Forrester: Manufacturer Direct E-Commerce Efforts Good For Research, But Little Else
Written by Evan SchumanWhen working on its annual study of manufacturer Web sites that try selling directly to consumers, Forrester Research pretty much found what it expected to find: that manufacturer sites are great for research with brand-loyal consumers, but the purchases are invariably made elsewhere. Forrester’s Sucharita Mulpuru, the principal analyst for Retail eBusiness and arguably the sharpest E-Commerce analyst working HTMLs today, said that, sometimes, the market works just as it’s supposed to. Many manufacturers were originally scared about offering direct-to-consumer deals, fearing that they’d undermine their channel and cannibalize sales. Turns out that consumers are smarter than they look and the product-maker sites haven’t hurt retail partners one little bit.
As Hershey’s concluded this month, the E-Commerce community trusts manufacturers to make stuff, not to sell it. It’s the exceptions that make the rule, Mulpuru said, pointing to two rare manufacturers that actually do make some direct to consumer sales: Apple and Dell. Apple does it by an almost biblically strict adherence to price, making the prices same regardless of whether the product is purchased directly, while Dell has a lengthy history of only selling directly (although it now sells through the channel). Still, Mulpuru argues that manufacturers should still offer E-Commerce for the CRM data collection and customer feedback info it provides.
-Marc
August 6th, 2009 at 2:45 pm
Interesting article…however I disagree with the Forrester conclusion on several fronts (of course, I’m sure there is a lot more analysis in the report that we are not seeing). From our conversations with our Manufacturer clients (Micron, Timbuk2, Callaway Golf, Step2, etc) who both sell direct and sell through the retail channel, there are significant advantage of being in ecommerce:
– ability to stock replacement parts or low sell-through products that most retailers are unwilling to hold in inventory
– ability to experiment with new products or categories. Most retailers cherry-pick the product line or stick with the “tried-and-true”, and it means the manufacturer’s ability to innovate is limited if they don’t have the ability to sell directly
– ability to communicate directly with end-consumers. until recently to enable faster product development, quality assurance and more targeted marketing strategies. Until now, manufacturers had to use secondary signals (returns/sales data/800 calls) and the occassional focus group to figure out what consumers care about. (of course, our Reviews and AnswerBox solutions are effective tools for these uses)
– ability to provide value-added products/services that retailers would not be able to provide (like the Nike ID program, or Timberlands “design your own shoe”, etc)
These are just a few thoughts…because saying that Apple and Dell are the rare 2 exceptions seems like a pretty blunt conclusion from the folks at Forrester. I’m sure that the 1000’s of manufacturers who are selling direct have many good reasons to participate in ecommerce besides just the “sale.”