For wholesale distributors, it’s hard to sell in today’s world, in many industries supply chains have been re-engineered which has meant many wholesale distributor/manufacturers margins have been squeezed or in some cases completely lost.
As a result, many wholesalers have started to turn or are considering going to direct channels to consumers via online. Fundamentally going directly to the consumer as a wholesaler represents a large risk as it can be perceived as a competitive intrusion by retailers.
As a result, you have to think about what you will do about your retail partners when you start to sell online so you do not alienate them.
There are several strategies that you can start to use now that will be beneficial for everyone, and you can even strengthen or create new partnerships. Let’s look at some tips that will help you in this endeavour.
1. You Shouldn’t Compete With Your Retailers
One of the biggest mistakes you could make is to start competing for sales with the retailers you value. After all, you are all on the same side and trying to move your products.
Instead of a fierce competition for sales, work with one another. You should make sure that you have open lines of communication with the retailers and sellers so you know what they are doing with and for your products and vice versa.
Something you can do with your site to provide more value to the customers, and even to the channel partners you use, is to provide in-depth information on the products you sell.
Some of the customers might buy directly from you, but many will buy from their favourite retailer, and that’s fine. This way, you are providing value to your site, your customers, and to your channel partners.
2. Benefits of Cross Promotion
Something else you might want to consider doing to show your retail channel partners that you are on their side is to cross promotes. You have a number of different ways that you can do this.
One of the best examples is to put their store, site, and information on your website in a prominent location.
You could even have a store search function on your site so that the customers who come to the site can learn about the different places where they can buy your goods.
3. Cross-Channel Value
Even when you don’t get a sale, you can still learn from the interaction with the customer. This information that you glean can come in very handy when you are trying to improve your sales.
When you have your site set up to capture the right data, you can learn more about the products that the customers are looking at before they buy other items, you can learn about the details of the products they are most interested in, as well as what images and copy work the best.
This allows you to spot trends, learn the best search terms, the most popular product lines, and much more. Once you have this information, share it with your channel partners so you can all benefit.
4. Pricing It Right
You also have to think about how much you will charge for your products on your site. The retailers are afraid that you are going to undercut them. After all, they have to increase the cost of the goods they are selling in order to make a profit.
If you are selling your items for less, then they feel that customers would not bother buying through them. They are right. That’s why you have to be very careful about your pricing.
A good strategy is to price it just above the retailer’s price. You can make your product more attractive by offering bundling accessories, unique configurations, limited editions, and the like.
This way, you are offering something different, and you are not a direct competitor of the retailer, and the customers can choose to go through you or the retailer, based on what they need.
There are plenty of ways that you can collaborate with your channel partners so everyone is happy. It is definitely worth exploring so you do not burn any bridges by mistake.
At the end of the day as a wholesaler you are going to need to move to direct to consumer as a business imperative and handling the sensitivities of retailer retaliation is a strategic issue.
However to do nothing and continue with the status quo is not a go forward position. So take on board these ideas and you will be surprised that the pain may not be as bad as you think and in fact, new collaborations will emerge.