Retailers such as Home Depot and Wal-Mart increasingly are holding big brands hostage, demanding exclusive versions of products and tight control over co-op ad budgets. If new Internet retailers, and the brand marketers themselves, establish Internet sites that move the merchandise, it would put the big brands in a much better bargaining position with traditional retailers.
Bob Wientzen, Direct Marketing Association president-CEO, believes a "fundamental shift in global commerce" is occurring with the rise in multichannel marketing. "Not too long ago," Bob told me, "manufacturers made things. Wholesalers sold those things to retailers, who sold those goods in their stores. Meanwhile, catalogers and other direct marketers did their thing, often in obscurity. And never the twain shall meet-or that's the way it used to be."
Nowadays, manufacturers are becoming direct marketers (Dell, Gateway, IBM) and retailers are becoming catalogers (Talbot's, Tiffany's, Saks Fifth Avenue). Bob said even the "vaulted retail halls" of Federated Department Stores "are filling with direct and interactive marketers," especially after the Federated acquisition of Fingerhut.
More and more catalogers and other traditional direct marketers are becoming manufacturers-or moving closer to the source of production-as well as going into retailing, Bob noted. Eddie Bauer and Williams-Sonoma are great examples of this movement, he pointed out, and even L.L. Bean has retail stores in Japan.
"And, of course, everyone is focused on the World Wide Web, which is opening up exciting new ways of going directly to the buyer. As Yoyodyne's former CEO, Seth Godin, observed last summer, Internet commerce is 'direct marketing on steroids.' "
The trick is to be able to go direct without jeopardizing other retail distribution channels. But sellers may not have a choice. Consumers, as Bob says, want speed and convenience-and they want to be in control.
The problem is there's a temptation for the cyberchains to adopt some of the heavy-handed tactics of traditional retailers. Amazon.com is charging publishers $10,000 for premium positions, just like traditional booksellers have done. Barnesandnoble.com will be offering similar deals.
Whenever retailers-cyberspace or brick-and-mortar-have a choke hold on marketers, the opportunity exists for a new kind of distribution channel to emerge-or an old one to reassert itself. That especially is the case today, when the distribution process is undergoing the "fundamental shift" Bob Wientzen talked about.
The Barnes & Noble that's not "dotcom," for instance, could give Amazon.com (and its own Web site) a run for its money by making its stores even more of an entertainment experience. In smaller communities, they could become intellectual and social activity centers, with authors coming by to give lectures. Why couldn't an author of a flycasting or golf book demonstrate their techniques?
If you think this is not practical, you haven't seen Bass Pro Shops Outdoor World. The New York Times reports the 300,000-square-foot flagship store in Springfield, Mo., includes a four-story waterfall, rifle and archery ranges, four aquariums, an indoor driving range, a putting green and a 17,000-square-foot wildlife museum. The store draws 4 million visitors a year.
The highly fragmented fishing tackle industry is ripe for an Amazon.com of the fishing business. There are major players, such as Bass Pro Shops and also Kmart and Wal-Mart (which sponsor their own fishing tournaments), and there are thousands of mom-and-pop tackle stores. Just like the book cyberchains, a tackle Web site could sell current best sellers and thousands of "backlisted" lures that even the biggest fishing retailers don't have in stock.
The key to building successful distribution channels is whether they're capable of opening up new options that match the mood and inclination of consumers around the world for control and, at the same time, entertainment-with just a