Given the ease with which brands and manufacturers can sell their products directly to consumers, many observers believe the future of resellers is limited. Ori Greenburg, an ecommerce veteran and now C.E.O. of Algopix, a market analysis platform, does not agree. I recently spoke with him, to discuss it.
What follows is the full audio interview and the transcription, edited for length and clarity.
Practical Ecommerce: What’s the future for resellers on marketplaces, especially Amazon?
Ori Greenberg: Not all brands find it that easy to sell directly online. They need to set up their own marketing department and specialize in ecommerce. They need to set their logistics for B2C. A lot of brands find it very tempting to go directly online and they think that the margins will be dramatically increased, but the costs of actually doing business online are still significant.
PEC: Are you aware of instances where manufacturers attempted to go direct-to-consumer and then changed their mind?
Greenberg: I’ve seen several cases. I used to own an ecommerce agency and some manufacturers thought they might want to do B2C, but eventually they stayed a B2B business, and then started selling to people who specialize in doing online marketing.
As a reseller, if you can find a way to add value to the space, either by setting up your own creative marketing activities or by providing a better customer experience, or even if you have a geographic advantage and your shipping time is better than others, there is room for your business.
If you’re a big brand owner, and you have the manpower and the cash to set up a marketing department, there’s more chance of you actually succeeding and making the adjustments required to do B2C business. For small and medium manufacturers, it costs a lot. So, I would say that the bigger ones find it very possible and it’s very feasible to sell online directly, and the smaller and medium manufacturers will fine it more challenging.
PEC: How can resellers on Amazon add value?
Greenberg: They can add value, in terms of providing the right experience, the right product, the right strategy with care, and shipping it on time or using FBA. As long as you’re making sure that the product is in the best condition and provide the best customer experience, that’s your way of adding value. And you need to be competitive in price.
PEC: How resellers can add value on their own websites?
Greenberg: They can do everything that comes to mind, from adding tips to the best uses of the product that you just purchased that you might didn’t think of. And also, old-school marketing activities, such as adding a brochure to your package and giving an incentive to go back to the website and make another purchase.
Also, many sellers neglect taking care of their customer base, and there’s a lot you can do there. Repeat customers are a great asset.
PEC: Say a merchant is contemplating selling on Amazon’s marketplace for the first time. What’s your advice?
Greenberg: I know it sounds very tempting to start selling on Amazon, but the best thing to do is to explore the opportunities, spend time seeing what the alternatives are. For example, if you’re a U.S. seller, the first thing is to explore the U.S. market and see if your product is being offered on Amazon or on eBay, and if you can add value, and where will you be in that competition.
It’s really important to understand, before you start selling, what your margins and sales volume will likely be in the marketplace. There are a few other questions to ask, but plan a strategy ahead of just starting to sell.
PEC: How does a seller research a marketplace?
Greenberg: There are two important things to always keep in mind: the market price versus the price that you could sell the product at. Once the price makes sense and there’s enough margin to set a business up around it, make sure you know what the demand level is and have your inventory planned accordingly.
The second thing would be to analyze your costs. By selling on Amazon, the fees vary by category. There are categories wherein your fees will be around 10 percent and there are categories where the fees will be around 15 percent. You need to know these things in advance, by each and every item.
PEC: How can Algopix, your company, help with this?
Greenberg: We automate the process that I’ve just described. There are two main use cases that Algopix can help you with and it’s all around product market analysis. If you are already selling online and you want to explore other opportunities or other marketing channels, you’ll be able to upload a list of your current inventory and we’ll analyze the demand level and the price in various channels around the world. We’ll also do the analysis and provide the entire breakdown of sales-related costs, like shipping, tax, and marketing costs.
We can even help you analyze what it will cost to set up a campaign for each product on Google Shopping, to see the potential of selling in that channel.