Retail and e-commerce: love-hate relationship or model for success

Author: Klaus Pilsl

Today, many products are best purchased via e-commerce. Nevertheless, there are products that need the services of a specialist retailer or similar. Namely, when it is essential for the purchase to offer the physical product experience before the purchase.

On the other hand, there are already many products today that are still traditionally sold via specialist retailers, although customers already clearly prefer purchasing via e-commerce.

In this article we talk about the trend towards e-commerce. The advantages and disadvantages of specialized trade, its fears, how manufacturers can deal with it and, above all, what strategies there are to unite specialized trade and e-commerce.

But let's take things one step at a time. First, let's take a look at what makes specialty retailing so special and unique.

Promotion of the target area (lead generation): Specialty retailers often have local roots and in-depth knowledge of the market and the needs of customers in their catchment area. Through targeted advertising and marketing measures, they can reach potential customers and inspire them to buy their products.
Exhibition of the products to experience them live: An important advantage of specialty stores is the ability to allow customers to experience products live before they buy them. Touching, trying out and getting to know the product creates a physical product experience that cannot be replicated in e-commerce. This aspect is particularly important for products such as furniture, electronics or vehicles.
Knowhow, advice, order: Specialty retailers have specialist knowledge and expertise that they can make available to their customers. They can advise on product selection and take individual requirements into account. In addition, retailers can support the ordering process and assist customers with questions or concerns. However, this is also a danger for the manufacturer, which we will discuss later.
Measurement, assembly, support, after sales service: Another advantage of the specialized trade lies in the comprehensive services it can offer. From taking measurements to installation and after-sales support, the specialized trade offers an all-round service that strengthens customer confidence and promotes long-term customer relationships.

What are the new possibilities and side effects of using a configurator in conjunction with specialist retailers?

When used as a sales support tool directly on the dealer's sales floor:

The configurator supports the specialist dealer in his daily work.
The configurator can handle the entire order processing.
The configurator perfectly complements the objects on display in the showroom, because it can present not only the configurations on display, but really all configurations.

When (additionally) used in e-commerce, for example an online store:

This is usually where customers have their first contact with the (virtual) product, get to know it and build up an initial relationship with it.
At the specialist retailer, this configuration can be built upon and the sales process optimized and shortened (increased efficiency).
More attractive offers are possible through favorable sales processing (price reduction).
High agility and flexibility in the event of changes to the product offering.
Convenient for customers = Faster completion
The configurator automatically takes over a significant part of the dealer training (see related article: Can my retailers also use the 3D configurator?)
In addition, the customer has the possibility to order directly online without visiting the specialized trade.

This last point is often the point of contention between retailers and manufacturers. The specialist retailer often feels left out because customers in his target area can buy the product much more easily online, and thus the specialist retailer receives no commission.

Manufacturers often try to solve the dilemma by not displaying any prices in the public configurator. However, we strongly advise against this. After all, customers today expect prices to be openly visible online. Preferably even with the final price or at least with a price indication. Offers for which the customer cannot find a price are perceived as dubious and unattractive. Basically, it can be said that all delays in the purchasing process (e.g. price search) are punished by customers, who then increasingly switch to a competitor, because this is usually only one click away.

What are the solution strategies for this:

Area protection: If it is feasible, the manufacturer can grant area protection to the specialist dealers. At the same time, the specialist dealer always receives the commission, regardless of whether he sold the product himself or whether it was sold in e-commerce to a delivery address in his target area - this is often found in the construction elements industry.
Differentiated product offerings: The manufacturer could introduce a new brand that is sold only in e-commerce and whose products are different from the existing brand.
Functional separation of tasks: The manufacturer can fully integrate its specialist retailers into the e-commerce sales process. This could be done in such a way that the specialist retailer himself no longer processes orders (see 3. Function of retailing above). Every order is placed in the online store, and the specialist retailer only takes care of displaying the products, looking after customers in the showroom, and providing after-sales service, for example. Incentivizing the retailer happens separately from the orders according to other performance criteria (a shining example of this is Tesla).

Summary

The specialty retail and e-commerce distribution channels each have unique strengths. Therefore, a significant opportunity lies in the collaboration of these two. It is crucial to choose the strategy in such a way that the needs of customers are taken into account centrally (simplicity, speed, price transparency, fun factor, etc.) and at the same time the strengths of both sales channels are cleverly combined. However, this also means that specialist retailers must change and focus on their strengths. Because it is time to turn the battle between specialty retail and e-commerce into a fruitful collaboration and to use the best of both worlds for the customer.

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