Why Would You Want to Sell Direct to Consumers?
E-commerce is eroding the traditional relationship between manufacturer and retailer. Consumers learn about brands through social media and go to the internet not only to do their research, but also to do more and more of their purchasing. If you can capture a sale directly from your website as a manufacturer or wholesaler, why would you steer your customers to local retail outlets? Maybe you would, and maybe you wouldn’t. We’re going to explore some of the pros and cons of selling directly to consumers vs. selling via retail outlets. Spoiler alert: it may be possible to have your cake and eat it, too.
Customers buy your brand for one of two reasons: either they have heard good things about your brand and are actively searching for it, or they are very interested in your product category and come upon your brand as they are investigating similar options. In the latter case, they have probably gone to a retailer who stocks a number of possible products; in the former, they’ve arrived at your website to find out where they can buy your brands.
As a fabric or yarn-oriented business, your customers are a little more hands-on. Sewing, knitting and crafting tools – these are all categories of goods that customers often prefer to handle before they make a purchase. In that case, directing them to retailers where they can touch your yarn, feel the join on your interchangeable needles, or see just how much yarn your shuttle holds makes sense. But if they are already familiar with your products because they have seen and touched them at a festival, a workshop, or at a friend’s house, they may not need that tactile experience. They may just want your merchandise – and most likely, they will want it soon and inexpensively. That’s where your website will need to be able to gratify their desires.
Options for Selling Direct to Consumers
On the other hand, you don’t necessarily want to compete with your own network of retailers – and you certainly don’t want to undercut them. One way that you can enhance retailer relationships while fulfilling customer demands is through signing up for a Shopatron account. As a manufacturer with a Shopatron account, you can send your online orders out to your retailers to be fulfilled either by shipping or by picking up in store. Your retailers can view your online orders and choose to fulfill the ones for which they have stock on hand. It benefits them by selling their inventory and introducing their retail store to new customers, and it benefits you by getting your products into customers’ hands quickly and conveniently while relieving you of the necessity of maintaining a fully-functional ecommerce store along with a consumer-level shipping department. Read more about how Shopatron works here.
Another way to go is Fulfillment by Amazon (FBA). Think of FBA as a way to outsource an online retail outlet. Once you’ve set up an account, you store your products at an Amazon Fulfillment Center, just as you would ship them to a retailer, and Amazon picks, packs, ships and does all of the customer service work for your orders. Your products are eligible for free 2-day Prime shipping and free shipping for all customers according to Amazon’s shipping rules. The cost to you is for your inventory storage space and Amazon’s selling fees. Your products show up in Amazon searches, exposing your brand to a new customer stream. You can even use FBA as a multi-channel fulfillment operation, having them handle orders that come in from your own ecommerce site or 3rd party retailers.
Setting up a retail shop on Etsy, BigCartel or another online marketplace for handmade goods is another way to bring your goods to retail customers without adding a retail element to your brand’s website. Particularly if you are selling supplies that other creatives will use to make their handmade goods, selling on one of the handmade marketplaces will help you reach your targeted customer base. Pricing varies between sites, but you can generally count on a listing fee and a percentage of sales. In return, you get a ready template for selling your products. Once you’ve set up a shop on one of the marketplace sites, you can list that marketplace store as a consumer source for your products along with your other stockists.
You can establish your own retail website parallel to your wholesale brand site. You may want to start by using it as a clearance site where consumers can get special deals on discontinued merchandise, experiments, or seconds. This approach keeps a line of separation between your main brand, exclusively available at your partner retailers, and your “bargain” brand, which may have languished in your warehouse. That may be enough for you and it’s unlikely that it will offend your retail partners, since it doesn’t compete directly with them. It will require all the work associated with setting up an ecommerce site, so you have to weigh the benefits against the costs.
Or you can take the plunge and offer your products directly to consumers on your brand website. The website of Ancient Arts Fibre Crafts, dyers of the Meow and Woof collections of luxury yarns, has a drop-down “SHOP” menu whose first option directs shoppers to their retail locations, followed by a menu of their yarn products by weight and collection, then their ancillary fiber tools. The retail directory lists shops alphabetically with links to their websites; there is a separate listing for online retailers arranged by country. It is the customer’s task to decide whether it makes more sense to pay for shipping from Ancient Arts directly or to find a local or online retailer where total cost of the product might be lower. From the customer’s perspective, buying directly from Ancient Arts assures that the desired colorway on the desired base will be available; the retailers only have stock on hand, while the dyer can always make more, but the customer might have to wait for it.
Exclusive Products for Your Retailers
It’s becoming more common that hand-dyers especially offer their products directly as well as through retail partners, and it does not seem to be harming either side of the relationship. Little tweaks can make this model work, like dyeing exclusive colorways for retailers that are available only from that retailer, or reserving specific bases for your wholesale customers only. Differentiating the products available in your webstore from what customers can find in your retail stockists can keep both sales channels viable.
Taking the step down the retail path can be a daunting prospect for a manufacturer, but it can open up a new channel of revenue in addition to those you already have. We’ve explored some of the possible entry points into retail sales arranged roughly from those requiring the least effort from you to those requiring the most effort. You’ll know when you’re ready to take the next step.
This article provided courtesy of Stitchcraft Marketing, a full service agency specializing in Yarn Companies. If you’d like more information about anything contained in this article, feel free to contact the owner of Stitchcraft Marketing, Leanne Pressly at 719-539-3110 or email Leanne@stitchcraftmarketing.com for more information.