Shopping Online Directly from OEMs

There is one thing about the evolution of e-commerce that continues to bug me. I just don't understand why product OEMs don't operate their own online storefronts.

A few days ago, I decided to search for a new impact vest for my upcoming kiteboarding trip to Cabarete. I specifically wanted the North Kiteboarding Impact Vest as I had tried it on last summer and liked the look & feel. So, as with anything, I started my shopping by typing in the appropriate key words in to my trusty search engine of choice.

The results came back listing about 10+ different retailers based in Oregon, South Carolina, Florida, North Carolina, California, the United Kingdom, etc, etc. Some of these retailers had inventory information on their site and others didn't. From what I could gather, most of these sites were operated by brick & mortar stores rather than being pure-play online businesses. So, given that I knew that this item had been on back-order for some time (I had inquired about this same product several months ago), I decided to email a handful of these retailers (six, to be specific).

"Hello. I'm desperately trying to get my hands on a North Impact Vest. Not sure if your site is up to date, but could you check if the North Impact Vest for Seat Harnesses (in Large) is available? Thanks, Charlie"

Only one of the retailers had it in stock and could ship right away. The other five emailed me saying they would check with North and get back to me. A day later, they all got back to me say that they could get their hands on one from North and have it shipped to me. One of them actually forwarded me the email response from North to his inquiry.

As an online shopper, I really had no affinity for any of these stores as none of them were physically near me. So, my purchase decision analysis was based entirely on (a) price and (b) availability (and not necessarily in that order). Ultimately, I ordered from the first (and only) store that responded with the product in stock.

Here's what I don't get. Why doesn't North want to take control of their brand? More importantly, if their retail partners are merely taking orders and North is drop shipping than why give them such a meaningful cut? All of these retailers are merely middlemen and the internet has no need for middlemen. I completely understand an OEM's desire to support their brick & mortar retailers, but the internet is a different distribution channel where price & shipping rule the day.

Physical store retailers command and deserve margins of 30-50% from the sale of third party products. That makes complete sense as all of these retailers have to pay for sales personnel and pay for rent on the physical space. And, many of them have to factor in distribution, warehousing, and inventory costs. Lastly, many/most brick & mortar retail operations have their own brand which requires marketing investment to support.

Shopping or selling online is a different game which should be played differently. Amazon is the only online retailer that even closely resembles the offline world. Most other e-commerce players play the game differently (eBay, iTunes, NetFlix, etc). The internet is much more akin to direct mail and direct response television than it is to traditional retail.

So, again, my question is, why don't the major OEMs operate their own online storefronts? They could operate these storefronts merely as a service to their brand-loyal customers and not step on their distribution partners toes by never selling product for less than MSRP.

Dell sells online and in stores. Apple does too. In fact, in the kiteboarding world, Best Kiteboarding does too. Interestingly, these are some of the most successful companies in their respective product categories.

In many niche categories where traditional brick & mortar retail still dominates the distribution channel (such as kitchenware, home & garden, exercise equipment, children's products, sporting goods, etc), specialty micro shops have taken to dominating the online shopping experience. Companies such as Mercantila, NetShops, CSN Stores, Blue Lava Group, Specialty Retail Shops, etc, have taken a sizeable presence in certain product categories by focusing squarely on (a) search engine optimization and (b) consumer reviews & customer experience. These kinds of businesses clearly marginalize the online portals of traditional retail brands like Macy's, Sears, Office Depot, Walmart, etc. So, why should OEMs let their branded products be peddled entirely based on price. It's not in their best interest. The web is not only a medium for brochure-ware; it's also a medium to connect, interact, & serve customers.

Given consumer reviews are prevalent and can be found across hundreds of content-focused or affiliate sites such as Epinions, ConsumerSearch, ConsumerReports, CNET, Edmunds, Angie's List, etc, products and brands can rise & fall on their own without the need or distraction of an intermediary. Comparison shopping engines such as Google Products, Price Grabber, Shopzilla, Shopping.com, NexTag, and BizRate make it super simple to find the cheapest trustworthy merchant.

There is a lot to learn from the successes of direct selling online by the likes of prAna, Under Armour, Dell, Sony, Apple, etc. These companies own their brand image and they control their customer experience as best they can, but they also support their brick & retail partners fully.

It's time for brands to step up to the plate and control their destiny online.