The right routes to market

To decide which sales route would be best for your business, you need to consider:

1. Are you selling to consumers, other firms or national/local government?

2. Do your customers have to be actively persuaded to buy your product or do they need to buy it anyway?

3. Are you selling a product or a service?

4. Do you customers need to inspect your products before they buy them?

5. Will customers see your product or service as a major purchase, a mid-range purchase or an incidental purchase?

6. Where are you primarily targeting your product or service – locally, regionally, nationally or internationally?

7. Does the product or service need to be installed or fitted at the customer’s premises?

Depending on your answers to the above, here are some options you may wish to consider:

1. Selling online

The value of online sales has soared in the past couple of years as Internet connections have become faster and payment transactions have become more secure. Now it is the preferred method of buying for many people, and there is very little that cannot be brought online.

One nice tweak to selling online is Click and Collect, as pioneered by Asda but now taken up by John Lewis and others. Customers order or reserve goods online but then go to a physical shop to collect them. Save on delivery charges and gives customers greater flexibility about when to collect their goods. Depending on your business, you might choose to allow customers to reserve without obligation, as Asda does, or to buy and pay before collection, as John Lewis does.

Advantages

Quick, easy and open for business 24/7 – location and distance barriers disappear, and no travel or parking is required.

Disadvantages

Customers may be deterred from buying goods they can’t see, feel or try on before they buy them. There are also some customers that are reluctant to buy things online for fear of fraud.

2. Opening a shop

The traditional way to do it, and still useful for goods that customers need to see and touch before they buy, or for products that they need to buy instantly – food and household goods, for example.

Advantages

Personal interaction with customers and the ability to satisfy requests immediately. A pleasant shopping environment can encourage people to browse and therefore buy more than they might have otherwise.

Disadvantages

Big overheads – rent, business rates, furnishings, staff costs, etc. Customer reach limited by geographical location and opening hours.

3. Pop-up shops

Pop-up shops are temporary shops which can be set up in any empty space for a day, a few days or a few weeks. There are two main types of pop-up shop — those held in empty retail premises, and those in non-traditional venues, which can be anything from a village hall to a garage, to an artist’s studio. The idea and the big appeal is that they are not around for long – from a day to several weeks; a season at most. That gives the venture both an element of surprise, and one of urgency.

Advantages

Cheap and low risk. Excellent opportunity to experiment with selling different types of products. You also receive instant feedback from customers.

Disadvantages

No opportunity to build a long-term loyal customer base.

Case study

Kate Ward and her sister Sarah Loader have found the idea of temporary venues so appealing that they have swapped their bricks and mortar tea shop for a pop-up version. The pair used to run The Silver Apples – a vintage tea room in West Didsbury, Manchester. But after three years they were so fed up of seeing their profits being eaten up by rent and rates they closed their doors and hit the road with a pop-up version of their tea room. Their temporary tea room can be created in both indoor and outdoor spaces, and the two of them go to great lengths to make it look exactly like a proper English traditional tea room, bringing tables, chairs, a counter, cake stands, linen and vintage crockery with them to decorate the space. They play period music on a record player and to complete the look the two of them  (who do the waitressing) dress up in old-fashioned tea dresses.

Ward said: “We can really transform a space and make it look gorgeous, and that is what we like about it. People love it because it looks like a proper tea room. They like the thought which has gone into it to make it nice for them.” Now every weekend the sisters load up their van and head for venues such as the market hall at Altrincham, Cheshire, where they create their tea room for the monthly vintage fair. Customers can find out where they will be next by checking on their website. The tearoom also promotes the sisters’ catering company, which makes the cakes they serve, and they don’t intend on ever going back to using permanent premises.

4. Selling to retailers

You many choose to sell your product to retailers such as a high street supermarket or department store, which will then display it on their shelves and sell it to their customers.

Advantages

High visibility for your product, and the potential to quickly build a high-volume business.

Disadvantages

The retailer is in a powerful position to beat you down on price, and you are likely to have to operate on a small profit margin. As a general rule retailers expect to mark up the products they buy by at least 100% which means you will have to sell to them at half the price you would sell directly to customers via your website.

If you are supplying the retailer for their own label range, there will be no opportunity to build your brand.

Case study

Michael Hall owns Fallen Fruits – a gift-ware and gardening business in Ludlow, Shropshire. He had been selling his children’s horse-shaped swings – made from a recycled tyre – through garden centres when he contacted the buyers at John Lewis two years ago.

Within three months, Hall had received an order for the swings, which sell at £79.95. Since then, John Lewis has asked Hall to make a dinosaur swing, which went on sale last year, while he is also working on a wooden version. Now John Lewis accounts for most of his firm’s production. Apart from the many forms that need to be filled in, supplying a large retailer has been very straightforward, Hall said. “The fact that we get the orders so far in advance has been fantastic for us. We look after them, and they look after us.”

5. Selling to wholesalers or distributors

Wholesalers and distributors act as a middleman between suppliers and the end customer, whether that is retailers or large businesses.

Advantages

An easy way to sell large volumes – it is much simpler to deliver 300 units to one wholesaler than one unit each to 300 retailers.

Disadvantages

Wholesalers need to make a profit too, so your selling price will be considerably lower than selling directly to a customer, or even to a retailer. Your product will be very much a commodity – there will be no opportunity to build a personal relationship with the end user. Also because you are not selling directly to the end-user, it will be difficult to build and establish a brand name.

6. Selling via mail order catalogues

You can distribute catalogues to prospective customers – they then ring or go online to place orders. Often used as a way to sell to other businesses because it makes it so much easier for them to see what you sell.

Advantages

A great way of showing prospective customers the range of products you sell. High-quality catalogues will be kept and noticed and so used over and over again

Disadvantages

It can be very expensive to produce a high-quality catalogue, and many of those you distribute will not hit their target and will be quickly thrown away or discarded. It’s a rather old-fashioned method of buying things, likely to appeal to an older generation who’s less accustomed to buying things online.

Case study

Charles Hunt started a mail order business at the age of 26 with £500, selling bed linen and towels from his flat in Battersea, south London. It took off and did well for eight years, reaching annual sales of £6 million. But the business was dealt a fatal blow in 2005 when a postal strike prevented catalogues from reaching customers during the valuable pre-Christmas sales period.

Hunt said: “They sat at Royal Mail from the end of November to the end of December and so we lost our entire Christmas trade. We lost hundreds of thousands of pounds in revenue.” The business struggled on for a while but never recovered and went into administration at the beginning of 2007. Even worse, Charles had personally guaranteed the debt and so was left owing the bank more than £500,000. Fortunately, Hunt has since bounced back with a new online venture, Duvet and Pillow Warehouse, which has a turnover of £5 million. But the experience taught him an important lesson: “We had too much in one basket. We had everything banked on catalogues and Royal Mail distributing them, so it took only one incident like that to knock down the business.”

7. Using sales agents

Sales agents are generally freelance, self-employed people who work on a commission basis – in other words, they only get paid if they sell. They normally operate in their own specialist sectors and have an established portfolio of business-to-business customers.

Advantages

A quick and cheap way to get your product in front of lots of potential customers without having to spend time and resources recruiting your own sales force. Particularly useful for new products which the sales agent will be able to demonstrate and explain in person to the potential customer.

Disadvantages

You have little control over the way in which your products are described or explained.

Things to consider

If you are starting a business without much money, you need to choose a route to market your customers already feel comfortable using in order to minimise your risk. If you have to educate potential customers about how to buy your product, it will take time and money that you probably don’t have.

Top tip one

Sometimes a business can become really successful selling well-known goods and services in an unusual way. Tupperware parties and Ann Summer parties are both classic examples – the idea of selling plastic storage boxes or lingerie via gatherings of friends in people’s homes was considered extraordinary when the idea was first launched.

Top tip two

Have multiple routes to market. Sell via retailers and also via your own website, for example. Or sell via a market stall and also by mail order. That way you will reach different groups of people and find out which routes work best for your business. Additionally, you have a fallback option so that if one route to market fails to work, you can still reach your customers and they can still buy things from you.

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You could have the best product or service in the world, but it will fail if you don't put it in front of the right customers. To maximise your chances of business success, you will need to identify and focus on the most effective routes to your market

There are no bad routes to market, but you can easily overlook the best routes to your market by skipping the homework required when looking for the best sales channels for your product or service. If you don't do the market research to find out where and how your target customers prefer to buy, your business will not thrive as it could.

Get to know your customer

All firms need to understand their customers before considering which sales channels to put their resources into. Sales channels are usually divided into direct channels, such as sales reps, shops, websites, mail order and exhibitions; and indirect channels, such as sales agents, distributors and franchisees.

You will need to ask your customers what they buy, where they buy, how they prefer to buy and why they buy. Different customers in different sectors can have very different buying habits and expectations.

A busy professional consumer, for example, will probably appreciate an online sales channel for books and DVDs. An engineering buyer considering a complex product will appreciate face-to-face contact so they can discuss technical details and build a long-term relationship with the seller. In this case, you will need to make the effort to meet your customers to establish your credibility and persuade them you can offer better value than competitors.

Whoever you are selling to - whether a consumer or a business customer - you will need to appreciate the needs of the individual buyer and ensure that you can cater to them.

Choosing the right sales channel

There are pros and cons to all sales channels. With direct emails, for example, data laws must be considered and the response rate can be low. But it is an inexpensive route to market.

Trade shows or exhibitions can be a more effective way of directly reaching potential customers. But there may be a risk attached to being placed right next to your competitors.

Using a sales agent or telesales team can work well, especially if sales are not your strong point. But such third parties may be more likely to focus on immediate sales rather than establishing long-term relationships with customers, and there are issues of control to consider.

Importantly, however, you must not assume that your competitors have got it right. The evidence of your market research should inform every decision you take when picking your sales channels.

Measure your results

Once you've settled on your sales channels, you will need to promote them to your target customers - if they don't know you're there, how can they buy from you? You will also need to measure the number of sales and enquiries from each of the channels you have chosen.

This will tell you which generate the most sales and so deserve further promotion, and which you should scrap, if any. Measuring returns on investment will tell you the real cost of a particular route to market; if you have any that are uneconomical, stop using them. Focus only the routes to market that actually make you money.

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For too long, telecom operators have given priority to their once profitable traditional channels over creating and integrating new channels that could better serve the needs of increasingly sophisticated customers, boost interaction, and increase profitability. It is now critical that operators rethink their approach to capillarity and transform their commercial footprint. Three new channels offer especially promising ways to boost sales profitably.

 New digital channels: As stated previously, operators must come to terms with new digital channels such as social media, which has already proven itself to be a force in a wide range of other markets and a powerful means of interacting with consumers. Many companies are already using social media to gain new customers through contacts initiated by consumers, and it has great potential to further boost customer care through various sub-channels, including videos, blogs, live chats, and social communities. Operators must prioritize this channel, determining the best strategy for the use of sub-channels and defining the mix of sales, information, and support for each. 

Mobile commerce: Mobile commerce (also known as m-commerce) is no longer simply online shopping via a mobile phone. Now, through such technologies as event- and location-based sales, it can actively improve the customer experience. Indeed, it is emerging as a key means of interacting with current and potential subscribers throughout the purchasing process, especially given the privileged position mobile operators have to develop and capture this new opportunity. But few mobile operators have taken advantage of m-commerce, despite their considerable insight into subscribers’ movements and usage patterns. 

Low-cost channels: A variety of low-cost channels have the potential to become powerful tools for controlling spending and gaining additional capillarity in areas where point-of-sale and other traditional outlets are not profitable. These low-cost channels include the following: 

• Direct mixed points of sale: Operators could increase their control over mixed points of sale — nonexclusive large retailers where their New ways of selling 14 Strategy& products represent a low percentage of revenues. Creating a better balance by minimizing or eliminating distributors and intermediaries at these points of sale offers perhaps the greatest potential.

 • Freelancers: Operators in less developed markets could employ independent door-to-door salespeople, who would be responsible for customer sales, activation, and subscriber registration along a given route. These freelancers could act as providers of basic services such as SIM cards and scratch cards for recharging prepaid phones to low- and mid-value clients, informing them about the operator’s products, services, and promotions. The potential of this model can be greatly enhanced with social media.

 • Street sales: Operators could deploy a fleet of small vans assigned to specific routes to cover remote areas or specific locations with “sporadic high traffic” where a store would not be profitable. Vans covering remote routes could combine “pull” efforts, with sales generated as the van travels along its route, with “push” efforts, such as planned visits to houses, fairs, local markets, and other venues. Intensive and detailed route planning, as well as the ability to track consumer contacts, is essential if this channel is to reach its maximum potential. 

The feasibility of any of these low-cost channels will depend on the operator’s specific market situation — its regulatory and competitive environment, and the degree of market maturity.

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Reference:

http://www.marketingdonut.co.uk/marketing-strategy/routes-to-market

https://www.strategyand.pwc.com/media/file/Strategyand_Customer-Centricity_Selective-Capillarity.pdf

http://entrepreneurhandbook.co.uk/right-route-to-market/


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Multi-channel routes to market

1. E-store

ONLY will operate its official website include desktop version and mobile version. Customers could purchase most personalisation products on the website except some exclusive collection. ONLY will not only display pictures of the personalisation products, but also show the personalised items to make the products more attractive. In terms of customisation service, there will be limited options online as this requires much communication and customers need to sent the clothes or any products to ONLY to do the customisation work. However, customers could still enjoy some simple customisation service online if they do not require complex designs. Customers could also book an appointment online to save the potential queuing time in physical stores. More importantly, ONLY’s official website would introduce and explain the products and services in details to give customers a clear understanding of them due to the webrooming trend which means customers tend to do more research before they buy.

Advantages:

•To improve the brand profile by having innovative, inspiring and modern website layouts and designs.

•To connect with brand’s social media and gain new customers with search engine visibility.

•To overcome geographical limitations. Whilst competitor Hand& Lock is merely based on physical store, ONLY offers more alternatives

2.  App

Only will create its own app to allow customers to purchase products and enjoy some simple customisation service. The design of the app will be similar to the website. However, there will be some inspiring posts and pictures on the app, where customers could view on a daily basic.  Additionally, customers could also try some customisation options on the app and save them to their ONLY’s account.

Advantages:

•To give customers more customisation inspiration.

•To engage with customers.

3. Physical Store

ONLY will start to open some stores in high street in the major cities in the UK. Customers could see the products and even try them. This will potentially increase sales when customers experience and enjoy the personalisation process. The physical store will also focus on its customisation service. Customers could talk to ONLY’s designers in store about the customisation details.

Advantages:

•To interact with customers and satisfy requests immediately.

•To show the customisation process to inspire and attract customers.

4.Selling to fashion brands

ONLY will also sell some of the products though high street fashion brands. For example, the leather stamp for putting initials on leather goods will be sold at handbag or purse area at Topshop.

Advantages:

•To have high visibility for the products and increase brand awareness.

•To connect the personalisation products of ONLY with high street fashion items.

SevenZhang

2017.5.28