You are here

Web Sales Forcing Brands to be Proactive

Published September 21, 2011

By Jason Norman

The steady stream of online competition has been flummoxing not only to brick-and-mortar retailers for the past several years, but to leading suppliers as well.

There’s little doubt online discounters have taken revenue away from both groups. The newest strategy in combating the trend calls for suppliers and
retailers to work in a more cohesive fashion.

“This is about what’s the right solution to solve the industry’s struggles,” said SmartEtailing co-founder Barry Brenner. “The challenge for the supplier is to be well represented on the web and not undercut or undermine the specialty retailer, knowing that the consumer wants multi-channel.”

Trek, with the help of SmartEtailing, is the first to venture into this type of cooperation, whereby retailers’ websites can now feature a limitless inventory—the supplier’s—and not just their own. Consumers can choose whether to pick up Trek products at their local IBD or have them shipped to their home or office, with no indication on the packaging that it was shipped from Trek and not the IBD.

“Everything points to consumers greatly preferring to buy from multi-channel retailers,” Brenner said of research done on the subject. “They want the convenience of online, but they want the comfort and added benefits of having that same retailer in their community where they could walk into the store.” The problem, Brenner said, is that IBDs’ websites haven’t had the selection, which sometimes steers consumers to a non-IBD online option.

Quality Bicycle Products will soon follow Trek’s lead, offering a similar online selling strategy of direct consumer fulfillment through the dealer by year’s end.

“It’s something that we’ve watched over the years,” said Todd Cravens, director of dealer development and service for QBP. “I know there have been some concerns from retailers that some folks on the supply side would get into direct consumer fulfillment.”

But from QBP’s perspective, Cravens said, it has always been a question of “How do we support and work with our customers?” Other industries, he noted, have been offering fulfillment for a long time. “This is the market speaking, which is driven by consumers,” Cravens said. “I don’t think it’s anything else, frankly.”

Cravens said it’s important for the industry to pay close attention to what the customer wants. “The questions when you own a business are: ‘Is my business relevant? Am I adding value?’ ”
he said. “I think the market is speaking kind of loudly.”

As Cravens pointed out, there are those retailers who feel that bike suppliers are well on their way to going consumer direct. But Brenner doesn’t see that happening anytime soon. “The last thing the supplier wants is to be is consumer direct,” Brenner said. “They don’t want to deal with that. They don’t want to handle returns. They don’t have the retail centers across the country to take care of them.

“The whole reason they’re in the specialty channel to begin with is because they have a story to tell, and there’s complication to their product,” he added. “They want that higher level of education and service.”

Even as successful as Trek is, president John Burke—when making his keynote speech at this year’s Trek World—recognized the threat online sellers present to suppliers and brick-and-mortar stores. “Great companies play offense,” said Burke, alluding to the company’s new online strategy.

However, just because sales are made online doesn’t mean retailers will get to stray from MSRP, Burke said. That’s important to note, said Brenner, because this new strategy can’t succeed without certain pricing guidelines.

“If a supplier’s online sales policy is not coupled with a minimum advertised pricing policy—and it’s a race to the bottom in price—I wouldn’t be doing business with that supplier,” Brenner said. “Specialty retailers need supplier partners that allow them to provide service and convenience to consumers both in-store and online, but with a gross profit margin that supports the high operational costs of a brick-and-mortar business.”

Pat Cunnane, president of Advanced Sports International, whose brands include Breezer, Fuji, Kestrel and SE, said selling through online retailers makes sense in certain categories because of market demands.

“We specifically bought Kestrel because we wanted to have an online brand to offer in the tri market,” Cunnane said. “A lot of sales in that market are made online.”

Kestrel, Breezer and SE are available through online and brick-and-mortar retailers. Fuji is strictly brick and mortar, although ASI’s new policy allows dealers to sell Fuji bikes that are two years or older online, Cunnane said. “It gives the retailers who have those old bikes a broader platform to sell them in, and gives us a broader market to sell them in,” Cunnane said of the recent policy change.

It’s not only tri that is much more of an online market these days; so too are BMX and transportation bikes, Cunnane said.

“Where there’s a specific sort of niche or expertise required—and the tri market is very much that way, and the BMX market is becoming that way—most retailers don’t have a good selection, and that’s where Internet retailers really prosper and can really provide the service and selection that consumers want.”

While some retailers single out price as the sole reason online retailers have found success, Cunnane said there’s more to it than that.

“The successful Internet retailers provide good service and good selection, and they are normally focused on something,” Cunnane said. “It’s like the brick-and-mortar retailers. The ones that provide selection, price and expertise are going to be successful. The less of the three that you provide, the less successful you’re going to be.”

SmartEtailing’s Brenner added that brick-and-mortar and Internet retailers should no longer be viewed as separate options.

“Consumers prefer them to be one and the same [multi-channel retailers], and current technology allows this in a manner that presents the supplier’s entire product line along with the retailer’s in-store inventory,” Brenner said.

Topics associated with this article: Web/Internet

Join the Conversation