Digital as a Direct or Indirect Channel?
Tech Sheets - The High Tech Blog
Posted by Ryan C. Jones on March 5, 2012
I’ve often had discussions with Tech companies as to whether the Digital channel should be used as a direct or indirect sales channel. In the Retail world, the benefits of going direct with Digital are pretty clear. Large retailers have seen double digit growth in dot-com sales over the last few years, while same store physical sales has been close to flat year over year. What those retailers have realized is that the integration between the Digital and physical stores is critical. Primarily because often times a customer buys something online and picks it up (or returns) in the store they’re likely to spend more money while in the store. The model’s simple enough for retailers, but what does that mean to Tech companies when evaluating dot-com as a direct and/or indirect channel?
I believe it means that for Tech companies with retail footprints the same Retail logic may apply, but for Tech companies without their own retail operations the answer may be different. For Tech companies without retail operations I believe Digital is a relevant channel for both direct and indirect sales. Let me cite two examples. First, for a large software company selling mostly indirect through channel partners, there’s an opportunity to increase the profitability of sales by pushing more business direct through a channel like eCommerce. There’s also an opportunity for incremental revenue growth by using dot-com as a direct channel to expand into new customer segments and geographic markets. That said, there needs to be a delicate balance in this model, as dis-intermediating large channel partners could be more hurtful than helpful. A second example: For a hardware company selling consumer devices (PCs, tablets, phones, etc.) it’s often the case that a majority of their business comes through retail channel partners. In that model, growing a dot-com business for direct sales may have its limits and the focus of the company’s efforts may be better spent using Digital to drive incremental sales to the retail channels. This model’s a bit more complex, as it requires working closely with key retail channel partners to make it work. In either case, I don’t think it’s a question of Digital as a direct or indirect channel, but instead a balance of Digital as a direct and indirect channel.
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