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Brands open up new sales channels direct to customers, despite the risks

Brands open up new sales channels direct to customers, despite the risks
Friday April 27 2012

Brands are investing heavily in selling direct to their customers and adopting a ‘wait and see’ attitude to potential pitfalls such as the risk of cannibalising their existing channels, according to recent research by eCommera.

The study - commissioned by eCommera, a pioneering provider of intelligent eCommerce trading solutions, with research specialists, Coleman Parkes - among 50 major international brands, shows that brands recognise the potential of selling direct to the customer through both store and online channels, and that online in particular is seen as the best way to reach new customers in countries where they otherwise have no or limited presence.

Despite the risk of upsetting retail partners and potentially having fewer physical outlets carrying products, brands are pushing ahead, determined to face the possible consequences as and when they arise. The research shows that their multi-channel strategy for engaging directly with customers is dominated by flagship stores (56%) – physical and online – but with similar emphasis (52%) on using social media, principally Facebook.

More than 70% of brands surveyed rely on price discounts to incentivise customers to buy direct, while 35% use VIP customer services. 15% use exclusive products to attract attention. A minority shunned online discounts, concerned that this might devalue their brand.

One eCommerce manager from a major high value specialist apparel and accessory supplier, said: “The potential to sell online is huge and will keep on increasing with the advancements in technology.  The only area that needs to be watched is the various online distribution channels so that the brand does not become a common brand which can be found anywhere.  We need to maintain our high-end focus and premium feel.”

Michael Ross, Director of eCommera, advised: “Selling direct and maintaining the brand aura is complex.  Managing delivery on promise across multiple channels and countries requires the coordination of myriad systems and partners.  Getting it wrong once can devalue the brand.  Getting it right each time can mean new and loyal customers.”

Coleman Parkes interviewed 50 senior eCommerce managers from major European brands between late 2011 and early 2012. Nearly half of respondents have been trading online for three or more years, one quarter for one to two years, while five, or one in ten, have gone online only recently. Only a small proportion of annual sales revenue comes from online sales, with only a handful reporting higher than 30%.