Problems will arise when there’s no clear internal view and excellent timely communication on promotional policy and initiatives.

Recently I had to deal with the fallout of this issue in a client’s company. They sell b2c directly online and through their own brick & mortar shops and at the same time they sell b2b to retailers, who sell the product to the end consumer themselves. That’s always a tricky exercise.

For almost 30 years I’ve stood at the other side of the equation, working as a retailer. More than once we were confronted by a supplier selling exactly the same items we bought from them in order to sell them to visitors of our shops, directly to the end consumer. De facto our supplier was thus competing with us, with the advantage of benefiting from a lower cost price.

Well, at this client of mine, let’s call them Company X, the situation is even worst than this, as they suddenly decided to offer huge discounts to their b2c clients. Discounts that couldn’t be matched by their b2b clients. To top it all, the b2b clients were totally taken by surprise.

Just image the scene. You’re a shop owner and a client comes to you – usually this happens at the busiest moment of the week, such as on Saturday afternoon – and asks you how much the discount is on the product from Company X. You are not aware of any promotional discount on offer online and sincerely reply there’s no discount. The discussion that ensues is obviously most unpleasant.

Alignment and respect  for each sales channel

We’re now a few weeks after that sudden series of online discounts were decided without sufficiently thinking it through and not accompanied by clear internal and external communication. The consequences are clearly measurable.

The direct to consumer sales have dropped by a stunning double-digit percentage per day on non-promotional days; the retail (b2b) sales have almost been at a standstill since the last huge online promotional stunt. Retail clients have told sales agents that they’ll wait till the next huge discount and then decide if they want to order again… or not.

The latest information conveyed to me from the field is that most retailers have a larger inventory than usually, due to a sales drop in their shops. I cannot prove this is collateral damage from the gigantic online discounts, but my gut feeling is that this is indeed the case.

Learnings

  1. Harmonize your sales practices through all different channels.
  2. Think of the consequences huge one-time discounts can have on future sales and sales through other channels.
  3. Just Think!
By |2018-08-22T21:23:39+00:00December 7th, 2017|business, retail|0 Comments

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