Roughly a decade after the first online retailers began to offer their wares on the Internet, an estimated 90 percent of product manufacturers have yet to join them. Why? Many believe that if they opened an online store and circumvented their “channel partners”—their distributors and retailers—they would be “committing suicide,” says Adam Southam, chairman and CEO of St. Louis Park–based Reshare Corporation. Yet manufacturers often have much to gain by getting in on the online action.
According to Internet Retailer, online retail sales for the first three quarters of 2006 hit $69.1 billion, up 24 percent from the same period in 2005. By comparison, total retail sales have been showing year-over-year growth closer to 6 percent. Internet Retailer expects Web sales, which now account for about 5.5 percent of total retail sales, to approach 13 percent by 2010.
Reshare’s mission is to make it easier for manufacturers to get into the online sales game while avoiding what the retail industry calls “channel conflict.” Reshare’s Distribution Relationship Management software allows manufacturers to capture their piece of the online market by sharing revenue with those partners. The software also increases the number of products available to consumers, without those consumers having to give up local service and support. And it makes it easier for them to find products by going straight to the manufacturer, rather than having to hunt around through numerous retailer and distributor sites and catalogs.
“For example, you might come to my house and see my Sligh home-entertainment cabinet,” Southam says. “Maybe I’ve had it for a while and I’ve forgotten where I bought it. You want one, so you look it up [on the manufacturer’s Web site]. Once you’ve found the cabinet you want, you enter your zip code and a list of participating retailers pops up. You choose a retailer and make the purchase.”
Regardless of where the part or product goes—whether to a distributor and retailer, or just to the retailer—all “channels” receive some revenue from the sale. The local retailer is responsible for service and support. “Every buyer at every level is in control,” Southam says, regardless of whether the sale is business to business or business to consumer.
The Toronto-born Southam founded Reshare in 1999. He started his first business, a photo-processing company that handled next-day enlargements for One Hour Photo, at the age of 14. That endeavor soon became a small employment agency for staffing photo-processing kiosks. He was working in Minnesota as a marketing and branding consultant in 1997 when a client sought to sell its products on line.
Selling over the Internet was new territory back then. “The promise of the dot-coms was that consumers would be able to buy from manufacturers and save money by cutting out the middleman,” Southam notes. This made the Internet dangerous territory for manufacturers, too; early on, retailers and distributors let manufacturers know who was boss. When Levi’s launched its first online store in 1999, department stores Macy’s and J. C. Penney cancelled their orders. (Levi’s online store reopened in December 2005, “in defiance of its retail partners,” Southam says.)
The online retail research that Southam performed for his client became the basis of Reshare Corporation. Since then, Reshare has sold its service to manufacturers in nine different industries, including furniture and sporting goods. Southam projects 2007 revenues of $5.5 million; by 2010, he expects his company’s revenues to exceed $50 million. Clients that become online retailers using Reshare’s software may experience similar revenue increases.
