In “Third-Party Marketplaces: What Merchants Should Know” and “Marketplaces: How to Sell More in 2013,” we addressed tactics — pro and con — for using marketplaces.
Some merchants avoid marketplaces, believing they compete with their stores’ brands. Others enjoy the additional revenue from selling on marketplaces.
In this article, I’ll suggest an alternative strategy for ecommerce merchants to leverage marketplaces without risking their stores’ brands.
Biggest Challenge: Who Owns the Customer?
The first thing to realize about selling on Amazon, Sears, and other large marketplaces is they control the customer relationship. Their customers likely do not care about your brand or your online store. They do care about your products, pricing, shipping, and marketplace store rating. But, the fact that you have a highly successful store is irrelevant to them. They are buying from the marketplace. In fact, in many orders, they are placing a general order that will be fulfilled by many different merchants. Many marketplace customers do not even realize it.
As a result, many ecommerce sellers do not have a separate online store. They simply sell on marketplaces. These sellers could be your competitors. Their business model is low margin and high turnover on hot-selling items. They use automated tools to feed products into the marketplaces and manage the pricing. They respond instantly to customer requests that come in through the marketplaces. That is their sales channel and they are relentlessly good at it.
Entering a marketplace with all your products — using your own, existing brand — is a great risk. First, your pricing will likely be much higher than similar marketplace offers and you will not likely sell many items. Pricing is highly dynamic on the Amazon marketplace, in particular. Prices change hourly for popular items. Are you set up to manage that kind of volatility with all your products?
Second, if something goes wrong in the fulfillment process, your brand suddenly is vulnerable. Third, as contributor Scott Smigler described in the aforementioned “Third-Party Marketplaces: What Merchants Should Know,” you risk duplicate content if you display the same product descriptions on your own site and in marketplaces. I know from experience you do not want to do that.
Alternative Strategy: Use a Different Brand, as a Separate Channel
Here is an alternative approach to using your existing brand, with all your products.
Brand. Set up your marketplace stores under a different name. In some cases, you may want to set up a different legal entity, too. This will allow you to continue to market your products as you do today in your own online store. You will not have to worry about price matching in both places and you will not have to worry if you are in some type of dispute that affects your store.
If you believe customers will visit your online store after making a purchase from Amazon, think again. In my experience, it happens infrequently. Customers buy on marketplaces because they are loyal to them, not to you.
Products. Start with a small subset of your products that (a) have high margins, (b) are readily available and in stock, (c) have some type of uniqueness (d) are already best sellers in your own store, and (e) are well suited to your category on the marketplace
Do not use the same title and descriptions that are on your website. Write original content that is tighter, more bulleted, and comparable to similar items on the marketplace you choose. Headlines should leverage solid search engine optimization. Include as much or more descriptive information as your competitors on the marketplace. Make sure you match the marketplace categories and tags.
As you see success, you can learn from it and add products accordingly. You may end up with different best sellers in the marketplace than on your store. In fact, if you manage this as a separate channel, you will likely end up with different products over time.
Pricing. Experiment with different pricing from your own store. You may develop ideas in the marketplace that can be applied in your store. Be ready to match prices on marketplaces, to generate sales. In some cases, you may actually be able to price unique items higher on marketplaces than on your own store.
Customer support. Be relentless in pursuit of getting the best ratings. Ship quickly, respond to inquiries within an hour or two — even on weekends. Most importantly, respect the fact that these are not your customers. If you have a return, just take it back without asking questions.
Infrastructure. Create a product feed that is reusable on other marketplaces if possible. You should try to use the same feed structure and content for all marketplaces, even on Google’s Product Listing ads. This will simplify your content preparation, though each one will still require slightly different information. Automate these feeds as much as possible.
Don’t worry about duplicate content across different marketplaces. That will be their problem, not yours.
For order management, try to incorporate marketplace sales into your own existing processes as much as possible. That may be difficult, as you will have to print packing slips for each marketplace and will need to update the marketplaces themselves unless you are integrated with them. Since you are not representing your own “brand,” you may also have to create alternative labels and email confirmations.
Manage your inventory wisely. If you have an inventory control system, allocate a subset of your inventory to the marketplaces so you do not risk ending up short.
Conduct a complete analysis before you dive into marketplaces. They can certainly help diversify your revenues. But use them wisely.