How has digitalization changed the relationship between manufacturers and retailers?

13/12/2018

Angela de la Vieja

Digitisation has changed the way we see the world, this is a fact. It has also, when applied to business, been a huge leap in the relationship between manufacturers and retailers. This progress has been both qualitative and quantitative, enriching and refining the understanding between both, along with improving communications and the supervision of certain processes.

Through the magnifying glass of digital transformation, certain points are seen which are especially interesting to use as examples. Let's see what the key aspects are in the relationship between manufacturers and sellers that have changed with the introduction of digitalisation into their environment.

- A new business model. With the digitalisation of the entire sales process, manufacturers can now reach the end-customer through direct channels such as a new online store. One could maybe come to think that the manufacturer begins to compete with itself, causing them to consider more than ever the importance of the retailers in their results. Likewise, sales orientated manufacturers websites become the place to implement actions which it considers achieves good results for each of its vendors.

In fact, this is one of the situations that worries most new (and maybe some existing) retailers, since it opens a channel to possible loss of profits.

- Customer knowledge. According to traditional sales models, the manufacturer was, more or less, limited to serving the product to the retailer so that they would sell it on to the target audience. Beyond their own market studies, manufacturers obtained very little data from their end-users. On the other hand, the seller obtained considerable information about who, how, when and why they bought their products. Now, with digitalisation, this data is worth gold - and manufacturers know this!

This new reality forges new alliances, new agreements, in which access to data is the commercial objective.

- Automatic supervision of MSRP’s. Digital price tracking systems allow each manufacturer to check how retailers interact with their recommended retail prices. While it is true that they cannot force MSRP implementation, it is now possible for a manufacturer to know at all times which vendors do and do not apply them thanks to data digitalisation.

In this way it is possible to promote future actions that directly allow the manufacturer to understand why the seller prefers not to use their RRP. This creates a closer relationship and improves the communication with each retailer, demonstrating a real, vested, interest in their status.

- Monitoring competitor prices. The are two ways of looking at this. Retailers can check at what price a manufacturer's product is sold by their competition, the manufacturer can also analyse in real time what prices are stipulated by its competitors. This greatly influences the infamous price war (which is almost constant) but allows each of the parties to have full knowledge of everything that happens in the market.

With joint strategies, the relationship between the manufacturer and the retailer is enhanced, when possible, to mutually improve the benefits of both by monitoring what others do.

- New ways of advertising and marketing. If before the physical spaces intended for the promotion of a brand or product were the most direct transmission route for the manufacturer, now the options are multiplied. Beyond the classical advertising formats, it is now possible to create collaborative actions in which good relationships between one actor and another stand out. This is also a sign of healthy and constructive communication.

A practical example can be found in the product datasheets. This is a fundamental piece for the conversion of an ecommerce; however, it is still a reflection of the brand identity of the manufacturer, as well as a differentiating element that enhances its relevance in the market.

In short, as a result of digitalisation, light areas and shadows have emerged around the relationship between manufacturers and online sellers. However, at the end of the tunnel mutual understanding develops out of necessity, mainly because if something seems not to be changing, medium term, it is the necessary collaboration between the two just to continue staying afloat.

11/11/2022

Consumer behavior: How can behavior tracking be effective for setting the right pricing strategies?

Behavior tracking is becoming massively popular today. As a result, pricing strategies born from studying consumer behavior are a merchant's dream come true. If done right, it can conquer every market for the business quickly. With abundant data available, the strategic makeover of the pricing models is becoming easy for companies.

What is behavioral tracking, and how is the data beneficial in pricing?

For a quick understanding, behavioral tracking refers to gaining in-depth knowledge and insights into consumers through their web data. Their browsing habits, spontaneous decisions, shopping interests, and preferences come under behavioral tracking.

How can enterprises use customer behavior data?

Companies can use customer behavior data as a tool to strengthen their hold on the market. A customer’s preferences, values, and tendencies allow businesses to work in sync with them through the collected data. Apart from this, customer behavior can also aid in:

Tailoring customer needs for customer retention

Personalization is becoming the heart of a company’s growth. No matter in which area an enterprise is functioning, tailoring the services, products, and solutions is becoming increasingly crucial. Uniqueness and personalization attract the crowd like no other.

Increasing the overall value

One of the best ways customer behavior data affects a business is by upgrading the value of customers for the business. The customer’s characteristics allow the company to target the people that match the business prospects well.

Optimizing every type of content

Everything that is up for digital display requires content. You must have seen companies unveiling their products or services through advertisements and making the initial public appearance. Two essential sales strategies – upselling and cross-selling comes through content optimization.

Pricing Strategy

Last but certainly not least is the influence of customer behavior data on the pricing strategy. The pricing strategy essentially constitutes content derived from data analysis. Companies need to have a dynamic approach to the pricing system to attract the right customers.

17/02/2015

Saint Valentine’s Day, always a good opportunity

V-Day is looming, a long-awaited date for all and also a good occasion for the eCommerce. According the study conducted by Prosper Insights and Analytics, it is forecasted the average consumer expense that day will be the highest in last years. Furthermore, 25% of them will buy online, which means an increase of 4% regarding 2014 (The US department of Commerce). This is, therefore, a key date where market competitiveness increase and which could be assumed as a big opportunity for our business or, a big fail if we do not adopt the correct strategies.

How to turn this event into an opportunity? To achieve this goal, we need to adapt our prices to this hostile environment, i.e. we need to develop an appropriate Dynamic Pricing strategy that allows us to adapt our prices to the variations produced in supply and demand and to position us ahead of our competitors. In V-Day, the frequency in changes will be higher, carrying it out each hour or even each minute. It is estimated that 65% of leader retailers have the ability to respond quickly at these variations, such Amazon. For this reason, it acquires great importance the correct use of a software specialised in price motorisation of competitors. Do not miss the time and adapt your business to new adversities.

28/12/2022

Which are the best footwear marketplaces to sell on?

Footwear marketplaces are booming. The last decade has seen the launch of new specialized marketplaces with millions of different users. Among them are Spartoo, Sarenza and Farfetch, portals with international reach. Their main value is that they unite hundreds of footwear brands, as well as offering clothes and accessories. Although each has its own characteristics, they are all vertical marketplaces, i.e., they focus on a specific area, and their sales categories are interrelated. For sellers, these portals provide an opportunity to expand sales channels and drive the globalization of their e-commerce business. We explain how to sell on these footwear marketplaces so that you can assess whether they align with your plans for the future and then start defining a possible pricing strategy.