Manufacturer-to-consumer is sometimes referred to as factory-to-consumer (F2C) because the manufacturer sells direct to the consumer. In essence, the company that produces the item takes the place of the retailer and any other third-party such as a wholesaler or supplier.
Manufacturer-to-consumer is the process of a manufacturer selling directly to the consumer.
Manufacturer-to-consumer has become more popular in recent times for a few reasons.
The internet is at least partly responsible, opening up new eCommerce channels that enable businesses to reach the customer and distribute their products more easily.
Consumers themselves are also driving the trend and causing online marketplaces to evolve.
Many also enjoy buying directly from the manufacturer because without an intermediary taking a cut, product prices are cheaper.
Benefits of manufacturer-to-consumer to the consumer
Why else may a consumer buy direct from the manufacturer aside from discounted products?
Here are but a few reasons:
- Convenience and authenticity – manufacturers offer access to larger inventories with more likelihood that a product is in stock. When consumers buy direct, they can also rest assured that the product is authentic which is no small concern in the era of counterfeit and knockoff products.
- Direct line of communication – in the event the consumer requires customer service, they deal directly with the manufacturer. With fewer intermediaries involved, there is less chance that communication will be misinterpreted or confused.
- Better customer service – since the manufacturer is the maker of the product, they understand how to maximize its utility and can provide useful advice to the consumer. When consumers visit a traditional retailer for troubleshooting advice, for example, they may find that the advice offered is sub-standard and not helpful.
Benefits of manufacturer-to-consumer for the business
There are also several benefits for the manufacturer:
- Brand loyalty – customers love buying directly from a manufacturer, particularly if the experience is positive and the company is mindful of their specific needs. This makes them more likely to make repeat purchases.
- Improved profit margins – with no intermediaries involved in the process, businesses can sell products for a lower price but at the same quality and improve their profit margins at the same time.
- Brand and price control – companies that sell via third-party retailers essentially relinquish control of their brands and prices. In other words, they permit some other company to handle their marketing efforts in a way that may not reflect their best interests. In manufacturer-to-consumer, the four Ps of marketing remains under the manufacturer’s control.
How can manufacturers take advantage of direct selling?
In the past, manufacturer-to-consumer would have required a sizeable capital investment and a complex assortment of extra services.
Thanks to advances in eCommerce, the process is now much more simple and affordable.
Nevertheless, manufacturers who choose this route can no longer rely on the services traditionally provided by third parties such as customer service and fulfillment.
They will instead be required to invest in infrastructure that centralizes every aspect of the business.
This may include:
- Technology – website design and optimization, shop platform, integration with warehouse operations, customer relationship management (CRM), and enterprise resource planning (ERP).
- Operations – inventory management and forecasting, fulfillment, storage, shipping and returns, and multichannel store operations such as marketing and click-and-collect.
- Data and analytics – analytics tools and reporting, platform and architecture, and compliance.
- Operating model – key talent and capabilities, Agile practices, organizational governance, and structure (with KPIs).
- Manufacturer-to-consumer is the process of a manufacturer selling directly to the consumer. In essence, the company that produces the item takes the place of the retailer and any other traditional third-party such as a wholesaler or supplier
- For consumers, the business model is more convenient since the manufacturer of a product has a wider assortment of brands and products in stock. It is also an effective way to ensure that purchased products are authentic.
- Manufacturer-to-consumer was a complex and costly exercise in the past, but thanks to simpler and more affordable eCommerce tech, it is now a viable option for businesses. Those who choose this route must use a platform that centralizes all aspects of operations.
Read Next: C2M Business Model.
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