Is frictionless omnichannel commerce a dream for industry?

Posted on 16 Mar 2015 by The Manufacturer

Gavin Davidson, NetSuite’s vertical industry lead for manufacturing, explores whether frictionless omnichannel commerce is a realistic proposition for manufacturers.

Gavin Davidson, vertical industry lead - manufacturing, NetSuite
Gavin Davidson, vertical industry lead – manufacturing, NetSuite.

Selling directly to consumers is a compelling proposition for manufacturers, and if they get it right they can reap serious financial rewards.

From the chance to tap into new revenue sources to the ability to target their audience directly, there’s a great deal to be gained through omnichannel retailing. Manufacturers increase their visibility to consumers, strengthen brand control and build on customer loyalty.

In today’s increasingly competitive market, retailers have to ensure they offer consumers a wealth of variety, with no brand bias. With this in mind, who better to sell that product than the manufacturer themselves?

Of course, when it comes to omnichannel commerce, it’s important that manufacturers remember that they must strike a balance between risk and reward.

Firms need to make sure that direct selling doesn’t backfire and result in lost revenue, simply because top partners will no longer carry their brand.

While manufacturers need to focus on managing channel conflict with their retail partners, that may resist the omnichannel model, they also have another challenge.

They must master new business processes and technologies, including running an engaging, efficient and mobile-optimised e-commerce site, as well as managing consumer-orientated inventory, order management, fulfilment and customer support.

NetSuite PQIn return, manufacturers have the opportunity to host the experience from the point of browsing to the point of sale. Ultimately, it’s customer demand and the availability of technology that support this nature of retail.

Today’s consumers are accustomed to having the ability to buy anything, anytime, from any channel. It’s up to manufacturers and their retail partners — from big-box chains to local retailers — to collaborate and compromise in order to satisfy those expectations amid a rapidly changing marketplace.

So, how can omnichannel retailing be a win-win for manufacturers and retailers?

Overcoming retailer resistance:

Keep prices at MSRP or above – Retailers’ bottom lines take a hit when manufacturers sell direct to consumers at prices lower than the marketplace at large.

Manufacturers need to work with their retail partners to ensure that revenue and margins aren’t pinched. A commitment to not sell at below manufacturer’s suggested retail price (MSRP) is a critical factor in the manufacturer/retailer relationship.

NetSuite PQ2Suggest consumers buy from retailers – Manufacturers’ websites should explicitly recommend that consumers visit a retailer’s website or store, especially if a given product is out of stock.

Share multimedia content with retailers – Dealing with hundreds if not thousands of suppliers, retailers face challenges in developing and maintaining content and imagery that support an engaging online experience.

Manufacturers can build retailer trust by supplying top-quality product information, a selection of detailed images and polished product videos that retailers can feature on their own sites.

Share intelligence with retailers – A manufacturer’s website generates a wealth of data on consumer activity and product appeal. Often, it will offer the full range of a manufacturer’s products, while a retailer may resell only a selection.

Making sales and customer intelligence available to partners can prompt a retailer to expand its product line-up and optimise its merchandising and marketing techniques.

Develop unique stock keeping units (SKUs) and product names for top partners:

Manufacturers can help store-based retailers combat showrooming – With product SKUs and even names unique to a large retailer, consumers can’t easily find the same product on a rival website.

NetSuite PQ3While it’s not practical to scale this technique across every partner, unique SKUs for top partners can help sustain profitable relationships.

A collaborative and customer-centric approach – Manufacturers and retailers can meet the dual demands of consumers. On one hand, consumers expect detailed product information, a rewarding brand experience and the option to buy directly from a manufacturer’s website.

On the other hand, consumers tend to view retail websites, especially those with product reviews, as a more objective source of information. Satisfying both sets of expectations is mutually beneficial for manufacturers and retailers alike.

Hurdling the technology roadblocks:

A single, integrated cloud platform – Manufacturers beginning to sell online or looking to replace a first-generation patchwork of applications can use a single, integrated cloud platform that seamlessly connects every step of the business – e.g. e-commerce; in-store; inventory and order management; merchandising; marketing; financials and customer service.

Since a cloud platform can be implemented in a fraction of the time and cost needed for an on-premise alternative, time to market is also sped up.

The right approach – With the right cloud approach, manufacturers can build out channels that deliver real-time inventory visibility, an engaging website that adapts automatically to mobile platforms, and a 360-degree view of all customer interactions to improve services and insights, at the same time as providing a foundation for targeted marketing.

Technology will be an integral resource for manufacturers if they are to craft the customer experience that is desired in today’s digital age.

In the future, omnichannel retailing will be key for those manufacturers that are keen to stay one step ahead of the competition.

Those who fail to offer the option of online shopping will invite consumer scepticism and ultimately risk losing brand presence, engagement and customer loyalty.

The answer lies in deploying the right technology, offering concessions to retail partners and creating a seamless, direct e-commerce experience.