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How manufacturers and dealers can partner in online retail

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How manufacturers and dealers can partner in online retail

I think our industry is missing out on an opportunity for manufacturers in online retail, with product pickup at independent lumberyards. So many manufacturers that are too eager to sell products from their own websites don’t consider how it affects their distribution network. One decking manufacturer once began selling their products online at a price so low they undercut all of their dealers. Another company did the same thing with its lighting products. Both companies, in the end, alienated their loyal dealers.

In the independent lumberyard business, a lot of us don’t have the assets or the knowledge or skillsets to be able to be able to create a viable online store. Granted, anyone can make one via eBay or Amazon, and you can get some online presence, but I think a better alternative would be to get the manufactures to team up with independent lumberyards by setting up a website to sell their product, and then make the product available for local pick up at the retail level.

Say a consumer wants to get a Brand A deck lighting, and I’m a stocking dealer. When that consumer goes to the website and purchases the lighting, that light is delivered to my shop and we get the profit. Now the manufacturer in that situation would then realize that they would have sold it through distribution for X dollars, and had the consumer bought it through the retail channel, they would have paid Y amount, and the lumberyard would have made Z amount as margin. The manufacturer then awards that amount as a credit towards purchases from that lumberyard. That way, everyone is happy and it encourages the lumberyard to promote Brand A’s website, because they know that they are going to make a profit on it, they don’t have to stock or fulfill that order, and it’s an alternative method for independent lumberyards to bring customers into the store to purchase other products as well.

The current method sometimes causes retailers to not even recommend some manufacturers’ products because they know that if the customer goes to the manufacturer’s website, they might decide that the price paid there to have the product shipped to their home is reasonable to them and will save them a trip back to the local lumberyard.

One of the advantages of manufacturers working with local, independent retailers is that right now when a manufacturer sets up a website, or these products are available at someone else’s website at a lower cost or a cost comparable to something you can’t make a profit at, it causes the dealer to not want to show the product, or even talk about it in their store.

This once happened with a certain brand of railing system. We had a display up, and consumers would come in and really like the product, so they’d go online and do a little more research before making a final decision. What they found is that the manufacturer was selling the product at a rate lower than I could get it through distribution.

I suggest that the manufacturers put products on their websites for a fair price, and make them available for pickup at a local store. That store then gets full credit for that sale. By getting that customer to come into the store, the shipping is free. If the consumer elects to have it shipped to their home, the costs are higher. That gives the store incentive to be a local dealer of the product, and when the consumer arrives in the store, it gives the store’s staff a chance to upsell, which in turn can also sell more of the manufacturer’s products.

This method of online retail also incentivizes the store’s staff to help the customer and upsell as much as possible because they can feel as though a customer is not just showrooming them, because they know that even if they went back to the manufacturer’s website, they’d still come to the store to get the product. By structuring online retail this way, it is a great way for both manufacturers and retailers to combine to fight back against all the online retailers that are popping up.

I think it’s important that manufacturers also not require that an independent retailer be exclusive to them. If a manufacturer has a great product and is confident in that product, they shouldn’t care if there are other brands being sold at the store. If you’ve got a really great product, you’ll create your own exclusivity.

If a program like this were available to us, I’d jump on it quickly, and I think a lot of other dealers would as well. I know there are dealers who, when a consumer comes in and starts asking lots of questions about a product that is available and comparably priced online, immediately direct the customer’s attention to a different product. That situation is not good for the retailer or the manufacturer.