http:www'reshare'comPresentationschannel_management_2index'htm

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According to the Gartner Group, more than 90 of
manufacturers don't sell online. The main reason?
Channel conflict. Distributors and retailers are
totally, utterly, fiercely, and understandably
protective of letting customers buy products
elsewhere. Especially when that "elsewhere" is
the manufacturer of whom distributors and
retailers are inherently suspicious and
distrustful.

 
  Over 90 of manufacturers dont sell online -
Gartner Group  

• http//www.reshare.com/Presentations/channel_manag
  ement_2/index.htm

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• You can sell through whatever channels you
  like, but we have the right to be selective too.
  We might hesitate to do business with our
  competitors- Home Depot  Home Depot made
  this same message loud and clear in a letter to
  their 5,000 vendors. They said "You can sell
  through whatever channels you like, but we have
  the right to be selective too. We might be
  hesitant to do business with our competitors."
  Companies like Maytag and Black Decker ceased
  their direct to consumer eCommerce operations at
  the time and could only sell their products
  online through a co-branded Home Depot store.
  Levis had a thriving online business in the early
  days of eCommerce that was rapidly shut down only
  to be replaced by co-branded eCommerce
  capabilities within Macys.com and JCPenny.com.
  The direct sales model that Maytag, Black
  Decker and Levis undertook harmed the
  relationship with all of their channel partners
  and the co-branded solution which ensued served
  to benefit only a select few channel partners to
  an even greater detriment to the rest

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• 66 of manufacturers cite channel conflict as the
  1 reason for not selling online- Forrester
  Research  Manufacturers know better than to
  anger distributors. According to Forrester
  Research, 66 of those surveyed cite channel
  conflict as the major obstacle to selling online.
  At the same time, manufacturers know that online
  shoppers are flocking to their sites. A Forrester
  survey of almost 9,000 users whove made an
  online purchase shows that 80 have visited a
  manufacturers site, and their visits arent
  limited to one part of the purchase process. They
  visit throughout the buying cycle, because they
  dont draw distinctions between retailers and
  manufacturers.

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• Six channel solution
• The Grenade Model Destroy the ChannelThe Dead
  End Model Do Nothing to Refer CustomersThe
  Fumble Model Refer but Lose CustomersThe
  Broken Boomerang Model Share but Lose
  CustomersThe Two Faced Model Partially serve
  customers and damage your channelThe Reshare
  Model Complete Channel Harmony and Customer
  Satisfaction

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• The Grenade ModelDestroy the Channel  We call
  this the Grenade Model because the results will
  be explosive and the grenade can always be tossed
  back at you. This is the approach Herman Miller
  took. They went online, telling channel partners
  that it's their way or the highway. How do
  channel partners feel about this? As an executive
  at Miller's second largest dealer said, "They've
  made their dealer community an essential business
  partner over the years. Now, they're saying let's
  fight them for this kind of business on the
  Internet." Contract suppliers and retailers are
  very unhappy about Miller selling online and see
  it as direct competition. One prominent retailer
  said, "if a comparable product was available
  today and the manufacturer guaranteed not to
  compete with us on the Internet, we would drop
  Miller immediately." Miller has lost dealers and
  retailers over the strategy. There are a
  multitude of examples of major companies who have
  done this and failed through lost market share,
  dealer support and complete channel retaliation.

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• The Dead End ModelDo Nothing to Refer Customers
   
• The Dead End Model will leave your customers
  with nowhere to go. Although most companies
  recognize the need for a methodology that offers
  customers sources for their products, there still
  remain those who have not executed such a
  strategy. We can cite several examples of
  companies with tremendous websites featuring all
  of their products with no store locator or online
  sales. It will not shock you to learn that this
  model is a lose-lose proposition for all. For
  customers, not being able to buy online is
  frustrating enough. But not even being able to
  find a distributor or retailer or get a phone
  number is quite another. Retailers lose the
  awareness that a Web site could provide and the
  business that results from it. The manufacturer
  or brand owner loses sales and something far more
  important - brand satisfaction.

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• The Fumble ModelRefer but Lose Customers
   The Fumble Model exists when you send your
  customer to your channel partner in the hope that
  they will promote your brand with the same
  veracity as you. While retailers are only
  concerned about selling a brand, you should
  only be concerned about selling your brand. At
  Titleist Golfs website, you can search for
  nearby retailers by city, state, zip or name.
  Titleist gives numerous options in an attempt to
  even the playing field for competitive retailers
  and give consumers more choice. Unfortunately, by
  using this model, you may lose your customer to
  another brand-perhaps an online brand that can
  meet the customers needs then and there. And no
  matter how you look at it, you lose control of
  the branded experience that you've worked so hard
  to achieve. Perhaps Titleist is a strong enough
  brand to prevent customer defections by a
  retailer recommendation, but even for Titleist
  there are no guarantees. Are there for you?

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• The Two Faced ModelPartially serve customers and
  damage your channel  In this Two Faced
  model, customers can purchase a limited selection
  of your products from your website. This is the
  case at upscale fashion accessory designer Kate
  Spade. The products may represent a segment of
  your entire line or be an entirely separate
  online-only offering. Regardless, customers
  expect that the manufacturer itself should offer
  its full suite of products. The customer is
  rarely satisfied by being forced to choose from a
  limited selection and will often leave your site
  without purchasing. The result is a negative
  brand experience. At the same time, your
  distribution channel sees your online store as
  direct competition. Even if you sell different
  products online, distributors and retailers are
  now put in the position to compete with you for a
  finite number of consumer dollars. Furthermore,
  channel partners see your initiative as a first
  step towards being totally circumvented by you,
  whether that is your intention or not. Channel
  relationships will worsen and focus on your brand
  in retail establishments will be diverted to
  other brands that appear more loyal to the
  distribution channel.

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• The Broken Boomerang ModelShare but Lose
  Customers  A Broken Boomerang best
  exemplifies this model. You throw your customer
  to your channel partner with the expectation that
  the sale will return to you through a customer
  purchase of your brand, only to discover that you
  have no idea what happened to it. In this model,
  the consumer goes to brandname.com, shops for a
  product, and clicks on buy online, taking them
  to icons of online retailers that are supposed to
  have the item in question IN STOCK. The customer
  chooses a retailer and is taken to the product
  page at the retailers website. Now at the
  retailers site, the consumer may be influenced
  by competing brands. We have seen countless
  examples where the desired product is not in
  stock, forcing the consumer to search for
  alternatives. The result is a complete loss of
  the brand experience the manufacturer has worked
  so hard to deliver, the potential for a lost
  sale, the ultimate loss of the relationships
  between the manufacturer and the consumer and all
  of the geo-demographic, psychological and
  purchasing data associated with the consumer.

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• The Reshare ModelComplete Channel Harmony and
  Customer Satisfaction  Imagine having
  absolute control over your customers online
  experience at your branded website. Imagine being
  able to develop a relationship with each of your
  channel partners and end customers, regardless of
  how complex or layered your channel is. Imagine
  satisfying the contractual, legislative and
  relational requirements of your entire
  distribution channel all of the time. You are
  imagining Reshare. Reshare is the leading
  Distribution Relationship Management (DRM)
  software and strategy company with the only
  patented DRM solution that enables manufacturers
  and brand owners to sell online directly to end
  users without circumventing their valuable
  channel partners. With over 20 years of online
  experience across a multitude of industries, we
  offer software and strategies that resolve
  channel conflict, guarantee complete brand
  control and enhance relationships between all
  channel partners and end users while increasing
  revenue, market share and profitability.

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• Allows you to sell directly to business buyers
  consumersAssures total brand controlPreserves
  your critical channel relationsProvides Bricks
  Mortar service, support and returnsBuilds
  partner and consumer relationshipsProvides
  incremental revenueGives you a strategic
  competitive advantage

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• Benefits to the Manufacturer
• Potential customers visit the web sites of brand
  owning manufacturers every minute of every day.
  They conduct research, look for products, compare
  prices and make buying decisions. Allowing these
  prospects to become customers right at their web
  site captures business for the manufacturer that
  might otherwise be lost to competitors or lack of
  action. Increased sales result. In many instances
  customers need, and are willing to purchase, more
  than one product. Manufacturers who control the
  purchasing opportunities of their customers are
  able to offer them further opportunities for
  additional sales. Manufacturers can use on-line
  incentives, collaborative filtering (product
  recommendation engines), instant discounts and
  more to increase their ability to cross sell.
• By establishing, sometimes for the first time, a
  direct connection with their end customers,
  manufacturers are able to gain important
  geo-demographic information about these customers
  which allows them to build better products,
  improve existing products, offer in-demand
  complementary products or build additional
  products.
• Brand degradation is an important issue with
  almost all manufacturers. Products are being sold
  over the internet whether the manufacturer
  supports it or not, often through illegitimate
  channels. The only way to truly control internet
  sales of a given product is to allow buyers the
  opportunity to purchase legitimate products sold
  directly by the manufacturer. Customers trust the
  quality, authenticity and support of the brands
  manufacturer.
• Manufacturers who sell directly on-line, and
  fully support their distribution system, have an
  opportunity to influence inventory decisions at
  the retail level. Information received by
  customers can be used to support sales of
  additional lines, skus or models.
• In a Business-to-Business (B2B) application,
  on-line purchasing directly from the manufacturer
  can significantly increase ROI. On-line ordering
  of both end-products and parts can have a
  significant impact on a clients bottom line.

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• Significant Return on Investment
• The efficiencies and cost savings that are being
  realized by the proper use of the internet are
  staggering. USFoods' (through its acquisition of
  Alliant Foodservice) online purchasing system
  lowers their internal costs from 107 to 30 and
  boosts the average order size by over 30. These
  remarkable savings allow USFoods to serve their
  customer better, improve profitability and
  shareholder value.
• According to a May 24th, 2004 Forrester Research
  report, Retailers lose billions when their
  shoppers research online and then defect to other
  brands when they buy offline. This is even more
  prevalent when consumers are shopping for
  individual brands online with the intention of
  buying and are somehow diverted from the brand
  due to lack of availability or competitive
  influences.
• The cost of a lost sale is astronomical if it
  means the defection of a customer, regardless of
  how long they have been a customer. Long term
  customers are a vital source of profitability.
  They purchase more each year and often pay more
  for products and services because they trust you.
  A typical order at Dominos Pizza averages 12.58
  however the value of that customer exceeds 5,000
  over the life of a 10-year franchise contract,
  according to a study by the Harvard Business
  School, Companies can boost profits by almost
  100 by retaining just 5 more of their
  customers. Their report on customer defections
  included analysis of more than 100 companies in
  two dozen industries and shows that a reduction
  of defections by just 5 translates to a boost in
  profits of 25.

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• Benefits to the Channel
• In recent years, manufacturing companies that are
  not channel dependent and sell directly to the
  customer on-line have become prominent in many
  industries. When a customer chooses to purchase
  from such a company the entire channel of a
  dependent manufacturer suffers through lost
  sales, revenues, etc. Sometimes these new
  manufacturers compete on price, sometimes its
  simply on ease of purchase and availability of
  product. If the channel dependent manufacturer is
  able to compete on the same playing field as the
  non-dependent manufacturer, it will win more
  often than not, and the entire channel benefits.
  In many channel dependent industries goods may
  have to pass through multiple intermediaries
  before they end up in the hands of the end
  consumer. Each of these touch points represents
  an additional cost to transport, store,
  inventory, insure and track the goods. If the
  goods pass from the manufacturer to a single
  fulfillment source that can deliver it to the end
  customer, margins are increased, and ROI for the
  entire channel can increase.
• Fewer product touches also means fewer
  opportunities for theft, loss or damage.
• Smaller retailers have little to no negotiating
  power with respect to rates charged by national
  credit card companies. If all on-line purchases
  are funneled through a single source, lower rates
  can be charged which increases margins.
• Since on-line purchases are made through an
  outside independent party where all transactions
  are transparent and open for review, trust can be
  more easily established up and down the entire
  channel.

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