Challenges manufacturers face in an e-commerce environment

August 4, 2010 by Diana Ferraez · Leave a Comment
Filed under: Articles 

By Richard Angelo, Director Product Marketing, Jesta I.S. Inc.

 Traditionally, consumer product manufacturers have marketed their products through the traditional retail customer channel or in many cases through company owned brick and mortar stores. Companies with strong brand images have been able to successfully market in both spaces by incorporating through line exclusivity offerings or protective pricing strategies. This has historically been received by traditional retailers with mixed reactions running from resigned acceptance to outright anger.

Considering today’s tougher economic conditions, manufacturers see their traditional retail client incorporate more profitable private label goods that are in many cases being sourced by the retailers directly, cutting the consumer products manufacturer out of the picture. Private-label goods accounted for 22% of consumer-packaged products sold in the U.S. in 2009, up from 20% the year before, according to The Nielsen Co. Some manufacturers today are choosing e-Commerce to sell directly to the consumer in order to increase market share and add profitability to their lines. Another impetus to sell via the Web came with the recession, which prompted consumers to do more shopping online, where comparison bargain-hunting is easier. Online sales are expected to reach 12% of the total retail market by 2012, up from 6%, or $211.7 billion, now, according to Forrester Research.

Manufacturer sites are already established as the trusted resource for product information. Forrester Research reported that 77 percent of consumers expect manufacturer web sites to have the best product information and 75 percent say they should be useful for post-purchase information. Because of this existing mentality of trust, manufacturers are finding themselves in a position to influence sales and customer satisfaction in a way that never has been available to them before.

 The traditional role of a manufacturer was to mass-produce products and sell them in bulk to retailers (or distributors) who provide the infrastructure and services to consumers that wish to purchase these products in the retail market. There has traditionally been a sharp distinction between the wholesale market and the retail market. However, the advent of online retailing and drop-shipping has blurred these lines to a point where manufacturers are now active competitors in the retail market. 

Direct sales by consumer-brand manufacturers are one of the fastest-growing areas of online retail, increasing almost 13% in 2009 to $487.6 million, according to Vertical Web Media, a Chicago-based research firm. Manufacturers such as Procter and Gamble, Levi Strauss & Co, Mattel, and Columbia Sportswear are now positioning themselves as retailers with revised and revamped consumer friendly websites. As a consequence these companies are increasingly looking at direct-to-consumer selling. Six key motivations can be identified:

  • Recovery of share of margin
  • Increased brand visibility and control
  • Shopper experience control
  • Strengthened relationship with increased insight into end-consumer
  • Improved ability to sell a wider assortment and services
  • Improved price and promotions control

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The technical and process challenges to the Manufacturer that markets in this space are not insignificant. New data requirements and delivery methods will have to be created and streamlined in order to achieve a high level of success. Some examples are:

  •  Near real time inventory positions presented to the web front end
  • Forecasting web sales to be incorporated into the make \ buy plan
  • Inventory reservation \ segregation to support the online channel
  • Flexible pick \ pack ship warehousing processes with an emphasis on parcel shipments
  • Robust freight and tax calculation processing
  • Well thought out returns processing and policies note: some e-tailers report up to 25% return rates
  • New CRM data based on end consumer information
  • Sophisticated pricing strategies i.e. freight free on xx dollar purchase , BOGO, etc

When manufacturers sell direct to consumers they risk losing their wholesale accounts, as well as tarnishing their reputation. Over the past few years, many manufacturers have struggled with the notion that they’re doing all the legwork (product development, purchasing, warehousing, shipping, etc.) while drop-ship retailers are reaping all of the benefits oftentimes at a higher margin than the manufacturers themselves make. We’re finding that more and more, manufacturers and distributors are turning to retail e-Commerce websites in an effort to expand their customer base and increase sales. And who can blame them?

About Jesta I.S. Inc.

Jesta I.S. is a leading supplier of enterprise business solutions for manufacturers, distributors and retailers primarily in the soft goods and specialty industries worldwide. Jesta I.S. is recognized for its expertise, innovative products and services and its commitment to evolving business solutions in today’s rapidly changing business world. Jesta I.S.’ solutions process essential business management information for well known industry leaders including Perry Ellis International (NASDAQ: PERY), PUMA (German: PUM), Genesco Inc. (NYSE: GCO), Town Shoes Limited, Cole Haan, Haggar Clothing Co., Cavender’s Boot City and DSW Inc. (NYSE: DSW) as well as many others.

Jesta I.S. Inc.

P: 1-888-925-5152

Email: info@jestais.com

Web: www.jestais.com

Copyright (2010) Jesta I.S. Inc. ALL RIGHTS RESERVED. All information contained in this document is the property of Jesta I.S. Inc. All company and product names are trademarks or service marks of their respective owners

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Town Shoes Inc. Upgrades its Retail Enterprise Solution with Jesta I.S.

December 9, 2009 by Diana Ferraez · Leave a Comment
Filed under: Press Releases 

Upgrade includes Vision Merchandising, Vision Analytics and the Vision Suite Data Warehouse

New York, NY – December 08, 2009 – Jesta I.S., a leading supplier of software solutions for the soft goods and specialty markets, announced today that Town Shoes a leading Canadian-based fashion footwear retailer has successfully performed an upgrade of its retail enterprise system.

The upgrade to Vision Merchandising 11.0 included the Jesta Vision Analytics module. Vision Analytics provides Town Shoes with the ability to view retail KPIs to help manage its business and build unlimited reports. Town Shoes now has the capability to distribute reports automatically using the report scheduler to persons or groups who can drill-down through the executive dashboard to retrieve information about business performance across the enterprise.

 “It is very important to Town Shoes that we retain the highest customer loyalty levels possible and to do so we know that we need to have the right assortment of shoes for each store. With Vision Merchandising and Vision Analytics we have gained further insight into our selling patterns and customer buying preferences, in turn allowing for far more accurate merchandise that meets each customer’s preferences.” stated Peter Gerhardt, Chief Financial Officer, Town Shoes Inc.

Vision Merchandising 11.0 includes enhancements to merchandise allocation providing Town Shoes with the ability to fulfill demand by facilitating the distribution of the right merchandise to the right stores and channels. Allocations created by Vision Merchandising are based on fashion and season trends, customer demands, store, channel and location attributes. Using Vision Merchandising Town Shoes can optimize allocations at the item, SKU or store level to increase productivity through automation and reduced distribution costs.

As a footwear retailer, it is important for Town Shoes to arrive at the optimal size runs and pre-pack for styles selling at locations with regional differences. Vision Merchandising 11.0 includes an enhanced size and pack module, allowing Town Shoes to dynamically create size pre-packs based on the size performance of select group of styles at a select group of locations.

“Vision Merchandising automates many processes for our clients while making merchandise recommendations that require little to no merchant intervention. Over time we see customers relying more and more on the application’s ability to automate business processes. The upgrade of Vision Analytics and the inclusion of the Vision Suite data warehouse will aid Town Shoes in its ability to generate not only the reports they want, how they want them, but provide them with total visibility and the intelligence needed in this competitive retail landscape,” stated Leslie Belcher, President for Jesta I.S. Inc

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