OPI recently took a non-scientific snapshot of almost 40 of some of the office products industry’s best-known manufacturers and found that around half sell direct to end users through their own websites.
Out of the vendors in the core traditional OP category, almost one third have their own online selling platform, although for some of the international brands, this option was only available in select countries. Traditional stationery manufacturers — including Faber-Castell, Pentel and Stabilo — appear to be more likely to adopt a direct strategy although, again, for some it was available only in certain territories.
All the major IT and EOS vendors operating in the business supplies industry that OPI looked at — including Logitech, Samsung and HP Inc — offered the option for customers to purchase direct from their websites. Looking at the UK market, only one — Brother in this case — redirected buyers to purchase through partners. In fact, out of all the companies that OPI examined, few offered a ‘buy from a recommended reseller’ link to end users.
Of the remaining companies in categories such as furniture and facilities management, one third offered a direct purchasing function. Interestingly, albeit unrelated from a direct-buy perspective, a quarter were not even on Amazon in some geographic locations. This mirrors the lack of general website capabilities in the jan/san industry, while for the furniture sector it reflects an ongoing reluctance by end users to buy big ticket items through the online channel.
One of the main reasons for manufacturers not selling direct online from their own web store is because they don’t feel it’s a necessity due to their presence on Amazon and other e-commerce sites, such as Euroffice, Shoplet, etc. As Hamelin CEO Eric Joan explains: “We don’t feel the need right now to directly sell to consumers, but we certainly feel a strong demand from them to buy online. Of course, Amazon is leading the way and offers us a great opportunity to promote our products to customers with a presentation that we control. It’s time-consuming but worth it, and it has forced us to improve our product information.”
As a way to reinforce and better control their brand messaging, some vendors are opting for a sponsored/branded page presence. This goes someway towards addressing the perennial frustrations around product descriptions, while offering manufacturers some element of brand supervision. “These pages are mostly to ensure that the products are accurately described and to take control of the branding. When one of our products lacks a branded page, marketplace dealers cut and paste the wrong images and descriptions can be completely inaccurate,” says Acme United CEO Walter Johnsen.
Using third-party e-commerce platforms brings with it its own set of issues for vendors. Many lament the fact that specifically dealing with Amazon today is not as easy as it once was, while some vendors miss the accountability that comes with the availability of and relationship with specific account managers in other industry channels.
It’s no secret that wholesalers, large resellers and dealers don’t carry a full line of available products, whereas a manufacturer’s entire SKU range can be hosted on its own web store or a third-party e-commerce platform.
As one major international OP vendor told OPI on the condition of anonymity, there isn’t a European wholesaler or reseller/customer that has all of its products available, adding that the standard scenario is to ask only for the “best-performing SKUs due to warehouse and catalogue limitations”.
In order to counteract this problem, it’s no wonder that many vendors have gone down the route of selling direct to customers via their own website, which is leading to a certain amount of disintermediation within the supply chain. That said, while there have been grumbles in the industry regarding this move, according to a recent opi.net poll (see right), it seems that an air of resignation towards this practice has set in.
As mentioned earlier, it’s certainly standard practice across many adjacent industries, particularly IT and EOS. While the uptake of e-commerce varies from country to country, virtually all the printer manufacturers including HP Inc, Canon, Samsung and Xerox offer the ability for customers to buy directly from their websites.
But online is not the only way manufacturers are bypassing the wholesaler and reseller channels to sell direct. High-end brands such as Apple, Moleskine and Lamy offer access via their own retail stores, while vendors such as Avery have been acquiring direct-to-consumer businesses — in 2017, it acquired Goed Gemerkt and Badgepoint, both European software-powered online digital printing companies. In 2016, Avery said around 10% of its sales already came from its direct-to-consumer businesses.
Avoiding price wars
Most vendors OPI spoke to admitted that ‘direct from their own web shop’ online purchases currently only make up a minuscule portion of overall sales. Importantly also, most manufacturers have averted a price war and competing with the reseller channel by offering end-user pricing that tends to be full retail whereas the majority of resellers sell below the recommended retail price, thus removing a compelling reason for customers to purchase direct. The real benefit for vendors is that they can sell products that aren’t available in the reseller channel, or offer bundles, for example, that cannot be found when going ‘comparison price shopping’.
Says Acme’s Johnsen: “We discourage direct purchases through our pricing strategy, but it helps provide a deeper product offering — essential for non-mainstream products. For example, our Kevlar shears which Boeing buys for its Dreamliner aeroplane, are also used by sailmakers. Wholesalers and dealers won’t carry these, but we need to ensure that they are easily searchable and available for anyone who wants them.”
Technology has levelled the playing field, meaning it is eminently possible now to cut out the middlemen — resellers and wholesalers. But while on paper this can seem like an attractive proposition, moving more prominently into the direct distribution of products is not the way most manufacturers want to go. Says Hamelin’s Joan: “We don’t have the proper logistics organisation to sell direct and a lot of our wholesalers offer good online distribution for our products.” Other vendors echo this sentiment, adding that the current distribution model works and for manufacturers to pursue a direct route to market simply isn’t cost-effective on any significant scale.
President of ACCO Brands EMEA Cezary Monko told OPI in a recent interview that as long as the current channels provide the desired access to the customer, there is no reason for the company to head down the avenue of selling product from its own web store. It should be a question of each channel focusing on its core competencies, he argued, not trying to be all things to all people.
Having said that, there are more options becoming available with the advent of third-party fulfilment (3PF) companies such as Distribution Management’s DM Fulfillment. The company is actively speaking to manufacturers about omnichannel fulfilment, including a drop-ship and carrier model for e-commerce fulfilment. With the current uncertainty over the two big OP wholesalers in the US, for example, 3PF could well be a game changer for vendors.
However, the majority of manufacturers state that they don’t feel they are competing with resellers, mainly for the reasons cited above, but also because e-commerce clearly lacks one essential ingredient — the customer relationship.
But one thing is for sure: as the OP market continues to undergo rapid change and consolidation, at least partially selling direct to customers through web stores and/or other avenues is likely to become an attractive option for vendors.