Just Do It - living your motto. Can a manufacturer sell direct and not kill their channel? It's a question every manufacturer or publisher asks in every industry You've heard all the objections:
It will cause too much conflict with our existing channel
We can't fulfill small orders
We won't be able to generate any sales
It will cost too much
Nike had the same questions too, but dug in and took their own logo to heart. They started a 'direct model' a few years ago; combining online and a retail presence to engage customers directly. Stores are hard; but online clothing is one of the toughest ecommerce transactions to support; size, color, and fit all require great data or you'll be swamped with massive returns.
How have they done? How does a 50% increase in online sales sound? And that's not 50% of 10 million. E-commerce sales surpassed the $1 billion mark last fiscal year. In fact, their entire direct-to-consumer sales topped $6 billion this year—a full 20% of the company’s total revenues.
So how did this nearly 50-year-old apparel manufacturer ace the transition to ecommerce to become an online sales champion? They did it by focusing on the entire customer experience across online and offline. This includes:
- Continuing to develop and nurture some of the best channel relationships in the business. YES Nike worked to expand their footprint with their retail partners providing them consistent pricing, top quality digital content, and support for their online efforts.
- Investing continuously in digital programs including app, ecommerce, and digital campaigns.
- Using data to drive decisions. Not all of their digital initiatives worked, but Nike tracks and monitors all of them, revising, tweaking, or killing as needed.
- Focusing on their 'real' competitors. Nike competes with Adidas & Rebook, not Foot Locker or Wal-Mart. Elevating the competitive focus to target other manufacturers got them out of the natural channel conflict that can occur. Don't get us wrong; conflicts still happen. But the primary focus is on being better than competitors both direct and through retail partners.
The lesson for manufacturers - You can “Just Do It,” too
This isn't about marketing, it's about sales and channel management. Any manufacturer can take a few tips from Nike’s playbook:
- Understand that a strong digital presence is required to support the overall channel, and make it a priority
- Ensure you have strong data quality and accurate pricing to flow downstream to support your channel partners
- Sell direct when possible: the net $ to your company for direct sales is 3-4x a channel sale
- Make the needed investments in technology, logistics, and people to support this
But just like going “from couch to 5K” this isn’t going to happen overnight and without some hard work. Investment in technology and logistics is key along with some plain old grunt work to get your data quality up to snuff. That’s where Yeoman comes in. If you’re not sure where to start, or if you just need extra hands for the heavy lifting, give us a call. It’s what we (just) do.