B2C Direct Sales via E-Commerce

Direct sales refer to direct online sales through a manufacturer’s own e-shop. Generally, direct sales can be divided into three different variants.

• Online direct sales: The manufacturer sells directly to the end user via an e-shop
• Online referral to affiliates: In this variant, buyers are transferred from the manufacturer’s e-shop to partners, or “affiliates”. Affiliates are usually selected Third Party eRetailers. Third Party eRetailers or online pure players are providers that run their businesses (usually) exclusively online.
• Hybrid of direct sales and referrals: Of course, a hybrid from of direct sales and referral to affiliates is also possible.

In addition to these basic types, there are further variants in which – for example – a connection to brick-and-mortar retail (for example through an online search of offline retailers) is established. In addition, different technological requirements (content management systems vs. shop systems) exist depending on the goal of the E-Commerce activity, and therefore must always be clarified.

Overall, the B2C environment – and primarily brand manufacturers with a high degree of online maturity (e.g. travel, consumer electronics) – displays a tendency towards the first variant; that is, online direct sales via a company’s own e-shop.

Irrespective of the actual approach, the goal is to offer interested end-users a seamless purchase process – whether it occurs directly from the manufacturer or from a recommended partner. This seamless integration – and the strategic yet systematic selection of affiliates – must be defined precisely within the framework of a dedicated Direct Sales & Affiliates Strategy. As seen in Figure 1, such a strategy typically consists of the following core elements:

Figure 1: Core elements of a Direct Sales & Affiliates Strategy

The first five steps of the Direct Sales & Affiliates Strategy are incorporated into a business plan to which further details are to be added over the course of the project. It takes into account all relevant costs and benefits of distribution via selected online marketplaces.

The first step involves the positioning of the online brand presence – i.e., the extent to which products are to be presented exclusively as part of a showroom or whether a facilitation of direct sales will suffice. This determines the degree of verticalisation. Depending on this, a decision regarding content management system (CMS) integration vs. the implementation of a comprehensive E-Commerce framework will also be made. This is followed by the definition of the affiliate strategy & services – that is, the degree of distributor integration (partial vs. complete) is decided upon and related services are defined.

Once a general direction has been determined by the initial two steps, the next step is to develop the affiliate partner concept. The most important components of this are the condition model, the selection of partners, the partner agreement and the legal review.  A proof of concept is carried out during contract negotiations with selected potential trading partners, who are then monitored by means of KPI reporting. After successful testing, comprehensive technical implementation and the onboarding of further affiliates will follow.

Sustainable success can only be achieved if these strategic core elements are worked through in a systematic fashion. Our many years of experience have shown that the approach has a decisive influence on the level of success. In particular, the systematic selection of affiliates and the subsequent management of these have an influence on the successful and sustainable development of this particular E-Commerce channel.