Ways to sell directly to consumers and save marketing cost

By ajay at July 26, 2010 | 6:03 am | Print

Ways to sell directly to consumers and save marketing cost

If you are one of those kind whose business is small business like a homebased manufacturing businesses then biggest hurdles you must be facing are, how to do marketing and compete against much bigger and better-financed competitors.

As people says someone’s loss is another one’s gain,this kind of situation is very good business opportunities for many.

Here, how it is, You can build up an online ‘factory direct’ online site that will act as a platform for those products for sale which is manufactured by these homebased entrepreneurs.

What Is Factory Direct:

According to Wikipedia Factory direct is basically used to explain when a manufacturer sells directly to the end-user of a product.In simple words, a factory direct channel is one where the price is typically lower than one would pay buying through a multi-tier distribution channel

Most products bought and sold by consumers are purchased through intermediaries and in many cases can include two tiers made up of distributors and resellers.

Each selling tier adds cost to the product. While many manufactures have no ability to service and support end-users and thus use distribution channels, increasingly the Internet and eCommerce are purchased through intermediaries and in many cases can include two tiers made up of distributors and resellers.There are two common factory direct channel strategies. The first sets the price artificially high so as not to aggressively compete with the manufacturer’s various channel partners.

It is a very profitable channel but frequently misleads the customer who assumes the best price for a product comes when they purchase directly from the manufacturer.

The second offers a “wholesale” price typical of what a reseller or distributor might pay.

Why it could work:

Because you will be providing these small manufacturing businesses a easy marketing and distribution channel,apart from that you would also providing them a chance to compete for business without spending a large sum of money on developing and marketing their own online site.

Other advantage of this kind of business is products can be sold through the site and can be shipped to purchasers directly from the manufacturer, this will reduce the need for warehousing inventory.

This would be also a great value for factory owners because they can confidently invest a great deal of money in developing and manufacturing a product, because it knows that distributors will purchase it, allowing the factory to recoup its costs immediately. Likewise, a distributor sells to a retailer, covering their expenses, leaving the retailer to sell the product to consumers.

How You Will Make Money:

Because you are providing manufacturers with a marketing channel, you can keep certain amount of the sales that the site will generate it could be around 15 percent . In my assessment it could do well as ‘factory direct’ pricing attracts consumers and securing manufactured goods to be featured on the site would be very easy.

Take Few Considerations:

If you are consumers then always take few considerations when you are purchasing direct because you are not going at the site of the manufacturer to buy factory direct, but order it via phone, mail, or internet.

It means that the you as a consumer have very little control over the quality of the product, and it is better to know the return policy on factory direct purchases before making them. Some manufacturers are amenable to returns on products which do not meet customer needs, while others do not accept returns, or will not offer full credit unless the merchandise is clearly damaged.

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