Manufacturer/Retailer Relationships: A Marriage Made in Heaven

For CPG brands as well as other manufacturers, having an online presence "is no longer about putting your brochures on a website," says Sean Cook, CEO at e-commerce solution provider ShopVisible. Instead, websites today provide manufacturers with a way to test new products, sell products at a higher margin, regularly engage consumers and get their products in front of a wider audience. By launching e-commerce sites targeted to consumers, manufacturers can support retailers.

"The manufacturer's main task [for its website] is to provide consumers with product information," says Alan Fulmer, co-founder and executive vice president of Channel Intelligence. "But once they've done that, they need to make it easy for consumers to make a purchase, whether it's via their own site or by directing consumers to a local retailer or retailer's website."

Fulmer reports a "halo effect" for retailers once manufacturers launch e-commerce sites. "Typically about 3 percent of a brand's sales at retail are cannibalized when a manufacturer starts to sell direct," says Fulmer. At the same time, however, overall sales for the brand increase 8 percent, which means there's an opportunity for retailers to increase brand sales.

Benefiting Retailers
Enhanced e-commerce sites that enable manufacturers to interact with consumers can also indirectly benefit retailers. Cell phone accessory manufacturer Incipio, for example, recently partnered with ShopVisible to relaunch its e-commerce site with the goal of significantly upgrading the customer experience by offering ratings and reviews, social commerce, and the ability to order personalized cell phone carrying cases.

One of the biggest benefits of the site is the ability to get immediate feedback from consumers, says Andy Fathollahi, president of Incipio. "Now we have an idea of what they like and don't like, and how to improve our products, which helps us to make decisions for our retailers. Being able to react quickly to customers' needs is amazingly important."

Channel conflict continues to be an issue as manufacturers' online presence grows. But it's less of an issue than in the past, says Fulmer. "Most manufacturers want to support their retail partners."

This is why they include retailer locator tools on their websites. Some manufacturers also partner with a company like Shopatron, which enables any orders via a manufacturer's website to be fulfilled through the nearest retail outlet that carries the product. Shopatron's growing list of clients includes manufacturers Callaway Golf and Alex Toys.