Business Intelligence (BI) is going to evolve into a critical asset for businesses in the coming months as companies begin to hunker down and trim the fat while we all ride out this recession. Now more than ever we require business intelligence.

Many businesses fail to understand or are able to justify the value of an implementation of BI software. Instead, decisions are based off of “gut feel,” advertising and marketing decisions are made based on “how we’ve always done it,” and at the foundation of it all: inadequate intelligence.

Want to see Business Intelligence (BI) in action? Visit a hospital.

After spending 5 hours at the hospital this week for a “false alarm” (my wife is pregnant), I was fascinated by the uterine contraction machine that the hospital staff had hooked up to my wife’s stomach. Through a series of sensors, this machine was hooked up to a PC and displayed a real-time readout of fetal heart rate and contractions both on the monitor and via a continuous printout on paper.

As my wife would wince with the pain that each contraction brought with it, the machine readout was right-on. Occasionally, I would see the contraction monitor start moving up (indicating a contraction was building) before she would feel it. Furthermore, over time we could see the frequency in which contractions were happening which enabled the doctors to see important trends with the contractions. As we began to recognize the trends, we could predict the next contraction for my wife within a 20-second range.

At no point were we left wondering whether the contractions were consistent or not, or how long they were lasting. It made me realize that if this was not a hospital room and if we were at any random business, chances are we’d be making decisions based on little or no data.

The three pillars of Business Intelligence execution

Our hospital visit showed “business intelligence” at its finest. In this particular case, this was a basic implementation of intelligence gathering, but essentially BI breaks down into the following:

1. Establish Key Performance Indicators (KPIs) — in this case when we were at the hospital, there were 2: fetal heart rate & contractions
2. Implement a method of collecting data — the monitoring machine
3. Implement a reporting tool so you can analyze the data to base your decisions off of — by evaluating the printed graphs from the machine, the doctor could identify trends with the contractions and determine if she was progressing with labor (in our case, it was a false alarm)

Do you have KPIs set for your business, department, website, advertising, or social media initiatives?

If you haven’t identified KPIs for running your business, then collecting data and reporting against it do very little if you can’t convert the data to insights. For example, consider the following scenarios when viewed in isolation, they may sound like accomplishments. Often times, quantity/volume or completion is used as a universal KPI:

• You just sold 100,000 units of XYZ widget!
  • What if XYZ widget has a Gross Margin (GM) of only 5%? 10,000 units sold at 50% margin (at the same price) is just as profitable. Volume can often times be misleading because the effort that goes into selling 100,000 units can be far greater than 10,000 units.
• Your department just completed a critical project on time!
  • Great, the deadline has been met. Does that mean success? Not necessarily. If each member of your department has just spent the last 6 weeks working 80-hour weeks, this is not success — it’s burnout.
• Your website had 100,000 unique visitors to your website yesterday!
  • Unique visitors to your website mean nothing if you’re not measuring the “next step” in the conversion funnel of your site. What does your website exist to accomplish? Generate leads? Sell products? Provide product support? Unique visits that don’t convert to sales or brand advocates are just a waste of bandwidth.
• Your TV ad ran during the SuperBowl!
  • How much did you spend on the ad and how many sales can be attributed to the ad? Don’t know? Then running an ad during the SuperBowl is not a success.
• Your social media campaign generated 5,000,000 impressions!
  • Like your TV ad that ran during the SuperBowl, how much was invested in this campaign and what time frame are you using to measure the return on the impressions generated from the campaign? Impressions are NOT a KPI for social media unless you can equate an impression to revenue or another unit of measure that is of value to your organization.

Business Intelligence tools

This this is by no means comprehensive but is a start to discovering what’s available in the industry for business intelligence solutions (based on the “top of mind” companies). Rarely will you find a “one size fits all” approach — often times you’ll find yourself utilizing several niche tools, particularly as you get into advertising and marketing campaigns.

Pillar #1: KPI Tools

There’s no software that can tell you what your KPIs should be for your business. KPIs vary widely by industry, type of business, department, and ultimately boil down to what you’re being measured to produce.

Pillar #2: Data Warehousing Tools

This is an important pillar, and there are many options available for data warehousing. A simple Google search for the topic produces many vendors who play in this space. Visit the Wikipedia entry for this subject and check out these vendor offerings:

• Open Source
  • MySQL
  • Infobright
• Commercial
  • SAP Business Objects
  • Oracle

Pillar #3: Reporting & Analysis Tools

Once the data is collected, you must have the tools to report and analyze the data. It’s one thing to see your KPIs, but the real skill behind Business Intelligence is the ability to correlate this data, mine the data, and discover information and trends you otherwise might have never known.

• Businesses & Department-Level Tools (See my BI links on delicious.com)
  • Open Source
    • JasperReports
    • Pentaho
  • Commercial
    • Cognos
    • iDashboards
    • SAP Business Objects
    • Omniture Discover OnPremise
• Website Tools (See my web analytics links on delicious.com)
  • Open Source / Free
    • Google Analytics
  • Commercial
    • Omniture SiteCatalyst
    • WebTrends
    • ClickTracks
    • ZoomRank for SEO
• Advertising, marketing campaign measurement tools
  • Google Adwords for TV
  • WebTrends AdDirector for SEM
  • Omniture SearchCenter for SEM
  • Visit the Dashboard Spy blog
• Social Media measurement tools
  • Nielson BuzzMetrics
  • BuzzLogic
  • Jeremiah Owyang (Forrester Analyst) has a string of blog posts on this topic covering the likes of twitter, blogging, and most other hot technologies struggling to prove their ROI to the business world

The following excerpt from ReadWriteWeb shows a fantastic trend happening in retail environments today whereby consumers have instant access to pricing information on products via their mobile phone:

Stores Clueless About Mobile Barcode Scanning Applications?

With the rise of app-laden smartphones like the iPhone and Google’s Android OS, now on T-Mobile’s G1, many penny-pinching shoppers have downloaded barcode scanning applications onto their mobile devices. These apps allow consumers to compare the prices of merchandise on a store’s shelf to competing stores in the area just by taking pictures with their smartphone’s camera. The prices are instantly retrieved and displayed on the mobile phone so consumers can know before they buy if they’re getting a good deal.

via Stores Clueless About Mobile Barcode Scanning Applications? - ReadWriteWeb .

Mobile barcode scanning is like PriceGrabber; it puts the focus on service  and reasonable pricing from retailers, not only lowest possible price

The reason why I like mobile barcode scanning is because, as a consumer, this will put pressure on retailers to be competitively priced and (more importantly) focused on servicing the customer. If it mobile barcode scanning grows widespread, this will ultimately force retail channels to align with pricing in online channels.

Essentially, mobile barcode scanning acts as your own personal PriceGrabber.com. With PriceGrabber, you enter a product name and see competitive retailers, retailer rankings, and pricing:

With phones like the iPhones which blur the lines between internet device and mobile phone and have a built-in camera, barcode scanning becomes easy — snap a photo of the barcode, an iPhone application reads it, and then performs a web search for competitive pricing and availability much like PriceGrabber.

It’s difficult to find significant price savings across products and retailers on PriceGrabber — because the playing field has been leveled for retailers in the price game and forces them to focus on service. Price your products too high, and the masses will not buy from you. Price them low enough, well, you had better be able to support the service on the small profit margins you’ll be making.

If barcode scanning doesn’t enforce better service, then it will demand unique product assortments from suppliers at the retail level

A world where retailers all sell identical product assortments for virtually the same price is going to force retailers to differentiate in other ways. Sometimes this means the retailer will go private label with certain products. Or, retailers will demand a unique product selection from their supplier within a product category. Other times, retailers will negotiate exclusivity on products for a period of time. Larger retailers will do all three to be well diversified.

This burden/strain will ultimately land on the manufacturer’s/supplier’s shoulders; Brand names will win in this environment

Bar code scanning and the PriceGrabber’s of the world put added burden/strain on manufacturers/suppliers. The manufacturers will be forced to be creative in their go-to-market strategies as they launch new products across various retailers and channels. Well-recognized brands won’t fall victim (as much) to the bundling requirements, product assortment strategies, and channel-specific pricing.

Apple, for example, is represented identically across channels — with pricing being within single digits of each other between retailers. A barcode scan on an iPhone will show similar pricing across all channels of business and all retailers — thereby putting the emphasis back on the retailer to provide good service and support.

Consumers will win this battle

As much as retailers want to control the environment, at the end of the day, pricing shopping is what people will do, whether or not barcode scanning is banned. Ultimately, consumers will win this battle, and that’s a good thing.

When calling the DMV today for questions about transferring the title of a vehicle, I was greeted with the following message once I navigated through the automated phone tree:

“May I have your attention. We are experiencing a higher than normal volume of calls. Your wait time may be excessive.”

Excessive? Did they really say that? On the heels of a similar post by Yabia, I couldn’t help but post my own reminder that viewing your business through the eyes of your customer or a consumer is critical to providing satisfying service.

“Excessive” implies an amount or degree too great to be reasonable or acceptable

My beef with the above recorded message is the use of the word “excessive.” Excessive is so often used in conjunction with something overly negative (excessive speeding, excessive drinking, etc.), why on earth would you use this language with your customers?

Now, granted, this is local government — generally an area where I rarely find customer service going above and beyond the call of duty. This automated message is either a complete stroke of genius by realistically acknowledging that the wait time is totally unacceptable…or a sobering realization of the lack of awareness. My vote is for the latter.

Soften the blow

If your phone system doesn’t support the ability to tell a caller how long they will wait, then don’t mention anything about the wait time being excessive. At the very least, choose different wording if transparency is your objective.

It makes me wonder: what would life be like if we lived in a world where there was only one supplier for each product we used in our day-to-day lives? Would you also have “excessive” wait times?

My media consumption is transitioning more and more to RSS feeds. From the latest online & web marketing industry news, to sports updates, to friends & family blog postings, RSS is an everyday part of my life where I pick and choose what I want to read/consume and when.

TV needs its own version of the RSS feed

It then dawned on me: TV needs to be like this. Essentially, it’s what all of our DVRs are striving to be. In our house, we have DIRECTV HD which means we are locked in to the underwhelming DIRECTV HD DVR. DIRECTV is taking a step in the right direction with the ability to schedule your DVR online. The problem is that it differs from Tivo’s implementation of online scheduling (we have Tivo in another room in the house).

Proprietary DVR scheduling “protocol” limits potential

If I visit ABC.com (or any television station’s website), there’s no standard way for me to subscribe to a show. I have to separately go to my provider’s website to use their proprietary method of scheduling the DVR to record a show. This is the beauty of RSS feeds — they are the same no matter which client you read the feeds from.

I really hope the future of DVR scheduling moves towards a standard which allows all networks to use a common syndication interface which can communicate with a network-connected DVR or computer. At the end of the day, there’d be a standard way to subscribe to an episode, series, and set it to record new episodes and/or repeats.

Advertising opportunities

If there were a standard DVR scheduling protocol, just think of how this could be leveraged through online advertising. A few ideas:

1. A call-to-action could be included within a link or a banner ad to “schedule this show to record” by simply clicking on it and adding the “feed” to your TV scheduler. You could then directly measure campaign effectiveness to new “subscribers.”
2. Similar to FeedBurner, a measurement service could be provided so networks could understand total subscribers.
3. Standardizing on a protocol would also allow online video sharing sites (Hulu, YouTube, etc.) to provide feeds to a DVR when a new episode/show/clip is available from your favorite show/contributor. I’d love to see YouTube feeds in my DVR list — when I’m sitting at the couch is when I have free time to check out online videos in longer sessions.
4. Viral marketing would be much easier — forward an email to a friend: “Hey, record this one episode, it’s hilarious.” Recipient clicks and they’re done.

Hulu is a step in the right direction

I can subscribe to an RSS feed for new episodes posted for a show or channel on Hulu. The missing link is the ability to play this content through the television. It’s still not quite convenient (or comfortable) to huddle around a MacBook Pro 15″ or a 20″ iMac — but good enough for catching an episode you missed or while on the road.

Yes, this is vastly over-simplified

I realize there are technical considerations that need to be accounted for, however my ignorance to DVR and TV-scheduling technology allows me to demand features like this.

Target is doing a nice job of creating consistent creative and messaging across channels (online and television). Here’s a screen shot of an ad from the homepage of CNN.com advertising the upcoming 2-day sale for Thanksgiving weekend:

Click on it and you see this page:

Target ads still recognizable even when fast forwarding on DVR

And while fast-forwarding through DVR’d TV shows tonight, the familiar red background and white stick figure running with the shopping cart flew by on a few frames. How often do you recognize an ad and/or brand name in just a few frames of DVR fast forwarding? I’ve been paying more attention to this lately and it’s difficult to recall anything…particularly in anticipation of getting back to your DVR’d show.

Here’s a clip of similar animation which it looks like Target is recycling from this 2007 campaign (found on YouTube):

Consistency is key with integrated, multi-channel marketing

The consistency of the creative of these ads enabled me to recall the Target campaign with HIGHLY passive viewing (browsing for news on CNN.com — which I do several times per day) and fast-forwarding through commercials on our DIRECTV DVR. I can’t think of any other ways where I’m less engaged than quickly scanning for the latest news on a website or sitting on the couch watching TV.

As marketers grow to accept a world where consumers can easily ignore their ads, it’s really interesting to see how Target is able to penetrate the barrier to recalling an ad. It begs the question: how does one test the “recall” and “effectiveness” of multi-channel marketing prior to executing the full media spend?

Traditionally, consumer panels are shown various ads and asked follow-up questions. The problem is this doesn’t simulate a real-world environment of cross-channel entertainment & news consumption.

Think big, start small, deliver quickly

Incremental releases of ads combined with analysis of ad performance in each channel are really the only way to truly optimize a campaign — especially across multiple channels. I’m still not quite sure if Target is at the level of being able to measure or test the effectiveness or recall of their ads if only a few frames of them are seen. In any case, this current campaign of theirs has worked on me to generate awareness. Now the question is: will I make it to Target for the sale and purchase something?

My wife and I are spending a very untraditional Thanksgiving away from our extended families this year and we decided to forgo turkey and instead opted for Honey Baked Ham.

A simple shout-out to a no-nonsense store locator

A quick Google search for “honey baked ham” and they show up first in the list of natural results. Dead center on their homepage is a larger text and graphical callout to their “store locator”:

And within one click from their homepage, I’m shown a listing of local stores. Easy enough, right?

Store hours AND holiday hours posted on the website. Love it.

They went the extra mile to also display store hours during the Thanksgiving holiday — an added bonus!

My wife and I had arrived back at the house late Wednesday afternoon before Thanksgiving and wondered whether or not the store would be open on Thanksgiving day so we could pick up the ham then. Thanks to the website, it saved us a phone call, and 30 minutes later we had the ham and side dishes for our Thursday meal back at the house.

It’s the simple things…

The point? Very rarely do websites have hours of operations, particularly holiday hours, posted on their website. Such a small convenience can go a long way. It saved us a phone call to the store which ultimately saved them time by not having to field calls from consumers simply wanting to know their holiday hours.

Apple has launched a clever new advertising campaign online and it occupied a larger-than-usual amount of real estate on the CNN.com homepage this week. I snapped a few screen shots (please excuse the headlines in the images below from CNN, but this was the current news at the time of the screen shots.):

The two ads, while physically separated on the screen, were designed to interact with each other as “PC” walks away from “Mac” from the right-hand ad to the top ad to destroy the customer satisfaction odometer:

As engaging as the ad was, I realize now that I didn’t even click on the ad — probably because I’m not in the market and already am a Mac owner (and thus fully aware of my satisfaction with the Macs I own).

After “PC” is finished breaking the odometer, the ads fade out and we see the Apple logo up top and the call-to-action on the right-hand side. Very interactive and one of the few ads I’ve actually wanted to toggle the audio ON for. Smart of Apple to default the audio to OFF as I’m usually scrambling for the pause or mute button when audio automatically starts playing when I visit a site.

An excellent way to leverage the interactive medium of banner advertising by utilizing characters originating from traditional television spots.

Social media enthusiasts of the world often unite in the wake of internet riots with the “I told you so” speech and blog postings (present company included) about how a company or brand should have reacted to a social media meltdown. The latest debacle was made possible by Motrin with this :30 spot. 

Problem: You’ve alienated your target demographic

The speed at which a big brand like Motrin reacted was decent. Rumblings started over the weekend and by Monday afternoon, Motrin had this announcement posted on the homepage of its website (although several hours after the entire motrin.com site was not available):

Not sure what’s distasteful about the ad? Read the coverage:

http://blogs.forbes.com/sciencebizblog/2008/11/twitter-moms-si.html

http://www.web-strategist.com/blog/2008/11/17/motrin-mothers-groundswell-by-the-numbers/

http://www.readwriteweb.com/archives/motrin_bows_to_social_media_pr.php

How can this type of situation be prevented in the future?

In short, it can’t be 100% prevented. At the end of the day, even the best processes and procedures can fail and its why we live in a world of product recalls and warranty repairs. Dealing with a negative reaction to an advertising campaign is similar to a massive product recall — it’s all in how you react to the problem.

How should I react to an internet riot?

I jokingly refer to these types of situations as “internet riots” however I realize they are to be taken seriously otherwise they will spiral out of control — much like a riot.

While mommy bloggers certainly rallied and voiced their opinion to Motrin via blogs, twitter, and other outlets, we have to remember that there are other types of visitors to the site — visitors who, like me, had never seen the commercial and had no idea what “everybody was mad about” this morning.

Plastering an announcement on the homepage of the site is probably “good enough,” but not ideal. Here’s why the Motrin execution falls short:

1. The entire homepage announcement is an image and not text. This means Google and other search engines cannot index the contents of the image. This then means the message will not be searchable on search engines. As of this writing, “motrin moms” (the ad campaign’s main message) dominates search results and motrin.com is nowhere to be found.
2. The message on the homepage is not clickable — it doesn’t take me to more information on the product, status on when the rest of the campaign will be disabled, or even a way to contact Motrin.
3. How long will this message stay on their homepage? What if we need to refer to it at a later date after the initial groundswell as died down?

Instead, the following steps would have been much easier and faster to produce and maintain on an on-going basis:

1. Post a blog posting containing detailed information on what the problem is, what you’re doing to fix it, and make sure to have keywords in the article that are found in the referenced blog posts, tweets, and articles (no need to involve IT or web developers to update the site)
2. Link to the post on the homepage of the Motrin site (so it can be later removed without eliminating the content of the article!)
3. Post a tweet on twitter to the channel of the dialogue with a link to the blog posting
4. Openly accept comments (I like the reference to the feedback, although there’s no mechanism to contact Motrin from this message on their homepage)

What can I do to monitor whether or not a riot is brewing?

In late 2006 I outlined some common ways to monitor your brand online via this post. If you find a site that is not RSS-enabled, you can also monitor it with a service such as this.

Help “steer the ship”

Posting content to your own site and managing comments on it can help you “steer the ship.” The last thing you want is a situation like Motrin’s that continues to spiral out of control with blog entries and tweets that carry a negative connotation about the product or brand name. By funneling all attention about the issue (good or bad) through a blog post our your website, you now function as the central source of information.

I was recently interviewed for a series of articles published both online and in print for Internet Retailer. I always find it interesting to see which quotes are chosen by the writer and how comments are represented when an article is finally published. The two articles in which my comments were featured were:

Laying the Groundwork

Rich media wows shoppers, boosts sales and builds brands—if e-retailers build it right.

Consumer insights refine early version of Levolor.com product configurator

This article is specific to our site in which more of my comments about launching a product configurator were used from the original interview below.

Original Interview

The article was published as a result of the effort of Adobe Scene7’s PR firm which is why you’ll see a few of the questions below specific to Adobe’s Scene7 product which we use for the interactive imagery in our product configurator.

In the spirit of full disclosure, and because I think the information in the answers below provides good background for companies considering product configurators, here is the full Q&A from the interview with additional links:

Q: When was the site launched? How long has the product configurator been on the site?

The product configurator was launched in June 2007.

Q: Please describe the product configuration capacity on your site and the underlying technology that powers it.

The product configurator is designed specifically for window treatments and supports 100s of billions of product combinations that are unique to the window covering industry. Technology used:  PHP for the application layer, MySQL for the database layer, and Ajax for much of the real-time calls to the server throughout the configuration process. Scene7’s dynamic imaging component is used to visualize window treatments as they are built throughout the configuration process.

Q: Why is rich media and this tool in particular important to selling at Levolor.com? What does this interactive capacity add to the proposition that text and static images can’t accomplish?

Since we deal with a home décor product, the ability to visualize the custom-order product prior to ordering is important to our customers. The interactive capability allows for the many billions of combinations of our product to be visualized on-the-fly without having to individually create the accompanying static images. Scene7’s dynamic imaging technology enables us to dynamically call the visual components of a configured product.

Q: In choosing across the standard and custom options – and the different product categories (blinds, drapes, etc.) – how many combinations are possible? If that number isn’t available, how many options are there to choose from?

There are over 100 billion combinations for ordering our custom blinds and shades. This doesn’t mean there are 100 billion questions to answer in a single configuration, but rather the combination of product options, colors, and sizes equate to over 100 billion different ways our products can be ordered. For a consumer, custom blinds and shades are an investment in their home and the ability to see a visual representation of the product before it is ordered adds peace of mind.

Q: What were the challenges associated with getting this many images up online? How did you resolve the challenges?

The need for dynamic imaging was obvious. There was no way it was financially feasible to maintain billions of image combinations. By leveraging Scene7’s dynamic imaging technology, we were able to resolve this product data challenge.

Q: What are the challenges associated with making sure this many images are served in a timely way in response to site visitor requests?  Could you have handled this on your own servers, do you use a content delivery network, or is this something Scene7 provides?

Scene7 provides the necessary capacity and delivery requirements to meet the needs of our end-users. Scene7’s technology was more of a foregone conclusion than it was for us to try and solve the “challenges associated with making sure this many images are served in a timely way in response to site visitor requests.”

Q: As you prepared to implement the product configurator, was there anything you learned in the process that caused you to adjust your initial plans in any way?  How did you resolve that?

Assembling a team of product experts, web development experts, interactive experts, and usability experts proved to be the most challenging. Each functional expert approaches a product configurator from their own point of view and it made identifying the ideal user interface for our end-users a very time-intensive initiative. Having the ability to deliver dynamic imaging is only a fraction of the equation to a successful configurator. For Levolor, the product configurator is an ongoing product which is updated and improved on a daily basis based on changing consumer insights, trends, and technological enhancements.

Q: What advice would you have for other online retailers considering adding this much rich media to their site, from an operational perspective? Is there any different way you would approach this, based on what you learned from you initial experience?

A product configurator is an ongoing commitment and should be treated as a part of your organization’s product offering. It’s easy to launch a functionally-sound configurator online but very difficult to achieve consistently positive customer satisfaction without continuous improvement; particularly if your configurable products change on a yearly basis. All too often we see organizations invest in a product configurator but neglect to plan post-launch improvements. The end result is a product configurator plagued by costly & massive one-time updates because the budgets align with advertising & promotion rather than research & development. A&P budgets fluctuate considerably and having the budget significantly reduced one year (due to economic conditions or otherwise) can single-handedly cripple your product configurator’s effectiveness on your website.  With interactive technology changing as quickly as it does, it’s important to stay on top of interactive and usability trends so you can stay ahead of the curve when it comes to customers interacting with your product configurator.

Q: What does it cost you to have the product configurator up on your site?  Has the return been worth it?

No comment.

In the world of consumable products, Procter & Gamble is often held at the pinnacle of marketing perfection. P&G is home to many brand names all of us are familiar with, either because we specifically seek them out on retailer shelves, or because it’s simply second nature to nab these items while at the store. From Folgers coffee, to Tide laundry detergent, to Duracell batteries, the list of brand names is rooted with highly recognizable names and long-standing tenures in the marketplace.

Retailers depend on brand name products to sell “private label” products

Retailers rely on brand names in the P&G portfolio as well as many other manufacturers to bring in the foot traffic to their stores. So as to not be dependent on one manufacturer’s brand within a product category, retailers often will sell competing brands or go at the product manufacturing/sourcing process themselves by “private labeling” their own version of the product.

We’ve all seen it at Target: the orange box of Pledge-brand furniture hand wipes on the shelf and conveniently positioned on the shelf below Pledge products, a similarly orange-colored “Target” brand furniture wipe for a moderately cheaper price. To the brand-agnostic consumer, this is a “win” for Target. To the brand-aware, the private label option appears to be cheap, or a “knock-off.”

Regardless, the brand names pulling traffic into stores allow retailers to enter into the “private label” business in the first place. The margins are healthier for private label products and enable the retailer to not be entirely dependent on one supplier/manufacturer. Excellent business strategy all around and certainly a trend with no end in site, particularly as low-cost-countries become more and more accessible to retail buying offices.

Manufacturers selling direct-to-consumer becoming more common

Like retailers depend on brand names for private label products to be successful, manufacturers depend on retailers for product sales. However, like the “private label” model outlined above, Manufacturers are turning the model around in their favor as well — by selling direct-to-consumer and bypassing the retailer altogether.

As a manufacturer, we began selling direct in June 2007. Our intention has always been to do this as a means for learning about the consumer shopping experience online. In the nearly 15 months since beginning our e-commerce initiative, the amount of data collected has been invaluable. The initiative wasn’t initially met with entirely positive feedback from our retail partners, however. Other Newell Rubbermaid brands (Levolor is a division of Newell Rubbermaid) are also selling direct: Graco Baby, Rubbermaid, and Dymo to name a few. 

P&G ventures into selling direct-to-consumers online … and Wal-Mart hires an executive to analyze the impact

In an article posted on FT.com, it opens with the following:

Procter & Gamble is testing its ability to use the internet to sell its toothpaste, household cleaners and nappies directly to US households, in a potential long-term strategic challenge to its retail partners.

The company is supporting a website, theEssentials.com, that is exclusively selling its brands, with items such as single tubes of Crest toothpaste and bottles of Mr Clean cleaning fluid, to boxes of its Pampers and Luvs brand nappies and Gillette razors.

When the leading consumable product manufacturer ventures into the world of selling direct-to-consumer, retailers’ ears perk up. While nobody can be sure of the long-term intentions of theEssentials.com, it’s obvious that a new chapter in Manufacturer+Retailer relationships is being written.

Quite often, manufacturers’ website traffic pales in comparison to retailers’ website traffic

Traffic to the P&G theEseentials.com site is minimal (27K unique visitors per month at the time of this post according to Quantcast). Clearly a non-threat to all of the major retailers who boast 10s of millions of unique visitors per month.

Retailer is to private label as manufacturer is to selling direct-to-consumer

In the short-term, P&G’s efforts will probably amount to several very uncomfortable conversations between the sales office of the manufacturer and the retailer. Phrases from the retailer will sound like, “You’re competing with us.” In the long-term, consumers will ultimately benefit from Manufacturer-driven ventures like these.

It creates a level of healthy competition between the retailer and manufacturer pushing both camps into a better understanding of the consumer’s desires and shopping behaviors — very much like private label opportunities for retailers force manufacturers to be honest with pricing and innovative with new product offerings.