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The Growth of E-Commerce Has implications for Franchising
Posted by Ed Teixeira
An article in the HBR Blog by Bonin Bough Vice President of Global Media and Consumer Engagement for Kraft Foods reveals that online sales of everyday items like soap, orange juice and toothpaste more than doubled between 2006 and 2010, and are expected to double again by 2014. He reports that Nielsen estimates online consumer packaged goods sales in the US will reach 25 billion by 2014. Although his article deals with consumer goods there is little doubt that the growth of e-commerce will impact the franchise industry. Here are some ways the increase in online sales and franchising can intersect:
- Franchisors with the rights to market through alternative marketing channels like the Internet need to be careful of harming franchisor-franchisee relations despite the contractual rights a franchisor may possess.
- Franchise programs that lend themselves to e-commerce can stifle franchisee growth as franchisor Internet sales increase
- Franchisors ought to find ways to include franchisees in e-commerce activity when possible. Leveraging the power of the franchises network can be a plus.
- Prospective franchisees need to be wary of franchisors with e-commerce rights and the products or services to match where these activities could reduce sales in the franchisee territory.
Given the growth of e-commerce, franchisors ought to find ways to capitalize on this trend by working in concert with franchisees when possible.
Posted on May 2, 2012 at 8:06 PM
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