December 01, 2009

Manufacturers Selling Direct

It's been a tradition that manufacturers of products sold through the retail channel do not sell direct to consumers. Since the advent of the internet, this has changed. While many companies have not chosen to sell direct, it is past the point where the practice is controversial or likely to result in retailers refusing to carry the product as once was common.

Still, there are issues. Is it OK for the manufacturer to offer lower prices or other incentives not available to retailers? What if the product is one that is typically sold at less than suggested retail price - should the manufacturer offer it at "street price."

Since I entered publishing in 1980, I have always sold direct to consumers, but been reluctant to offer consumer incentives that would seem unfair to my dealers.

It's one thing to sell direct, but another as to how and where you promote your direct channel. A curious case appears today where Penguin Books is promoting their online store on Shelf Awareness, an email newsletter sent to people in the publishing trade (ad below).

You might say that individuals at other publishing houses, agents and publicists are good prospects for a well-loved publisher such as Penguin. And "reader/booklover" is an accepted category of subscribers, so there are definitely consumers reading the newsletter. But one of the main readerships -- the one to whom most ads on Shelf Awareness are aimed -- is booksellers. It seems to me dangerous to rub your direct sales effort in the face of your primary distribution channel, especially since Penguin is offering gift packs and personalized editions that likely are not available to retailers (though make absolute sense in a web store) and promoting staff recommendations, just as a book store does.

1 comment:

arlee bird said...

Internet shopping is indeed the way much will be done in the future, but sadly much to the detriment of brick-and-mortar outlets, the local distributors who provide service and a sense of community. This strategy may fail as time goes on -- the impulse purchase or the enamoring of a consumer through contact with a product may be threatened thereby decreasing comsumption of goods. Here recently with the sales fliers in the L.A.Times, I was looking at one (Toys r Us perhaps?) where the products on sale at area stores were shown with pricing, while the flier also promotes buying the same items at their website-- I understand why they need to do this but I fear the possible reprecussions.
If I buy specific books from a publisher, now I don't support my local bookstore where I might have purchased a few other impulse items or seen something I will go back for later--good bye local business, jobs, and the related tax base that supports our communities.
I buy online all the time so I am guilty as well. And if a publsher or a Walmart or Amazon can fork it over to me cheaper, I'm looking out for number 1. Sad but true.