More suppliers consider selling direct to consumer

by | Oct 26, 2022 | Retailers, Suppliers

When it comes to online sales and distribution channels, shipping pallets and cases of products to retailers isn’t the only option for suppliers anymore. Suppliers typically send their products to a retailer for in-store and online sales. In other cases, suppliers will handle order fulfillment on the retailer’s behalf and drop ship the item to the consumer.

But some vendors have begun selling direct to consumer themselves, cutting out the retail middleman for greater profits.

Increase direct to consumer sales by expanding online, growing profits

While most suppliers don’t sell direct to consumer, an increasingly large number have been doing just that. It’s a new way for businesses to think about their sales channels. More suppliers are selling online to grow profits and market share.

The big concern is any potential harm to their retailer relationships. Over the past few years, this is becoming less of an issue as many suppliers have established an eCommerce site and opened their own retail stores — such as Apple, Nike, Bose, and Starbucks — while also selling into large retailers.

Changing sales landscape for retailers and suppliers

Shifting trends have created a different sales landscape than what retailers have been used to for decades. As retailers start to see smaller suppliers enter the world of eCommerce, they are worried about what this will mean for them. However, smart suppliers recognize the need to protect their margins for themselves and their retail customers. They cannot sell their products for lower margins. This means they instead will sell their products at full retail price through their online channels, mimicking the pricing strategies used with their retailers.

For example, when Nike puts a store into a strip mall, we used to think it was all overstocks and seconds. But that’s not the case anymore. Nike has its own products, and they’re competing with their retail customers. But they’re also protecting them by selling the same items at the same price. They’re doing it online as well to protect other sporting goods retailers.

In the end, suppliers must decide whether to sell and ship to consumers directly or stay out of the retail market altogether. Do they want to get into the order fulfillment business, or do they prefer to work in crate- and pallet-loads, shipping only to retailers?

If you’ve been struggling with whether to sell your own products directly online, or want to let your retail channel manage online sales for you (and you just provide drop shipping), SPS Commerce can help you figure it out. Take a look at SPS Commerce solutions for suppliers for more information, or contact one of our experts who can answer all of your questions.

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Scott Bolduc


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