Brands adopt new sales channels despite risks

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By: Wise Marketer Staff |

Posted on April 23, 2012

Brands are investing heavily in selling direct to their customers and adopting a 'wait and see' attitude to potential pitfalls such as the risk of cannibalising their existing channels, according to research by Coleman Parkes and eCommera.

The study of 50 major international brands showed that brands recognise the potential of selling direct to the customer through both store and online channels, and that online in particular is seen as the best way to reach new customers in countries where they otherwise have no or limited presence.

Despite the risk of upsetting retail partners and potentially having fewer physical outlets carrying products, brands are pushing ahead, determined to face the possible consequences as and when they arise. The research shows that their multi-channel strategy for engaging directly with customers is dominated by flagship stores (56%) - both physical and online - but with similar emphasis (52%) on using social media, principally Facebook.

More than 70% of brands surveyed rely on price discounts to incentivise customers to buy direct, while 35% use VIP customer services. 15% use exclusive products to attract attention. A minority shunned online discounts, concerned that this might devalue their brand.

One e-commerce manager from a major high value specialist apparel and accessory supplier said: "The potential to sell online is huge and will keep on increasing with the advancements in technology. The only area that needs to be watched is the various online distribution channels so that the brand does not become a common brand which can be found anywhere. We need to maintain our high-end focus and premium feel."

"Selling direct and maintaining the brand aura is complex," concluded eCommera director Michael Ross. "Managing delivery on promise across multiple channels and countries requires the coordination of myriad systems and partners. Getting it wrong once can devalue the brand. Getting it right each time can mean new and loyal customers."

Coleman Parkes interviewed 50 senior e-commerce managers from major European brands between late 2011 and early 2012. Nearly half of respondents had been trading online for three or more years, one quarter for one to two years, while five, or one in ten, had gone online only recently. Only a small proportion of annual sales revenue comes from online sales, with only a handful reporting higher than 30%.

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