped; BRP Did it then stopped; then started again; and now Harley is doing something strange with its e-commerce (so I hear). Educate the retailer - put incentives in the right place; and increase customer satisfaction by supporting the channel (not bypassing it). My 2 cents worth anyway.

  • I have dropped three labels that have decided to compete with my stores. In one of the three cases their prices were lower than my minimum margin would allow. I am getting ready to go to Vegas where I am going to inform two others that I am reducing my buy for the same reasons. When I can develop a relationship with another label that can fill that niche I will probably drop them as well. I respect their right to determine the best strategy for their company. If they think they can make more money going direct then it is a good move for them, but there are far too many terrific labels that I can partner with to build a brand to deal with vendors who are anxious to compete with me. My advantage is that I have spent 12 years developing loyal customers who rely on my face-to-face advise, television appearances, published articles and fashion events. It is not difficult to convince customers to abandon a label in favor of another (as long as you don't forgo quality and appeal). Again, I don't begrudge a company pursing their best strategy for making money. We will see if that business model will work for them over time. I would say it is pretty even odds at this point.

  • Wholesalers should wholesale and retailers should retail. I find that many wholesale manufacturers think they can run their business and the retail business. Humm, that sounds like the idiots running our country. Greed creats this and it GETS EVERYONE FIRED IN THE LONG RUN. DO WHAT YOU DO WELL AND DON'T BE A KNOW IT ALL!!!!!!!!!!!!!!

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