Practical Ecommerce

Can ecommerce marketplaces expand a brand?

It’s funny how ecommerce brands fear established online marketplaces. When I discuss with those brands selling on Amazon, Walmart.com, Sears.com or any of the hundreds of online marketplaces, I often get a look of terror.

Their concerns, typically, are as follows.

  • “I don’t own the customer, so I am helping to build a competitor’s business.”
  • “When my sales grow, the marketplace is going to steal my business.”
  • “I’m spending money on marketing to drive customers to my site. I don’t have the budget to send traffic to two sites.”
  • “It costs more to sell on the marketplaces than on my own site.”

I will address all of those points in this post. But it boils down to this: Ecommerce brands should be on as many relevant marketplaces as possible, for the following reasons.

Awareness. For most ecommerce brands, building awareness is a costly and difficult task. Awareness-driven advertising is hard to measure.

But one thing is for sure, the more consumers see your brand, the higher the chance to sell them.

Amazon represents most of marketplace sales. It is far and above the largest. By some estimates, more than 50 percent of all ecommerce transactions will occur on Amazon within the next two years. Fifty-two percent of all product searches now occur on Amazon — 75 percent when you add eBay and Walmart.com into the mix.

Why not take advantage of this low-cost, low-risk method of creating awareness? Let consumers see your brand in as many places as possible.

Trust. Consumers trust Amazon. When shoppers see a new ecommerce brand, they are often hesitant to purchase. They may feel more secure purchasing from that brand on Amazon rather than the brand’s own site.

If customers try your product through a marketplace and the branding on your packaging is strong, those customers will know how to repurchase directly from you.

But consider, too, typical online consumer behavior. A consumer sees your product on Amazon. Before he buys, he goes to your website to obtain additional information. Once he does that, you can retarget him using AdWords, Criteo, AdRoll, or other retargeting platforms. Then you can make him your own customer, even if his first purchase was on Amazon.

Customer acquisition. When selling on Amazon’s marketplace, you have a choice of fulfillment methods: Fulfillment by Amazon or Fulfilled by Merchant. With most of the other marketplaces, sellers fulfill their orders. Their costs on these other marketplaces are listing fees and some on-platform marketing.

Throughout my 20 years of marketing consumer products online, customer acquisition costs have increased. But generally, acquisition costs on the marketplace have averaged roughly one-half of other paid online channels. So I look at the marketplaces as an effective way to acquire customers.

Search engine optimization. Face it. No matter how hard you try, you probably won’t be able to beat Amazon in search engine rankings. When a customer searches for a solution that your brand resolves, it’s good to see your products show up in multiple listings on the search results.

Sales. We could all use more sales. Give your brand every opportunity to sell more. The marketplaces provide that opportunity because that is where shoppers are gravitating. In Q4 of 2016, almost 70 percent of all ecommerce transactions occurred on Amazon and eBay. That can be powerful for merchants if used correctly.

And Amazon is not going to steal your brand. At best, Amazon may ask you to sell to it directly versus via the marketplace. That is a business decision you have to make for your brand. I have always stayed away from being a vendor to Amazon or Walmart. Control over my retail prices and marketing should remain with my brands.

In short, to build a successful brand, you need to build awareness. Consumers purchase from brands that they trust. If they have never heard of your brand but they trust the marketplaces you sell on, then use that to your advantage. If you don’t, your competitors certainly will.

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Comments ( 2 )

  1. Elizabeth Hollingsworth April 24, 2017 Reply

    Phil, are you sure about this happening most or all of the time? “A consumer sees your product on Amazon. Before he buys, he goes to your website to obtain additional information.”
    Basically all the info I need is there in the form of customer Q&A and reviews if I’m going to buy immediately – and the retailer’s website won’t offer Prime shipping…

    • Phil April 25, 2017 Reply

      Hi Elizabeth,
      Yes i am quite sure. When a customer sees a NEW product or brand on Amazon, they check reviews and then they look online to see if there is a website or any other information. They then make the decision to buy.

      They wont buy from the brands website directly. They will go back to Amazon because of the trust factor. The point is that once the brand has proven itself to the customer, then the customer will buy directly.