For 2017, German online retail is predicted a turnover of 73 billion Euro. For this reason, channel monitoring will become ever more important to brand manufacturers. The continuous growth in online retail also reflects an increased acceptance among German customers of online retail itself. Price comparison sites or online marketplaces are an important tool for establishing what price range an individual product actually possesses.
This price transparency, so advantageous to end consumers, places an enormous pricing pressure upon retailers. Increasingly often, therefore, branded products are already being sold at very low prices shortly after their market launch. The vendors here of these very cheap offerings are often uncertified retailers (grey market).
Particularly among manufacturers of quality brands, this can lead to a drop in value of their products, as well as a loss in image. Brand-name manufacturers are thus faced with the challenge of ensuring balance between increased sales – also at online marketplaces – on the one hand, and the safeguarding of brand image, on the other. To recognize tendencies towards image loss, brandname manufacturers require extensive information about the pricing trends for their products at online marketplaces.
Channel monitoring: Make decisions on marketing and product development
The recording of price offerings from various retailers over a long timeframe furthermore creates a hitherto absent possibility. Product lifecycles and their preferred variants (e.g., certain colours) among branded products can now be quickly and easily recognised on the basis of pricing trends. When these recorded values are linked with marketingcampaigns and product launches, either for own- brands or those of competitors, strategic decisions can be derived from this regarding marketing and product development.
Control the pricing policies of your retailers
Brand-name manufacturers across various sectors are increasingly applying measures to both control and monitor their online sales channels. These extend all the way from market monitoring and vertical price maintenance, right through to sales bans at marketplaces such as Amazon and eBay. Yet the legal situation in this area appears complex and manufacturersare concerned about coming into conflict with competition laws.
All the more interesting is the current code of conduct upon which the Austrian Federal Competition Authority established, on the basis of EU Directives, that precise monitoring of online retailers for pricing conduct is indeed permissible under cartel laws. Furthermore, vertical restraints on distribution for the protection of a brand are not in all cases prohibited.
Retail monitoring: Protect your brand
The question here is not of a decision between offline and online retail. The aim of sales control is to protect the brand image. Even in online retail, distribution partners should adhere to the same guidelines of brand presentation at point of sale. A deliberate selection of online vendors should furthermore curb the offering of counterfeits and also of price dumping. Branded products reach uncertified sellers by illegal distribution channels and are then offered in online retail. The prices of these grey market goods are mostly well below the usual selling prices of authorized dealers. A considerable loss is thus suffered not only by brand-name manufacturers, but certified retailers must also endure losses in sales.
Companies are still using product data manually
The product data essential to retailer monitoring in online retail is still being tapped manually by 80% of companies. In-house employees are often engaged for this purpose, who manually record their competitor prices. This is possible for individual products and retailers in a relatively unproblematic way. The larger the product line becomes, however, and/or the number of competitors to be observed, the more disproportionally rises the effort required in this aim.
Channel monitoring: A glimpse into the future
An altered purchasing behaviour amongst consumers has effects upon the structures and strategies of retail. A strong price awareness amongst consumers, combined with illegal offerings at dumping prices, increases the pricing pressure on certified retailers. Brand image is increasingly suffering due to a lack of sales advice and poor product presentation by uncertified vendor offerings on the Internet. Manufacturers are concerned about this development and are seeking ways to protect their brand image. This can only occur on the basis of substantiated current data and information. Manual solutions rapidly reach their limitations caused by large data volumes. Ever more companies are thus planning the introduction of automated solutions to price and retailer monitoring on the Internet. Daily updated data creates an informational advantage offering companies the possibility to react faster and more efficiently to current happenings in online retail.
Do you need further information on channel monitoring on the Internet? Download free of charge, or contact us about, our whitepaper, “Retailer monitoring for brand-name manufacturers: How you can control the pricing policies of your retailers in online trade”. We look forward to your message.