Relationships between retailers and manufacturers can often become tense. As they each try to protect their margins and do what’s best for their customers, they can start to feel more like competitors than partners.
But it doesn’t have to be that way.
In this episode of Ecommerce Connected, host Anthony Capozzoli talks with Sean Dawes, co-founder of Modded Euros, an online retailer for aftermarket European automotive parts. Sean and his team have made some innovative choices about how they partner with brands, and it’s allowed Modded Euros and their brand partners to thrive.
They share unique data and insights with partners to help direct research and development. They fight for their brands.
If manufacturers lose their margins, retailers lose, too
One of the big challenges of ecommerce today is that small, bootstrapped sellers can dropship products from established brands with little or no operating costs. They aren’t interested in the brand’s integrity or even their own scalability or long-term profitability. So they slash prices deep into their own margins, and they have no problem violating pricing policies.
Sean says, “You have these people that are trying to make a quick buck, so to speak, and it causes market devaluation of that brand.”
As retailers try to compete with these sellers, they’ll often put the onus on the manufacturer and demand better margins, which hamstrings the brand’s ability to invest in research and development, or to improve their price.
“At the end of the day, if manufacturers don’t have any margins and retailers don’t have any profit, the businesses are ultimately going to die,” Sean says. “So for us, by protecting margins and protecting our profit and our partners’ profit, in this case being the manufacturers, we’re ensuring a long-term business relationship. A long-term healthy business relationship means we can grow, we can provide and invest into areas that improve our customer experience.”
So instead of strong-arming potential brand partners, Modded Euros takes initiative and actively hunts down these bootstrapped sellers in Facebook groups, Instagram, and other social media channels where they can often be found arranging private deals and violating pricing policies undetected. The brand can then choose to clean up their channels and enforce their policies, or Sean and his team are comfortable passing on the partnership. It takes work, but as a major ecommerce retailer, Modded Euros has a lot more resources to throw at the problem than most manufacturers, and it ultimately benefits both them and their partners.
Sean says, “You can invest into better customer service, better website experience, maybe better policies, faster shipping rates, all these things that improve the customer experience and the manufacturer can improve not only designing new products, they can spend money into R&D, but they can improve current products. Or maybe if they start doing a little bit more volume, they can improve pricing.”
Retailers can identify gaps their brand partners can fill
While brands usually don’t get much visibility into how their target market behaves on a retailer’s site, Modded Euros has seen a lot of ways in which being generous with their data empowers them to provide a better customer experience.
“We have a lot of traffic, we have a lot of transactions, so there’s a lot of data for us to leverage,” Sean says. “We’re able to see what customers want to buy and we’re also able to see customer feedback on products, whether it be by brand, by type, and this goes back to shape, color, all the different features of each individual category.”
This allows Modded Euros to help their brand partners develop new product lines and fill gaps in the customer experience, filling out Modded Euros’ catalog and giving their best manufacturers some easy wins.
“If there’s nobody in that exact niche that we needed a product for, [we’ll] go to a brand that’s one of our strong partners and say, ‘Look, I think you need to develop this and this is what you need to do. You need to be at this price point. This is how it needs to be designed and let’s work together to penetrate that little sector of the marketplace for you.’”
Learn more on our podcast
Anthony Capozzoli lends his ecommerce expertise in our podcast, PriceSpider Ecommerce Connected. This episode features an exclusive interview with Sean Dawes from Modded Euros. Sean and Anthony discuss how Modded Euros advocates for their brands and promotes healthy competition.
Check it out!