Multi-level sales vs. direct sales - or how both work
The demands that a user has as a private buyer in B2C trade raise the same expectations towards B2B trade. Anyone who meets this expectation in the B2B environment will get satisfied decision-makers, buyers and motivated sales partners via this sales channel - and thus generate more sales and profit.
Networked services and smooth data exchange and ordering processes for B2B customers are crucial to success from a manufacturer's point of view. However, those who address the actual end customers directly could not only expand their multi-level sales channels, but also shorten access for the end customer. The manufacturer can act directly with its end customers, which in turn creates additional values and benefits for both sides. When it comes to direct sales, challenges come to light for the manufacturer, the mastering of which is sustainable and future-proof for the company - but the solution to which is not succinct. After all, a major reason for selling through retail was that you wanted to outsource, avoid and transfer exactly these challenges to other vicarious agents in the sales process.
In this article we look at some good reasons, ideas and examples of how the whole thing can work for manufacturers, existing sales partner structures and end customers and how these can positively mature over time.
Survival of the fittest
The implementation of our customer Olymp Bezner KG’s own B2C shop fits the topic of direct sales for manufacturers. Fashion-conscious end customers can now not only buy Olymp quality from trading partners and in local Olymp stores, but also online directly from the manufacturer. Olymp has recognized that multi-channel is of increasing importance in both sales and communication. Olymp has successfully brought all online activities and fulfillment processes in-house and now runs the shop on its own – from marketing to shipping and returns management.
"We have the first two months in the books," said Mark Bezner, Managing Director of Olympus, in an interview for the magazine "Wernen & Vertriebs": "We are well above the previous year and significantly above the business plan. But it was definitely a right decision to bring online sales in-house. After all, we want to become more international. Our partner was not willing to invest beyond the German-speaking markets and multiply the success that we already have in other countries. We expect a lot more and want to take bigger steps.”
With its own, multilingual B2C shop, Olymp has opened up all omni-channel options in connection with the local stores for the future. The project was implemented with great success within half a year and the goods were very quickly sent to six countries via the company's own brand shop.
Use all sales opportunities as a manufacturer and secure long-term market share through direct sales
While in 2016 only 27% of all processing and manufacturing companies sold their goods digitally via online sales channels such as e-shops, apps or EDI, the number has almost doubled at the moment. Retailers have recognized the D2C potential and the Corona crisis has generated additional pressure to act. Whether B2B or B2C: Due to a lack of resources and a lack of know-how, day-to-day operations are constantly eating up opportunities for strategic realignment. Extensive data bases, the necessary technical infrastructure, logistics and fulfillment processes can also be implemented by very few themselves.
But this is exactly where the opportunity lies to become a pioneer within your industry and to expand your lead: through digitization of B2B sales/B2B marketing in combination with B2C direct sales and end customer marketing.
The route is the goal
For example, first set up online sales channels for specific individual product lines. A spare parts market or a used goods market could be a good start to retain business customers through online services. By giving your business partners insight into orders and contracts via a customer center, you simplify B2B purchasing processes - just as it is in every B2C shop. With simple, digital services, you make life easier for your business customers and secure loyal customers.
If, on the other hand, you want to start with D2C to the end customer, you should stand out from your sales partners with special content, services and support for your products. Products that can be ordered exclusively and directly from your shop may justify additional prices for the end customer and you do not compete with your sales partners on this level.
Or bring your B2B buyers and end customers together yourself: Interested end customers who get information about your products online could put them directly in touch with suitable service providers on site (example: plumbing, heating and air conditioning technology for the necessary installation of the products). Cross-media networking of your sales channels creates comfort and advantages for everyone involved. Depending on the starting position and manufacturer industry, there are many facets that need to be considered, but also many opportunities.
The following basics for the digitization and optimization of your sales/marketing - both to B2B buyers and for possible B2C direct sales - are essential:
1. Information, systems and data exchange - laying the foundations for B2B e-commerce (B2B online shop, field force app for field service, via EDI, transaction data, classifications):
Manufacturers are confronted with different transmission paths and processes for the electronic or even manual data exchange of product and transaction information from their partners. There are different purchasing terms and conditions and possibly also different product portfolios that have to be mapped.
Product information management can not only provide the required product and marketing information for specific retailers and without multiple maintenance and export it in various required formats, but also form the data basis for a B2B online shop that can be multi-client capable and with individual retailer logins can act as an additional sales channel. In addition, the respective scope of marketing-relevant product descriptions can be flexibly configured in PIM systems. Existing ERP systems can act as leading systems between PIM and shop. With a B2B shop for your dealers, you offer a new, attractive, web-based shopping alternative that can also be of interest to new sales partners and B2B buyers.
For B2C direct sales (own online shop, VIP shop or shopping app):
The main differences to B2B commerce are the different containers, the contract design and verification of business customers and the consideration of commercial laws. The products and product information offered remain largely the same for B2C. Digitization in B2B therefore means that most of the technical requirements can also be used as a blueprint for B2C direct sales.
For B2C and B2B:
All efforts serve your end customer. The individual channels should not compete with each other, but complement each other in a meaningful way. With suitable trading partners and a cross-channel experience across all sales channels, you can offer the consumer a unique shopping experience and benefit equally as a manufacturer and retailer.
Ideas for a Cross Channel Experience:
- Mediation of trading partners and necessary service providers such as financing or leasing services
- Support for the installation and operation of the product can be provided
- Further services can be cross-channel complaints and exchanges
- Order from the manufacturer and pick up in the regional trade. Experience has shown that this generates additional purchases from retailers
- More extensive product selection only from the manufacturer: offer additional sizes, shapes and product variations
- Special products and editions that are only available in the manufacturer shop
- As a manufacturer, refer fairly to the best price at his dealer
Basically, one can say that customer-centric ideas and measures solve the dilemma of manufacturers as well as wholesalers and retailers in today's digital change and make both more successful.
2. Service provider selection and own know-how – the right team
a. Target-oriented data bases must be created, interfaces developed and cross-system processes set up or optimized.
As a full-service agency, we implement your digital transformation and accompany you on your way to becoming a digital professional: In addition to quickly providing an e-shop, we also take care of your online marketing potential, product information that can be used across channels, stable performance and future scalability and fulfilment.
b. Build up your own know-how internally and regain control of your data and customer information. A web analysis of your own online activities helps to generate insights and data about your target groups and customers.
c. Bring marketing, sales and technology together in your organization, because conventional marketing has had its day. Nowadays, marketing and sales have to master complex digital skills and virtuously feed a constantly growing number of channels, search engines, agents and in the future even artificial intelligence with suitable information to reach your target groups.
i.e. Consolidate the know-how in the company and get all the employees involved on board for your digital projects: Accounting can also provide useful insights into how customer satisfaction can be increased.
e. As a manufacturer, involve your sales partners and convince them by developing a joint e-commerce strategy that enables advantages, savings and additional benefits for all participants and target groups.
f. Put your previous sales partnerships to the test. If you don't want to face the new market conditions, you may no longer be the right partner for the future. These retailers then often make the same mistakes as the ailing retail trade.
Digitally oriented competitors of the classic wholesale trade have extensive experience in the digital business and thus have a digital knowledge and infrastructure advantage and have high logistics skills. They have the power to disrupt value chains of wholesalers whose primary focus is e-procurement rather than e-commerce.
The mere existence of competing online trade does not pose a threat to the wholesale trade through which you sell as a manufacturer. On the contrary, wholesalers have often become simple goods pushers who do not provide end users with unique selling points, attractive services, support and added value. The "classic" wholesale trade has to react quickly to these challenges in order to remain competitive - the greatest risk lies in not using this potential. ###3. Die Marktansprache hat sich geändert – bleiben Sie relevant
This is how you gradually build up your online marketing skills:
a. SEO is an essential part of this, as the search channel is important when it comes to gathering information for your customers. This is where you need to be relevant and visible. Search Engine Advertising SEA provides additional support to achieve faster ROI and scaling in online marketing. But the same applies here: excellent SEO and good content are crucial for high-performance advertising on the Internet.
b. Inspire with relevant content. Offer comprehensive and easily accessible digital product information for sales partners and end customers: dimensions, data, descriptions, spare parts lists, accessories, application examples, tips and information, customer experiences, things worth knowing, historical, unusual or funny.
You and your users know best about your products and must have great ideas about what to do with them. This inspires potential customers even more than the best price.
c. Create a content strategy and think about using appropriate social media channels. By promoting your content via social media, you increase visibility and reach.
i.e. Model and analyze the digital customer journey of your customers. Where do they get information and what questions do they ask? What information does customer service have? What does my web analysis say about search phrases and the behavior and intentions of my prospects? What improvement requests do your customers have? How do customers use your products – and do they tell about it themselves? Make these customers your ambassadors.
All of this provides ideas for relevant content that makes your brand visible throughout the entire buying process and sets it apart from the competition.
Future-oriented sales and marketing methods go far beyond multi-level sales. But please keep an eye on the customer and his needs despite all digitalization. In summary, the following principles count - regardless of B2B and B2C:
"To be or not to be" for manufacturers, wholesalers and retailers in the future depends on whether you can offer your customers more variety, information, service and benefits - in order to win them over and retain them in the long term .