Manufacturer/Retailer Relationships: Friend or Foe?

4. 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 lineup and optimize its merchandising and marketing techniques.

5. Develop unique SKUs and product names for top partners. Manufacturers can help brick-and-mortar 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. While it's not practical to scale this technique across every partner, unique SKUs for top partners can help sustain profitable relationships.

With 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.

In fact, 55 percent of manufacturers selling D-to-C said they believed it had a positive effect on other channel relationships, a recent Forrester Research study found. Thirty-six percent said the effect was neutral, while 9 percent characterized it as negative. Meanwhile, 82 percent of those manufacturers surveyed reported they had improved their customer relationships with D-to-C e-commerce, while 76 percent said they had met or exceeded D-to-C revenue targets.

"Direct-to-consumer online channels offer clear benefits in the form of both higher revenues and customer engagement," Forrester's study said. "Reluctant firms should take strategic steps to overcome roadblocks that may be preventing the development of this channel."

Hurdling the Technology Roadblocks
One of the roadblocks manufacturers face is implementing the processes and technology infrastructure needed to deliver an engaging online shopping experience that rivals a good retail website. In addition, manufacturers selling D-to-C must be capable of efficient inventory management and fulfillment.

A decade ago, e-commerce was typically a hairball of on-premise solutions bolted together into a workable and cumbersome whole. Cost and complexity was high, and personnel spent untold hours putting data from one system into another simply to fulfill orders. Today's new breed of cloud-commerce solutions disrupts that prehistoric equation.

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, the manufacturer can also speed time to market.

Manufacturers such as GoPro, the global action camera maker; Magellan, a GPS device provider; and RST Brands, which complements its core business of supplying home and outdoor furniture to Costco, Home Depot and other retailers with D-to-C sales, are among the companies reaping the rewards of online selling in the cloud.

With the right cloud approach, manufacturers have built out D-to-C channels that deliver real-time inventory visibility, an engaging website that adapts automatically to smartphones and tablets, and a 360-degree view of all customer interactions to improve services and insights as well as provide a foundation for targeted marketing. At the same time, they're able to deliver the emotional brand connection and immersive experience that many consumers seek.

In the near future, D-to-C selling will be an imperative for manufacturers hoping to compete and grow brand loyalty. Those not offering online shopping invite brand skepticism, if not scorn, among consumers who visit a site only to find that the shelves are bare. The cost is more than a one-time sale lost; it can mean brand degradation that inflicts long-term damage on a manufacturer's fortunes. With concessions to retail partners and the right technology, manufacturers will be well on their way to meeting the D-to-C mandate.

Andy Lloyd is the general manager of commerce products for NetSuite, an integrated cloud business software suite. Andy can be reached at alloyd@netsuite.com.