Alibaba received a $192,000 penalty for pricing during the past two Singles’ Day sales.
What manufacturers must learn from online retailers
While retailers have created a flexible, targeted, and often captivating sales channel through their web sites, most manufacturers are lagging in their use of the online channel to connect with consumers. But by taking a page from retailers and offering a more complete user experience, manufacturers can improve brand image, sales, customer satisfaction and loyalty.
Consumers today are turning to manufacturers` web sites for product information before they even begin thinking about where to buy something. They return to the manufacturer`s site during and even after the sales cycle for support, related purchases and information. According to Forrester Research, 77% of consumers expect manufacturer web sites to have the best product information and 75% say they should be useful for post-purchase information. Suddenly, manufacturers find themselves in a position to influence sales and customer satisfaction in a way that never has been available to them before. Yet, the majority of their sites do not take advantage of the opportunity to interact directly with consumers.
Why they come
Initially, consumers visit manufacturers` sites to find detailed product information with which to make a purchasing decision. After the sale, consumers return for support, accessories, and opportunities to get the most from the product they`ve purchased. Meanwhile, manufacturers are looking for ways to establish stronger relationships with those consumers to build their brand and to influence the decision. Later, manufacturers want to extend the relationship that has been created by the purchase, foster loyalty and better understand the consumer`s needs and preferences.
In short, what the consumer seeks is a perfect complement to what the manufacturer desires: interaction. They want to talk with each other. This type of organized--often personalized--dialogue happens frequently and naturally for retailers, but not for most manufacturers. Whether manufacturers sell only via retail partners or also directly to consumers, they stand to learn a considerable amount from retailers about connecting with customers.
Before the sale, manufacturers have a number of advantages over their retail partners and dealers to support the consumer`s needs. They can provide deeper knowledge about a specific product than a mass retailer can. A big-box store--or online mass merchant--is unlikely to spend hours preparing expansive data about just one of the items on its shelf, but the product`s manufacturer does. Manufacturers can also provide a much richer experience than they currently offer, similar to those of specialty retail sites, incorporating product reviews, user ratings, virtual tours of products and enhanced imagery.
Manufacturers should also present product comparisons within their lineup, laying out all the models and options in an attractive and easy-to-use manner. Properly constructed, these comparisons can help the manufacturer guide consumers to the value and benefits of the products that best meet their needs.
While some manufacturers sell directly to consumers, others prefer to use the online channel to generate leads for their dealers and retail partners. Many of these sites, however, don`t compel the user to take the actions necessary to generate a lead. They may lead the visitor through online product configuration, option selection, and rendering of a customized image but then that`s it--a dead end. Retailers know when to present the call for action, and manufacturers need to do the same. They can show consumers which retailers have the product in stock and the price at each location, provide a printer-friendly tear-sheet, ask the online shopper to submit a quote request or even offer live chat with a customer-service representative.
Knowing that consumers visit their sites to explore product lines, manufacturers should provide useful navigation and search options. The best retail sites offer multiple ways to move from the home page to the product page, allowing the user to browse by price range, color, occasion and other criteria. They also leverage advanced search capabilities on their sites to merchandise more effectively to consumers. These options are less common among manufacturers` web sites, but consumers appreciate them and are more likely to find the products they want with the help of these tools.
Like retailers, manufacturers should take advantage of promotions. Consumers often find discounts, rebates and other special offers in newspaper flyers, magazines, direct mail pieces and in-store displays, but manufacturers frequently neglect to include them on their web sites. Consumers expect to find these promotions and rebates at the manufacturer`s site; companies that fail to provide them online are missing another opportunity to relate to the consumer before the purchase decision is finalized.
To conflict or not?
A principal concern among manufacturers and retailers conducting commerce on the web revolves around channel conflict. Should the manufacturer sell direct to consumers or, instead, refer them to retail channel partners?
Manufacturers are resolving this issue in several ways. Those with very strong brands like Sony, Life Fitness, Bose, and Timex sell direct, confident that their retail partners will still want to carry their products and that both channels will flourish.
Other manufacturers offer web-only product lines. Nike allows consumers to customize and then purchase products online, such as shoes, gear, and golf balls. Customization not only offers a way around channel conflict (retailers generally don`t have the resources or time to offer customized products), but also helps manufacturers prevent commoditization of their products.
Manufacturers with licensed dealers may choose to sell direct but then credit local dealers with the sale based on geography. Snap-on Tools is a successful example of this model.
Whether or not a manufacturer chooses to sell products directly, it certainly can offer parts and accessories in its online store, items that retailers don`t want to carry or cannot provide efficiently. Manufacturers can use their web sites to save the cost of a call-center transaction, and at the same time use the online parts and accessories store to merchandise additional products to the consumer. Because the chance to initiate (or alienate) a customer relationship is so strong during this sales process, manufacturers must provide an attractive, comfortable and satisfying customer experience online and not relegate parts sales to a dingy corner of their web site.