For consumer packaged goods, the grass may not always be greener when deciding which side to allocate resources – E-Commerce (direct-to-consumer) vs brick-and-mortar.
Regardless of the grass color, regardless of the side, there’s almost always grass (opportunity).
We all want to see the biggest return-on-investment when selling our products through sales channels. Many would have you believe that E-Commerce is the only practical way to scale efficiently. Many would also argue that brick-and-mortar is the only way to turn a startup into a full-fledged company. Often times, people just stick to what they know.
Every single product is different. There’s never a single correct way to approach the market.
Avoid Strategizing in Black and White
Most entrepreneurs and startups think of physical, large-chain retailers when they hear or see the word “retail” just as Amazon is for E-Commerce. A huge variety of sales opportunities exist in today’s markets for unique, innovative products. You don’t have to choose your strategy in such black and white formats as retail vs E-Commerce. After all today’s retail is omni-channel and should be treated as such.
E-tailers, catalogers, enterprise customers, TV retailers, specialty stores, influencer channels, and many other avenues exist to push product sales and build your product brand. These other opportunities help to mitigate risk when you’re expanding your product reach into the market – both for you and your sales channel partners.
You’ll always have competition for consumers’ attention, and being creative with your sales channel strategy can be a huge competitive advantage when done correctly. For example, if you’re selling a smart light bulb, retail is extremely price driven. It might be better to target small-medium sized businesses or b2b distributors (i.e. hospitality, apartments, etc) instead.
It’s important to look at upfront costs, margins, and other barriers to entry when considering sales channels; however, many brands fail to consider product return rates, marketing ROI, brand exposure, or other variables that are harder to know concretely during the early stages of a new product or brand.
Sales Channels are Opportunities – Not Guarantees
Because I work on the retail side of things, most startups and brands I talk to are looking to expand their sales and brand presence away from their website and Amazon. However, one of the most common educational barriers to cross is the understanding that a purchase order (PO) or placement of your product into a retail channel does not guarantee anything. **Despite what a sales rep / agent might tell you**
Best Buy placed you on their website. Brookstone put you into their stores. You’ve launched on Amazon. That’s only half the battle. It’s only an opportunity so far.
Capitalizing on any new channel partnership requires the right execution. Retail marketing, inventory management, communications, return policies, customer support, MAP control (minimum advertised price), sales forecasting accuracy, and much more.
Even for Amazon there’s no guarantees. What if your product isn’t quite ready? What if you don’t respond to customers in a timely manner? Bad reviews can quickly sink your brand.
For reasons like this, many brands would rather stick to their direct-to-consumer models because of this perceived risk. Direct-to-consumer may actually be the right move, but it can also be limiting.
It’s the Consumer, Stupid
The closer you can be to your consumers, how they feel, their budgets, challenges they have, where they spend their time… the better positioned you’ll be regardless of whether you’re selling primarily online, offline, or both.
Most marketable, unique items can find PR exposure, retail partners, distributors, or commission-based salespeople with enough time and effort. On the surface, that might seem like the deciding factor into who succeeds vs those who fail in the market. However, it’s your cost efficiencies, ability to execute, ability to keep your promises to partners, and ability to garner end-consumer attention that is more likely the deciding success factor.
Stay close to your customers (partners and consumers), constantly refine your processes, and create increasing value over time (i.e. new products). Do that and you’ll find scaling up your business to be much easier.
If you’re considering expanding your brand’s presence in retail distribution channels feel to contact me directly through LinkedIn — https://www.linkedin.com/in/benjaminertl/