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Behold the Manufacturer's Ecommerce Site: Thou Shalt Not Take My Sales

by beckygoudy on July 29, 2009

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An interesting Ecommerce conundrum occurred last week. A manufacturer (name concealed to protect the guilty) that accounts for a good amount of my sales this time of year, called and confessed that they didn’t like how many sales I was ‘taking’ from them. Their rationale was that they pay big money for PR, and I’m (suddenly) reaping all of the benefit. I offer complimentary products and cheaper shipping (my site’s value proposition), so this clearly is driving all of their rightful customers my way. They went on to say that they thought it was unfair, because they sell wholesale to me and make half the money they could on a retail customer.

Now, I’ve been selling this brand for over a year, and it seemed odd to me that I’m suddenly the source of their woes. This is a multi-million dollar company (gross sales)…and I am definitely not. So I find it perplexing that I could be putting such a huge dent in their bottom line. Furthermore, I chose this brand in the first place, both for the original concept and the hard MSRP that they regularly police. It’s one of the online strategies that has worked well for me in the past–force customers to base their buying decisions on something other than price. But to now water down all of my expertise in terms of marketing seemed just unfair. I hadn’t even received a set of “dos” and “dont’s” from this company in terms of advertising to begin with. Even still, all of my advertised promotions (Free Shipping over $75, Flat Shipping on orders under $75, and free gift with purchase), were well within accepted Ecommerce best (ethical) practices. So why was I being called out for my alleged shenanigans over a year after they began?

Who knows. You could say that they didn’t catch me earlier, I suppose, but I think it goes deeper (and to a much more irrational place) than that. The economy is doing strange things to people right now. I don’t believe this company is actually unethical. But I do think that they’re misguided and stressed out. I also detected a bit of “green” when it comes to online sales knowledge. Perhaps this company’s (director level) representative didn’t know how to set policies for sales in the online world (it is so different than the offline world). Either way, she’s desperately trying to make sales, and if sitting on my head is the way she needs to move her product, I pity her financials at the end of the year. My customers will probably still not shop at her manufacturer site since it has so many faults. They are literally driving away customers in droves because the site is so unusable (but more on that in another post).

The solution reached (rather, dictated to me) was that I can’t do anything to promote my store in PPC for this brand. In other words, I’m forced to ignore PPC best practices in order to allow the manufacturer’s site to shine. Like their defunct site, their PPC is also defunct. When it comes down to it, they should divert some of those PR dollars to Usability testing. What good is it to bring in customers if you can’t convert them? This is exactly why many of ‘their’ customers shopped with me?

So what to do? I took this as an opportunity to clean my own house. It’s never a good idea to base sales on brands, alone, because those sales can be fickle. Some of the reasons for this fickleness include:

  • Your brand can cut you off at any time, for any reason
  • A competitor could undercut you in price
  • A new competitor could come in and upset the balance of sales–they take some of your customers and it’s a while before the space evens out
  • You are making an apples to apples comparison on products when users search on brand, so unless you have an exclusive product of theirs, the buying decision will usually come down to price

Of course, it’s always a good idea to have brand advertising to drive sales to your site, but never rely on it. The best long-term strategies involve a good amount of longtail keywords driving organic traffic–then you sprinkle in some brands. That way, you drive up average order value on the brand items.

The Aftermath – While this situation was monumentally annoying, it was a blessing in disguise. I hadn’t actually explored competitors in this category (there aren’t many), so wasn’t going after the additional 10,000 searches a month for this type (not brand, but type) of product! I never would have explored that opportunity if that brand hadn’t tied my hands so much. Overall I’m safer now because I can further define my value proposition for my customers as becoming an authority on this type of product. And it provides ambiguity on price, since this grouping of products isn’t easily compared elsewhere online. In addition, it allows me a broader range of selection for my customers, since the one-size-fits-all product was, for some customers, too expensive, and for others, not what they were looking for.

We’re still selling that other brand, but less of it, obviously. Our current longtail strategy is more difficult to gain immediate sales and it’s time consuming to implement, but it protects us in the future if a strong brand goes away.

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