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Maximizing Profitability through Best-in-Class Channel Management

Jim Tompkins, CEO, Tompkins International
Lisa Kennedy, Project Manager, Tompkins International

In today’s retail environment, distribution channels are diverse and complicated. Consumer options to purchase goods include retail storefronts, catalogs, call centers, or online through computer or mobile technology. Online marketplaces are fragmented even more by a number of direct and varied independent marketplace organizations. As a result of three megatrends, retail is also quickly undergoing massive transformations.

These three megatrends include: technology, globalization, and supply chain. The technologies of the internet, e-commerce, smart phones, and social media have totally changed the definition of the word “shopping.”  Globalization has resulted in products being designed for global consumption, manufactured in the country that provides the lowest total delivered cost and sold and delivered wherever, whenever, and however the customer desires. The role of the supply chain is to support the “shopping” desires of global customers with an efficient and effective flow of goods, information, and cash. The key focus to retail transformations going forward is the omnichannel supply chain. The omnichannel supply chain needs to be evaluated and evolve by moving through a process of Strategy-Structure-Implementation.

Omnichannel Channel Management (OCM) is a component of omnichannel strategy, and it requires organizations to answer these questions:

  1. What to sell?  Must decide a path for “OWN” brand as well as general merchandise.
  2. Who to sell to?  How to segment product offerings for different channels and how to minimize channel conflict.
  3. Where to sell?  Different offerings for different geographical regions/countries.
  4. How to sell?  Directly via stores, outlets, e-commerce, catalogs, etc. or indirectly via wholesale, forward marketplaces, or backward marketplaces.

Which of the many channels maximizes revenue and profitability? The quick answer is that companies need to pursue more than one channel. Different customized business plans must be applied to each channel and monitored on an ongoing basis in order to optimize multiple channel performance. Suppliers that identify proper partnering strategies, recruit the right partners, create effective channel programs, and develop insightful performance management systems have the structure in place to become industry leaders and experience strong profitable growth.

Consider these questions as your channel strategy evolves:

  • What is the best channel strategy (or strategies) based on our objectives?
  • How do we properly segment channels and develop a pull demand system?
  • How do we allocate and develop the right partners or internal capabilities?
  • Do our investments motivate the correct company and partner behaviors?
  • How are we positioned compared to our competition?
  • How well is our team driving our channels results?
  • How well does our channel management strategy allow us to leverage our “OWN” products?
  • How well does our channel strategy allow us to leverage forward and backward marketplaces?

A channel management strategy identifies the optimal method to engage customers, the best business processes supported by each channel, and coordinates interactions between multiple channels. A channel strategy should produce:

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Articles

Maximizing Profitability through Best-in-Class Channel Management

Jim Tompkins, CEO, Tompkins International
Lisa Kennedy, Project Manager, Tompkins International

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Read the press release here.