U.S. Manufacturer Sales and Marketing Channels.

Part
01
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Part
01

Which sales channels are U.S. manufacturers using for initial sales?

While there is no preexisting information to fully answer your question, we've used the available data to pull together key findings: The manufacturers Lillian Vernon, L.L. Bean, Harriet Carter and Archie McPhee use mail-order catalog as their exclusive DTC sales channel, which are also applicable for initial sales. US manufacturers' direct-to-consumer (DTC) channels include physical stores, eCommerce, and non-physical store channels such as telephone and mail-order catalog.

Below you'll find an outline of our research methodology to better understand why the information you've requested is publicly unavailable, as well as a deep dive into our findings.

METHODOLOGY

To complete your request, I researched US manufacturers using direct-to-consumer channels for initial sales and to acquire new buyers. I did not include distributors, wholesalers, or retailers procuring products from manufacturers. I researched industry analysis, rankings, and reports as well as trusted media articles. Though I found a list of manufacturers using a DTC channel exclusively for sales including initial sales, I did not find any helpful distinction for manufacturers using omnichannel for DTC sales.

However, I found that major manufacturers are using and investing in DTC channels in recent years. Please see below results of my research.

DTC

Forbes reported that the number of US manufacturers choosing to sell directly to consumers was expected to grow to over 40% of all manufacturers in 2016. Also, more than 33% of surveyed consumers said they bought directly from a manufacturer's website in 2015. The article did not distinguish between initial and repeat sales.

Direct-to-consumer (DTC) channels today are categorized into two broad categories: physical stores and online. However, there are also non-store DTC channels such as telephone and mail-order catalogs.

DTC NON-STORE

While some manufacturers use non-store channels as an optional DTC strategy, BizFluent identified several manufacturers that use non-store mail-order catalog as their exclusive sales channel. This means that the following companies also reach their new buyers through the DTC channel mail-order catalog.

These are Lillian Vernon (gifts and knickknacks), L.L. Bean (outdoor apparel and gear), Harriet Carter (novelty items) and Archie McPhee (novelty items).

While I did not find a list of manufacturers using telemarketing or DTC telephone marketing, I found that the Internet Retailer predicted that DTC online and non-store sales including mail-order catalogs and telephone sales will grow 8% to 12% in 2017 in the US.

DTC PHYSICAL stores

Brick-and-mortar stores are a primary direct-to-consumer channel. Manufacturers whose revenue and investment in physical DTC stores have grown in recent years include Nike, Under Armour and REI. However, I found no distinction for new or repeat customers being reached through the companies' DTC channels.

In 2016, Market Realist reported that Nike has expanded its store count by 73 at the end of 2015. Along with sales from its DTC online channels, Nike's physical store sales has grown in the previous years and has been a major contributor to its revenue. Market Realist reported that 24% of Nike's revenue came from its DTC channel sales in the first half of 2016.

UnderArmour also reported that it has increased the number of its physical DTC stores by 25 stores year-over-year, reaching 160 stores in mid-2015.

REI, an outdoor specialty retailer manufacturer, also sells direct-to-consumer through its stores. In 2016, Bicycle Retailer reported that REI's store sales including DTC sales grew by 7% while its online sales grew by 23%.

Plausibly, new customers as well as repeat buyers are being reached through the companies' DTC channels.

ECOMMERCE

Online and eCommerce websites are also a major direct-to-consumer channel used by manufacturers. Under Armour, Timberland and Victoria's Secret have reported increased revenue from DTC channels, though with no distinction for new customers and initial sales.

Under Armour reported that it launched new eCommerce websites in international territories including Thailand, Belgium, Ireland, Austria and Portugal in 2015. The company also reported strong DTC ecommerce sales along with its physical DTC store sales.

Victoria's Secret reported that its DTC revenue from eCommerce grew 8% in 2016. The beauty products manufacturer also reported that its DTC sales made up 21.3% of its overall revenue.

In 2016, Digiday reported that footwear manufacturer Timberland launched its first digitally connected store, which merges online and offline DTC shopping. Customers can either purchase in-store or save Timberland items they want to buy online later through CloudTags technology. Forbes also reported that other manufacturers such as Nike and L'Oreal are using "portable eCommerce" tools such as digital media networks and in-store beacons to drive DTC sales.

In spite of the lack of information whether eCommerce DTC channels are being used primarily to reach new customers, it is plausible that more new customers are being reached through eCommerce DTC due to its wider range and reach.

CONCLUSION

Despite the lack of publicly available information around direct-to-consumer channels used to reach new customers, we used available information to pull together the following findings: the manufacturers Lillian Vernon, L.L. Bean, Harriet Carter and Archie McPhee use DTC mail-order catalog exclusively for sales, which are also applicable for initial sales. US manufacturers' direct-to-consumer channels include physical stores, eCommerce websites and non-store channels such as telephone and mail-order catalog. DTC eCommerce websites plausibly reach more new customers due to their wider range and reach.
Part
02
of three
Part
02

Provide an overview on which marketing channels U.S. manufacturers (of any kind you can find) are using to bring in new customers.

Marketing and sales channels used by U.S. manufacturers to bring in new customers are constantly evolving from traditional channels (e.g. retail stores, call centers, TV/radio/newspaper advertising, and word of mouth advertising) to those that are more digitally focused (e.g. e-commerce web stores, online B2B marketplaces, social media advertising, and email marketing). In fact, 90% of B2B buyers rely primarily on digital means for product research and are willing to pay more if they are able to buy directly from the manufacturer.

MARKETING CHANNELS

Traditional marketing channels are being replaced by digital channels to bring in new customers. Traditional marketing channels include: television advertisements, radio advertisements, newspaper advertisements, word of mouth, and live events. Digital marketing channels include: email marketing, search engine optimization (or SEO), content marketing, and social media advertisements/marketing.

In the last ten years, traditional marketing has decreased from 51% to 15%, while digital marketing has increased from 15% to 51%. In 2017, 62% of companies reported that email marketing is the most driving factor for leads, and 61% claimed that it was their top source for revenue. Email marketing is optimal because it's cost-effective, it gives the option of tracking unique clicks and website visits, and it can be used more than once.

The most effective marketing channels for manufacturers specifically are email marketing, content marketing, and search engine optimization. Pay-per-click advertising, social media, and regularly updated company blogs also prove to be effective marketing channels. Paid searches and word of mouth advertising are mildly effective, and conferences/trade shows, video/print ads, and field marketing are among the least effective channels.

SALES CHANNELS

A change in sales channels has also been seen among manufacturers to help bring in new customers. As with marketing channels, manufacturers are favoring digital channels as opposed to traditional channels. Traditional sales channels include: retails stores, distributor stores, call centers, mail orders, and sales representatives. Digital sales channels include: e-commerce web stores, distributor web stores, and online B2B marketplaces.

Trends indicate that physical stores are on the decline, with only 32% of B2B companies managing physical stores today. It was expected that over 9,000 retail stores would close in 2017, with more closing in the future. Research indicates that e-commerce web stores are the most prominently used sales channel among companies today, followed by distributor web stores and social media. In fact, customers are willing to pay 20% more when they are able to purchase goods directly from the manufacturer.

Online marketplaces are also a significant source of traffic and revenue for businesses, with nearly 60% of all online product searches beginning on Amazon.com.

CONCLUSION

In conclusion, digital marketing and sales channels are far more effective for manufacturers when compared to traditional marketing and sales channels. Email marketing and SEO are the most effective marketing channel, while e-commerce web stores and online marketplaces are the most effective sales channels. It is reported that customers do most of their product research online and are willing to pay more if given the opportunity to buy directly from the manufacturer.
Part
03
of three
Part
03

Provide an overview on which sales channels U.S. manufacturers (of any kind you can find) are using for repeat buyers.

Manufacturers are increasingly making use of digital channels to engage their existing client base, using ecommerce solutions and mobile technologies to facilitate sales. Companies that use direct sales methods, rather than distributors or mixed sales channels, have higher attach rates and lifetime penetration rates, suggesting that the more control a manufacturer has over their sales channels, the more likely they are to have returning customers. However, field sales representatives are still a crucial part of a manufacturer's sales strategy. These representatives remain important for their one-on-one interaction with customers, educating them on products and introducing them to new product offerings. While these sales reps using many traditional methods for facilitating a customer's order, such as paper forms, PDFs, email, and phone, but they are also in need of digital tools, such as order writing software, to assist them in making the final sale.

SALES CHANNELS

Several surveys have looked at the sales strategies of manufacturers over the last few years. These surveys show an increase in the adoption of ecommerce and, to a lesser degree, mobile technologies to facilitate sales to existing customers. Most manufacturers, however, have either maintained or increased their sales team along with the adoption of these digital technologies.

Though slightly dated (2015), the Manufacturers Trend Study found that about 20% of surveyed manufacturers used the internet as a sales channel at that time, but it was expected that this figure would increase to 60% by 2018. One goal of manufacturers in making this move to a digital presence as to increase their volume of sales coming straight from consumers, rather than initiated by a sales representative, by more than 20%.

2016 SURVEY

The 2016 Manufacturing & Distribution Sales and Technology Survey
Report offers a wealth of data regarding the sales channels manufacturers are using. The survey states that it is done annually, but the 2016 survey appears to be the most recent one that is publicly available. While the report also includes distributors, the data highlights the use of B2B ecommerce, mobile technologies, and traditional sales reps by manufacturers of various sizes. I've culled this report for data relevant to the sales channels actively used by manufacturers, offering numerous highlights below.

The survey notes that 44% had a B2B ecommerce option, allowing their customers to place orders online, and 21% of them said that one-fourth of their revenue came from online channels. Therefore, the 2015 survey appears to be correct in suggesting the ecommerce adoption would increase in the manufacturing sector. Some 50% of respondents who had not yet adopted B2B ecommerce sales intended to do so in the next year.

Commerce technologies reported to be important to manufacturers were ecommerce software to facilitate online B2B customer orders (63%), mobile software to allow field sales reps to writer orders (58%), and mobile ecommerce software for online ordering (30%). Fully 79% of manufacturers with B2B ecommerce solutions in place said that customer had asked for the ability to place online orders. The survey also shows an emphasis on the increasing need for omnichannel sales methods, allowing a customer to start an order from a mobile device, then complete it on a computer. Manufacturers who have yet to adopt an online sales channel may be unaware of the increasing need for an ecommerce solution, as 34% reported that they did not know if competitors offered online sales.

The survey further indicated that offline sales channels were also extremely important to manufacturers with 75% of respondents reporting the use of field representatives, 63% using independent sales reps, and 73% selling through trade shows. Among manufacturers with a B2B ecommerce site, 84% of them said their field sales team grew (41%) or stayed the same (43%). Manufacturers stated that sales reps are very important (29%) or extremely important (46%) to their business.

Small manufacturers cite cost (40%) and lack of needed staff members to maintain an ecommerce solution (38%) as the top reasons they had yet to adopt ecommerce. That said, 41% of companies with 1-5 employees have adopted an ecommerce solution, while 54% of companies with over 1,000 employees have done so. Between 41% and 62% of these companies have seen over 20% growth in their ecommerce channel. These manufacturers said that 44% of their customers want to order online but still want access to a sales rep. These sales reps are deemed important for new customer acquisition, as well as order writing, new product promotion, product education, and brand advocacy.

When writing orders, sales reps depend on paper order forms (34%), PDF order forms (18%), and Excel spreadsheets (15%). They submit these orders via email (77%), phone (49%), fax (36%), order writing software (30%), spreadsheets (26%), and hand delivery (24%).

Orders come from customers via email (84%), phone (62%), fax (51%), EDI (27%), and ecommerce (24%). EDI stands for electronic data interchange. Some manufacturers use digital catalogs (49%) as a means of receiving orders in a more automated fashion, but many manufacturers are lagging behind in this area.

In terms of B2B ecommerce models, the direct model (i.e. selling directly to consumers through a branded site) is preferred by manufacturers (76%) over a marketplace model (i.e. selling alongside competitors in an online marketplace). Half of the companies with an ecommerce solution report that customers find and order new products through this channel with 34% of companies reporting an increase in the value of each order place through this channel. Furthermore, 45% of manufacturers saw more frequent client orders and 38% saw inactive customers returning via the ecommerce channel.

About 63% of manufacturers reported offering a mobile sales channel, but only 17% of them offer a native mobile app. However, 85% of consumers prefer apps, so there may be an opportunity for manufacturers who invest in native mobile technologies.

OTHER SALES CHANNEL STATISTICS

While not specific to manufacturing, a 2017 survey of B2B companies found that the top sales channels uses are a branded web store (46%), sales rep (41%), physical store (32%), distributor website (27%), online marketplaces (26%), email marketing (26%), social media (23%), mail order (19%), mobile apps (17%), and call centers (16%). Faxing gets an honorable mention on this site at 12%. Another survey offers very similar results.

A report by McKinsey found that manufacturers that use direct sales channels, as opposed to distributors or mixed sales channels have a "1.5 to 2.0 times higher" lifetime customer penetration rate. Their attach rate (the ratio of primary purchase to secondary purchase) is also higher for these companies. Those using direct sales channels see a 70-100% attach rate, compared to 30-50% for those using a channel mix or distributors.

CONCLUSION

In conclusion, manufacturers are increasing their use of ecommerce solutions, noting that customers are requesting more online purchasing channels. Though digital channels are increasing in popularity in the manufacturing sector, field sales representatives remain a crucial conduit for both acquiring and maintaining a strong customer base.
Sources
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