How to Engage OEM Distributors in eCommerce

As an OEM or  B2B company within the manufacturing ecosystem, we know that you face a dilemma when considering a direct-to-consumer sales model like eCommerce. While the potential for better profit margins and increased revenue can be enticing, it often comes with the possibility of disrupting your existing distribution network. Your concerns regarding this disruption are definitely valid, but there are ways to implement a direct-to-consumer model that strengthens, rather than weakens, your relationship with distributors and key channel partners. Here are a few key tactics that can lessen the risk of disruption and assist you in your new eCommerce implementation.

Transparency and Collaboration

Once you’ve decided that eCommerce is a worthwhile pursuit, it’s a good idea to let your distributors and channel partners know as soon as you can. The big reason for this is maintaining the trust you’ve already established so you don’t blindside anyone. It also gives you an opportunity to listen to their input and concerns. Be ready to address their questions, and consider some of their ideas so they feel engaged in the process. 

Some questions that may come up:

• Will my sales be cannibalized?
• How will you handle pricing and discounts?
• Will I be involved in the marketing efforts?
• How will customer service be handled?
• Will I have access to sales data from the eCommerce platform?
• What is your long-term vision for eCommerce?
• How will you ensure my continued success in the new landscape?
• Are there opportunities for collaboration on the eCommerce platform?

The recommended strategies below should help give you some ideas for how to prepare yourself for that conversation, and what you can recommend to your distributors to ease these concerns. 

Channel Differentiation

One simple way to avoid cutting into distributor sales is through channel differentiation. This means offering different products or focusing on distinct markets through each channel.

For example:

Targeted Product Selection: Your eCommerce store could focus on specific product lines, such as:

• Older models or refurbished products: This caters to budget-conscious customers and avoids directly competing with distributors selling the latest releases.
• Accessories and consumables: These are often add-on purchases that complement your core products sold through distributors.

For manufacturers who are just starting out with eCommerce, it might make sense to start small and focus on a specific product line, thus freeing up your distributors to sell the rest.

Reaching New Markets: eCommerce excels at expanding your reach. You can leverage this by:

• Targeting underserved regions: Focus marketing efforts on areas with weak distributor networks to build a new customer base.
• International expansion: eCommerce can be a gateway to new countries or regions that traditional distribution channels haven’t reached.

By strategically differentiating your channels, you can leverage the strengths of both eCommerce and your distributor network to maximize sales and market reach.

Compensatory Strategies 

Another great way to ensure both you and your distributors are benefiting from your eCommerce platform is through compensatory strategies. There are several ways to incentivize distributors and ensure they remain enthusiastic about your eCommerce strategy.

• Revenue Sharing: Consider a revenue-sharing model where distributors receive a portion of online sales revenue. This directly ties their success to the success of your eCommerce platform. You can even offer a higher commission for leads they generate that convert to online sales.
• Lead Nurturing and High-Value Sales: Develop a system for routing complex online inquiries to your distributors. This ensures they capture high-value sales that may require more technical expertise or personalized attention. Your eCommerce platform can handle simpler, one-stop-shop orders, freeing up distributors to focus on more complex customer interactions.

Collaborative Marketing

A strong eCommerce strategy goes beyond just selling your products online. It’s about creating a win-win situation for both you and your distributors. Here’s how collaboration can foster a successful partnership:

Joint Marketing Initiatives: Launch your eCommerce platform with a bang! Partner with distributors on joint marketing promotions to generate excitement and reach a wider audience.

Co-Branded Content and Assets: Develop co-branded marketing materials that leverage the strengths of both your brand and your distributors. This could include website banners, social media content, or even co-hosted webinars.

Distributor-Specific Incentives: Offer exclusive deals to distributors who plan to utilize your eCommerce platform for bulk orders. This creates a valuable sales tool for them and incentivizes them to integrate your platform into their operations.

Empowering Distributors for Online Success: Support your distributors by providing them with the resources they need to thrive in the online space. This could include:

• Digital tools: Provide them with digital tools to manage online orders, track inventory, and streamline communication.
• Marketing materials: Equip them with high-quality product content, such as images, videos, and sales copy, to effectively promote your products on their own channels.

By working collaboratively, your eCommerce platform will complement your existing distributor network, creating a powerful sales force that reaches a broader customer base.

Pricing Policies 

Pricing strategies can be a powerful tool for ensuring both your eCommerce platform and your distributor network thrive. Here are a few approaches to consider:

Transparent Pricing: Consider displaying the Manufacturer’s Suggested Retail Price (MSRP) on your eCommerce website. This provides a baseline price point for customers while allowing distributors to offer competitive discounts through their own channels.

Distributor-Managed Discounts: Empower distributors by providing them with login access to manage their own discount structures on your platform. This gives them the flexibility to tailor pricing to their customer segments and sales strategies.

Exclusive Benefits for Distributors: Offer special terms to distributors that incentivize their participation in your eCommerce ecosystem. This could include:

• Extended payment periods: Provide distributors with extended payment terms to improve their cash flow.
• Exclusive access to products: Offer distributors exclusive access to certain products or product bundles, making them a more attractive sales channel for specific customer segments.

These tactics offer customers transparent pricing and access to distributor discounts, while distributors have the flexibility to manage their pricing and gain access to exclusive benefits.

Shared Technology 

Last, but certainly not least, your eCommerce platform can be a springboard for your distributors’ online success. Here’s how you can leverage technology and training to empower them:

Shared Platform Access: Offer distributors access to your eCommerce platform or the underlying technology stack. This allows them to:

• Build upon your foundation: Distributors can leverage your existing infrastructure to create customized online storefronts that seamlessly integrate with your platform.
• Develop their own eCommerce stores: Empower distributors to build and manage their own independent online stores, potentially expanding your overall sales reach.

Comprehensive Training Programs: Provide distributors with in-depth training on using your platform effectively. This should include:

• Platform functionality: Train distributors on core features like order management, inventory control, and customer service tools.
• Integration and optimization: Equip them with the knowledge to seamlessly integrate their systems with your platform and optimize their online stores for maximum sales potential.

By providing shared technology and comprehensive training, you can empower your distributors to become stronger partners in the online sales landscape. This collaborative approach benefits everyone: you gain a wider sales reach, while distributors gain the tools and expertise to thrive in the ever-growing world of eCommerce.

Wrapping Up 

Building a successful eCommerce presence doesn’t have to come at the expense of your existing distributor network. By implementing these collaborative strategies, you can create a win-win situation that strengthens your overall sales force and market reach. Remember, a thoughtful eCommerce strategy isn’t just about selling products online – it’s about building a strong ecosystem that benefits everyone involved.

Do you have questions about implementing these strategies or want to discuss your specific situation? Feel free to reach out to me a cspaude@topfloortech.com or request a complimentary consultation.