YEOMAN TECHNOLOGY GROUP 2018 TOP TRENDS FOR BRANDS & MANUFACTURERS

Transcription

1 YEOMAN TECHNOLOGY GROUP 2018 TOP TRENDS FOR BRANDS & MANUFACTURERS

2 CONTENTS Overview... 3 Brand s Direct Sales Surge in Pricing Conflicts Worsen - Especially for B2B... 6 Amazon Continues todominate (and that s not all good news)... 7 The Real Fake News Traditional Retail is Recovering... 8 Next Level Content Pressure You Need More Video... 9 Next Steps for Brands... 10

3 OVERVIEW The recovering economy may make many brands think the painful digital shift they ve been undergoing in their channels will subside as traditional retail, wholesale, outside, and catalog sales get a lift with a stronger economy. You re wrong. While a stronger economy will help all sales, this recovery will likely see its biggest boost in digital channels everything from direct sales and drop ships to social commerce and more Amazon domination will be a very strong year online, but brands and manufacturers should focus on 5 key trends / opportunities: Direct sales Pricing conflicts Amazon shifts Stumbling retail recovery Content pressure from partners

4 BRAND S DIRECT SALES WILL CONTINUE TO SURGE IN 2018 Every brand has walked the line of selling direct and supporting their channel programs. In 2017, we saw almost every brand we monitor record double-digit direct sales growth regardless of market segment. In fact, the 3-year trend of consumer direct is unmistakable; brands that have consistently sold online for the past 5 years (with realistic pricing and a solid website) average 15-25% growth per year. The key for your brand to sell more direct? Support your channel by selling direct. It may sound counterintuitive, but the data backs us up. Brands that add a where to buy as well as a buy now call to action actually have a higher close rate than those without both. Adding custom quotes and dealer interest forms improves onsite behavior even more. Brand Site Conversions by Customer Interest Become a Dealer Buy Direct Where to Buy Custom Quote Request Source: 2017 Conversion rates for $100m US Manufacturer with all options on their core brand site

5 To reap the biggest benefit from your brand site you should follow these best practices: 1. Provide fair website pricing that never undercuts the channel Our research shows that the core brand site can maintain a 2-5% premium of the standard (non-sale) list price on the web 2. Minimize brand site sales and discounting Let your downstream channel do the sales pricing The best offers you can have a free shipping and quantity-based discounts 3. Expand your where to buy options on your site, actively promoting your partners Menu and On Product where to buy links actually increase overall sales 4. Focus on your larger quantity and higher ticket items; our research shows that direct consumers typically prefer to buy the higher end and bulk/case sizes direct

6 PRICING CONFLICTS WILL WORSEN, ESPECIALY FOR B2B Speaking of pricing, several B2B markets are going to face increasing pressure due to poor offline-to-online pricing alignment. Education, healthcare, and heavy industrial are all likely to end up in tense meetings as clients and contracts are scrutinized because of easy access to pricing online. Let s start with a quick fact check. B2B online sales have always been higher than B2C when you factor in EDI, closed systems like Ariba, and the traditional transactional systems used by everyone from Grainger to Cisco. They never caused many issues, since the pricing and data weren t easily accessible. Not anymore. You can blame Amazon s surging B2B sales, but they re just part of the shift. Yeoman s research has shown that every major distributor in every industrial and education market has updated their digital presence and is pushing more aggressively online. B2B buyers are surging online, so every major player is trying to get there fast. If you ve have a distribution partner that s been stiffing accounts for years, this may be their year of reckoning. They re going to get dumped. And don t be surprised when they call you to complain. Be proactive start analyzing your price variances now and set some guidance. For many traditional industrial B2B manufacturers that means finally publishing some type of price point on your own site. Selling direct may not be viable for many, but leaving the channel to guide pricing is a huge mistake (just ask any B2C brand).

7 AMAZON WILL CONTINUE TO DOMINATE (AND THAT S NOT ALL GOOD NEWS) Amazon had a record year in 2017 and not every brand benefited from this growth. In fact, some of Amazon s strongest growth came from their own private labels as well a new surge of FBA-only brands that import directly to Amazon s fulfillment centers. 2,000,000,000 Amazon Visitor Traffic ,500,000,000 1,000,000, ,000,000 0 Wayfair Walmart Amazon Linear (Walmart) Linear (Amazon) Poly. (Amazon) Some analysts predict Amazon s private label business could account for 20% of its revenue within the next few years. If you re thinking Amazon Basics or Alexa, think again. Amazon has 20+ brands like Arabella (clothing), Beauty Bar (cosmetics), and Denali (tools). There s still plenty of growth on the platform, especially if you re fully leveraging the newly bolstered brand protection and expanded marketing services. Another huge opportunity for 2018? Leveraging Amazon as a launching point for international expansion. Amazon s Merchant and Vendor programs both have turnkey programs that help you launch in Amazon s international markets including Canada, Mexico, UK, India, Japan, and all of Europe.

8 THE REAL FAKE NEWS TRADITIONAL RETAIL IS RECOVERING B2C brands breathed a sigh of relief as most major retailers delivered fairly good results this holiday season. However, every manufacturer should dig into the details. Most of the gains were small at best and were often obscured by the fact that many don t break out their online revenue. The numbers don t lie in-store growth was 4.9%, but online growth was 3.5X that at 18.1%. Any retail partner that isn t investing heavily in an integrated ecommerce system that links the stores and sites together is going to fail. Integrated pickup, pricing, returns, and shopping experience will be the norm. The big boys, like Walmart, are acquiring sites, technologies, and talent to try and retool. It s way too soon to predict a winner, but for brands, it means more pressure to provide better content for web and in-store use. Top 10 signs your retail partner doesn t get it: 1. Different products in store vs. online 2. Separate buying group 3. No pick up in store 4. No returns to store 5. Separate online and retail marketing teams 6. Digital ads don t match weekly ROP 7. Refers to ecommerce as another store 8. No ability to order online from within the store 9. No tracking of mobile users and searches within store 10. Ecommerce site still isn t mobile friendly

9 NEXT LEVEL CONTENT PRESSURE YOU NEED MORE VIDEO Most brands have finally acknowledged that they are responsible for providing their digital content including compelling copy, images, and bullets. A few brave souls have made it a separate group from Marketing and have banned the use of smart interns. They are in the best position to be able to deal with the huge uptick we see in demand for next level content including video, 3D images, and digital augmentation of your product. Forget the 5-minute overview that takes a month to make. You ll be pressured for fast, short, relevant content linked to an event or season. Expect the requests to come fast and furious ready for instant streaming on Facebook, YouTube, or dozens of other spots. The available PPC options for video is exploding. There is so much streaming content available ad platforms simply don t have enough ads to run. You ll be able to get your short snippets in front of your audience for a fraction of the price you traditionally paid. How low? Our PPC team is seeing full video views for under 2 cents per click! Bumper ads (those 6 second snippets) are at 3/10 of a cents! Sample Bumper Ad Analytics Targeting Crafters

10 NEXT STEPS FOR BRANDS Need help? Get Yeoman. We focus exclusively on brands and manufacturers and understand how to navigate online and offline selling. Don t expect a consulting report from us. We re hands-on and will jump in with your team to understand and grow your digital sales. Contact us today to get started.