Small manufacturers are the heartbeat of the manufacturing industry. They make everything from toys and technology to furniture to food. The problem? Too often, their profits are eaten away by wholesalers, resellers and middle-men retailers.
However, with the advent of online selling, that’s slowly changing. It’s now much more realistic for small manufacturers to sell directly to their customers.
Why should you sell direct?
Some manufacturers will be perfectly happy selling their products to wholesalers and retailers. After all, you can still make a significant mark-up. According to Entrepreneur.com, smaller manufacturers often strive for a gross margin of 50-70 percent, while larger “mass-oriented” manufacturers could be satisfied with 20-30 percent.
Of course, this can be affected massively by the type of product you’re selling. Food products have a notoriously high mark-up because the ingredients are generally quite cheap. On the flipside, you can expect a bit less profit on things like office supplies.
On top of that, it’s much more simple selling directly to consumers. With direct data on product sales and even your own customers, you’re better placed to predict demand in the future. That’s not even mentioning the direct relationship with your target audience, which could even provide more direction when it comes to new products or improvements to existing ones.
Online or instore?
If manufacturers want to sell directly, they face a choice between setting up a website, or opening a brick-and-mortar store. As we move further into the digitalisation, this choice becomes easier and easier. More and more high-street shops are closing down because the cost to run the store and employ staff puts too much pressure on their business.
On the flipside, it’s becoming increasingly easy to set up and run your own online store. While less people are shopping in-store, the number of internet sales is steadily rising, meaning manufacturers can get on board with an upwards trend rather than jumping on a sinking ship.
Your own website
With that in mind, setting up a website is one of the biggest steps towards selling direct to customers. As mentioned, that’s been made a whole lot easier in recent years, with the advent of platforms like Shopify. That brings us to the first real challenge – choosing the right platform.
Consider the pricing and whether a free trial is on offer. This provides the perfect opportunity to ‘test-drive’ the platform, get a feel for it and see whether it’s right for you. What about reviews? Do your research on the different options, see what people are saying online and speak to any other manufacturers you know who have set up shop online.
Finally, check what features the different platforms offer and whether they fit the needs of your business. That includes everything from the design of your site to the payment methods offered to customers.
Making the most of technology
The final consideration is how you will organise your company to deal with the demand of selling directly to consumers. Will you hire a web designer or seek external support? Most established e-commerce platforms have a network of certified support partners, so you can always find a provider you trust.
On top of that, there’s the actual production itself. Again, this is an area where technology can help. An effective production spreadsheet will help micro-scale manufacturers make the most out of their time and resources.
Of course, as things get bigger and more complex, there will be a need for a more sophisticated system. Needless to say, this kind of production and inventory organisation will boost productivity, making your business more efficient and boosting your bottom line.
Image credit: Direct customers via T.Dallas/Shutterstock