According to a recent article in the Financial Times, "Procter & Gamble has started to sell brands direct to US consumers online for the first time, in a sign of how digital commerce is shaking up relations between retailers and their suppliers." In other words, Manufacturers are aiming to take retailers' margin for themselves! And this is just the beginning. There are now many examples of Manufacturer's competing in the direct-to-consumer space. And this trend is continuing to expand at a rapid pace.
Why is this happening now? Manufacturers are realizing that they do not necessarily need retailers to validate them any longer. With the success of the internet, Manufacturers finally get a chance to sell direct to consumers without having to open expensive retail stores. This is a huge difference from years past. Manufacturers now have the ability to build relationships and sell products online at deeply discounted prices to consumers.
On a positive note, one of the main reasons that Manufacturers haven't jumped into the direct-to-consumer space, is that they still realize the importance of not undercutting their existing customers ie wholesalers and retailers. They understand that there is a fine line between trying to generate more revenue for their business and not hurting their existing relationships. Therefore, manufacturers are starting to sell products online, but only at MSRP prices.
How long before all manufacturers go direct-to-consumers? Well, there is no clear answer yet, but over the next decade, Manufacturers will increasingly sell products directly to consumers. Either way, let's hope that this trend does not happen any time soon!