Brands love to be as close to their end users as possible, and that’s understandable, but don’t limit the important element many customers want when shopping…choice.
Working in sales and marketing for over 20 years has given me insight into the way different brands and businesses manage their various sales channels depending on their objective at the time.
Within the fiercely-competitive mobile telecoms market I have seen networks battle to secure 100% market share within a popular retailer to rapidly scale volume, only to then change direction once sales targets are met to focus on their own higher-margin, direct sales. It’s a constant game of shifting priorities and is replicated in many other industries too, including services, food and pharmaceuticals and healthcare.
First, a quick definition. Direct sales – sales your business makes itself, i.e. the customer goes through your own checkout. Indirect sales – using a reseller or other distributor to generate sales on your behalf. And finally, a quick caveat question to ponder later – is any sale ever truly ‘Direct’ – once you factor in the Google ads, emails, social media posts and PR that all play a role in driving customers to you. For simplicity, we’re going to ignore that particular debate here.
Over the last few years, partially accelerated by the pandemic, brands have been shifting sales to online. It was inevitably going to happen, but there’s no doubt that the temporary closing of high streets across the globe sped that shift up. With online, businesses have more control of the flow of traffic towards their front door (their website) – influenced by their social media ads, Google ads, email, TV ads and text message campaigns.
It also gives you a direct relationship with the end user of your product or service.
It’s no surprise then that so many companies are having a stab at focussing solely on direct sales, or at least increasing the percentage of sales delivered by that channel.
Examples extend into healthcare products – take a look at shaving. Once upon a time you’d buy your razor from a local supermarket. Now you can order Harry’s razors direct to your door, cutting out the Indirect channel altogether (the supermarket in this case) and never looking at another brand again. It’s clearly having an impact on Gillette, as they’re also trying the direct subscription model too.
You can even subscribe for toothpaste now…and dog food, and toilet roll and washing powder. The list of product and service categories focussing on direct sales is endless and there will be more to come. Vape cigarettes is another one we’re seeing – what will those newsagents put on their counters!?
Samsung is a prime example of consumer electronics sales shifting channels. Once solely reliant on resellers such as Curry’s, AO, Amazon and Carphone Warehouse to sell their mobile phones, fridges and TVs, in the last couple of years have embarked on a direct ecommerce strategy, recruiting new staff to manage a focussed drive on encouraging people to buy directly from their website instead.
Now, where does this leave the traditional Indirect sales channel?
Well, let’s not doom and gloom on their behalf too much yet – there is plenty of life in the Indirect channel right now and it continues to offer unique approaches that no single product brand could ever hope to replicate – Colgate isn’t about to open a bunch of supermarkets across the country, it’ll leave that to Tesco and Sainsburys (for now). And some companies are just too big (or small) to be able to manage all their customers directly. However, there is no denying that the channel mix is shifting and the Indirect channel needs to adapt accordingly to potentially declining channel share and ensure it continues to offer value to both customers and business partners.
So what’s the biggest differentiator for the Indirect channel?
There are a few (e.g. speed to market, reaction time, value adds) but I want to focus on the biggest, most important one that no one direct brand could ever give customers themselves…
It’s a simple theory. EE are only ever going to recommend one mobile network to you when you visit them…EE. Samsung are only ever going to recommend one brand of Android phone…Samsung Galaxy. Both great brands in their own right of course but you see where I’m going here? It’s fine if you’re a fiercely brand-loyal customer, but for the shopper that doesn’t know what they want yet or wants to look at the full range of options available to them, the Indirect channel is one such source of expertise, endorsement and impartial advice. No direct sales channel can ever truly offer that.
Huel, the nutritionally-complete liquid food (there’s probably a proper term for the product) with a brilliant brand (full disclosure, I’m a customer), is one such business that has recognised it needs the Indirect channel to further scale – not just in unit sales but global brand awareness.
For years, the only place you could buy Huel was directly from their own website. Now, it’s stocked across supermarket shelves and at airports as a ready-mixed drink. No doubt, Huel will be hoping these single purchases from shops will lead to direct long-term home delivery subscriptions, but it’s a new customer journey where the Indirect channel has a role to play.
And that is something Indirect sales channels – however you define ‘indirect’ – need to focus on promoting and maintaining as one of their key USPs. Choice. Not every customer wants it but there are plenty that always will.
For brands pursuing the Direct-only sales channel, there’s no denying there is a market for it, but if you want to reach as many new customers as possible, Indirect sales partners will continue to play a key role in this.
Yes, that role is evolving beyond just stocking your product on their shelves, but just like the risks of putting all your marketing budget into just one social media platform, a single sales channel limits your audience, even with the power of the internet. For customers that want choice, they’re going to seek out the businesses that can give it to them.