How brands can get their distributors to be a part of their ecommerce plans
As a brand, you may have distributors who have established strong physical distribution networks including sub-distributors, dealers and retailers. These are no doubt, very strong and established channels that have proven to be the key strengths for many brands especially in emerging markets
However, ecommerce is now becoming the default option for brands to adopt as their primary sales channel. This does not mean that distributors need to be cut out of the eco system. In fact it means that distributors can now play a bigger role in the ecommerce game by being a fulfilment engine for brand ecommerce initiatives.
Here is how it can work:
1. Brand creates an online ecommerce presence using a specialist company who can not only setup the online store software, but project manage the entire process
2. The brand online store can play the role of product display, marketing, order taking, payment collection and consumer services
3. Once orders and payments are collected and confirmed, the system can push the order to the distributor or the retailer in the location of the consumer through Electronic Data Interchange (EDI) (provided that the inventory mapping is done in an accurate manner and the distribution point is adequately stocked with inventory that is displayed on the brand web site). In practical terms, this would mean that the brand takes the initiative of setting up its online presence through a brand online store and takes on the responsibility of maintaining its content, marketing, consumer, promotions and to be able to take orders and payments. Thereafter once the order is confirmed and payment received the transaction would flow to the distributor who would then fulfil the order
4. In case the brand would not like to take on the responsibility of payment collection it could connect the payment gateway on the brand web site directly to the distributor. In this way the payment is collected directly by the online distributor
The above model is very workable and a very practical way for any brand to leapfrog into the ecommerce game while having strong distribution and delivery capabilities and without having to invest additional in stocks for the e-channel
Having said this, there are other models possible. The ideal situation is one where the brand appoints a specialist online brand ecommerce services company that performs the front-end activities and appoints another specialist online distribution and ecommerce fulfilment company that can also be the transacting party with respect to the end consumer. In some cases, the brand may find a business group that has both the capabilities and in which case it’s much easier for the brand to have its entire brand ecommerce business managed by one specialist. Such specialist ecommerce services company that also plays the role of online retailer is ideal because it would have the necessary skills to not only manage the front end but all the nuances relating to consumer transactions, fulfilment and customer care that are so vital to the success of the brand online store
In summary the following are the following potential operating models for a brand to sell online through its own brand online store
1. Brand sets up the web site and operates the online store on its own while being responsible for payment collection, order processing, fulfilment and consumer invoicing. Taking on the full responsibility for ecommerce management while taking the assistance of ecommerce consultants and specialist agencies along the way
2. Brand sets up the website, content and promotions and partners with a third-party specialist (not a regular distributor) who operates as the online retailer through whom the consumer transaction happens as the specialist online retailer
3. The brand sets up the brand website and the online store uses a specialist ecommerce services company to manage the front end of web-store creation, content management, marketing, shopping cart management, payment collection and CRM. It then connects its distributors to the online store for them to process the transaction under their name and fulfil the customer orders
4. The brand hands-off the entire ecommerce to one of its distributors and lets them run it independently under the brand guidelines
5. The brand appoints a reputed and experienced brand online retail company and entrust it with managing the entire brand ecommerce
Of the above choices, our recommendation is to go with number 2,3 and 5:
1. Brands are generally focused on production, brand building and high level distribution. To work as an ecommerce company is a specialist activity which will require the brand to setup huge, competent and evolving ecommerce team and eco system. This may not be sustainable in the long term due to too many concurrent priorities of the brand
2. Leaving the entire ecommerce to the distributor too is potentially fraught with the same or similar issues as the above
3. Its best to leave the ecommerce to the ecommerce specialist because the kind of skills and focus required to run an online business is very different from running the general brand business including physical distributions
4. Using a third-party specialist enables the brand to extract the best returns on its investment through good contracting and target setting
5. A specialist agency may charge a fixed fee but would largely operate on a margin basis. This enables the brand the opportunity to scale up with low fixed investments
6. With the above model wherein the brand manages the web site and the content and marketing but leaves the transactions to a specialist company or to its distributor, the brand is setting up a capability whereby many other sales channel would be attached to the ecommerce channel, for e.g.: getting influencers to also sell products of the brands through their own online stores orders for which are fulfilled by the distributor or the brands online retailers.
To know more about why and how your brand should embrace ecommerce in a much larger and strategic fashion and how a specialist consulting and ecommerce firm like Tiger Pug can assist you in your commerce endeavour write to email@example.com or Whatsapp +6583886673 today!