Forrester: More Manufacturers To Go Online To Sell Directly In ’07

Written by Evan Schuman
February 23rd, 2007

For years, manufacturers have avoided the direct-to-consumer E-Commerce route to avoid channel conflict, fearing that if they started taking revenue away from their retail sales partners, their partners would resist.

A new Forrester Research report sees that trend reversing this year, citing Apple Computer’s AppleStores and Callaway Golf as good examples. Callaway Golf, the report pointed out, “collects orders on its Web site but then has one of its retailers that carries the item fulfill the order for customers. This is a win-win-win for the manufacturer, the retailer, and the customer.”

Maybe. But retailers will likely be a significantly weakened position to negotiate for their commission on those sales because, candidly, they will be bringing less value as they will no longer be bringing in the sale. It may be a win-win, but it’s hard to argue that as sales acquisition moves away from retailers, some of the associated revenue won’t move with it.

The report also predicts growing strength of payment alternatives such as PayPal and Bill Me Later as well as a lot more user-generated content (video plus text). Web site analytics will get more complex and it will be seen as mission-critical for a lot more?and a lot smaller?sites than are using it today, the Forrester report said.

The report also questioned the trend of search engines that are pushing comprehensiveness as a replacement for more intelligent filters. Said the report: ” ‘More’ still trumps ‘better.’ ” Citing services including Pronto and focus on being as comprehensive as possible?the report questioned if this is what consumers want.

“Left to their own devices, many consumers prefer not to shop around, with 27 percent reporting that they shop at just one store prior to making a purchase,” the report said. This is an excellent point. In what some marketers have referred to as “wanting good-enough,” there is a tendency for many rushed consumers to want a really good product right away, as opposed to investing the time to find a truly great product.

Search engines that evaluate products and merchants to deliver good-enough but reliable items may prove to be the next big thing for 2007. Then again, that’s much more difficult to automate. In other words, a search engine that focuses on quality-comparison and evaluation is not likely to come out of a VC-funded startup. Unless, of course, there are still some VCs left that appreciate the value that us non-scalable humans can add to a service.


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