It’s not exactly news that eCommerce is a crucial sales channel — but it’s also creating some new challenges for brands.
Amazon continues its expanding trajectory, Walmart is picking up steam as a direct competitor, Facebook is connecting shoppers and buyers in new ways and owned eCommerce sites are easier to set up than ever.
As eCommerce grows and twists, where does the marketplace listing model fit in for both the customer and the brand?
How Marketplaces Accommodate New Consumer Expectations
Online marketplaces have grown in popularity because they know what consumers are often looking for: convenience, choice and low prices. This is exactly what consumers find when they shop on major marketplaces.
Platforms like Amazon, eBay and now even Walmart offer customers endless choices when it comes to products. Max Godin at CrazyLister reports that Amazon has about 353 million products for sale. Customers can buy groceries, clothes, appliances and basically any physical product they want all in one place. On top of that, they can compare reviews and prices with ease.
Ryan Murtagh, Founder and CEO of Neto, writes that consumers benefit from all of the choices they have on eCommerce marketplaces. “Marketplaces allow buyers to easily compare items from multiple sellers, with the added advantage of getting access to extensive ratings and reviews from other purchasers,” Murtagh writes. “They take the perceived risks out of online purchasing — payments are secure, returns and exchanges are straightforward.”
Because of these many benefits, newer marketplaces, like Facebook Marketplace, are gaining ground. Instead of trying to copy eBay or Amazon, they are finding new ways to do marketplace listings — and payments.
Andrew Hutchinson at Social Media Today notes that Facebook Marketplace has evolved from a buy-and-swap platform “into a full eCommerce platform, and a way for Facebook to facilitate direct, on-platform buying and selling, without having to go through the regular payment channels and processes.”
Hutchinson reports that Facebook is looking into how blockchain technology could enable a universal payment system on this platform — one that could unite payment options for its 2 billion+ users.
But all of this streamlining might be counterproductive for many consumers and the brands they love. People have a variety of tastes. They buy new and used items. They buy both unique and generic products. And, increasingly, many customers expect personalized, seamless experiences when they interact with brands. That’s just not going to happen on digital marketplaces.
On most marketplaces, consumers will not find chatbots, personalized discounts from brands they are loyal to or the content that brands can provide on their own platform. Adam Watson at Hollywood Mirrors makes an excellent distinction in this regard: Customers on Amazon are not customers of the brands they buy from. “They are Amazon customers,” he says. When a person buys from Amazon, they can enjoy a convenient buying experience, but they won’t find a thoughtfully designed, unique brand experience.
How Marketplaces Can Accommodate Brands (Or Vice Versa)
Marketplaces have a lot to offer brands, but they do not come without some tradeoffs.
Still, Cathryn Lavery, Co-Founder and CEO of BestSelfCo, makes an important point about what a marketplace can offer a brand: A sales channel with lots of traffic, easier customer acquisition and the platform’s credibility. “With your own store, no matter how meticulously your ducks are lined up on launch day, you won’t be drawing nearly as much traffic as marketplaces like eBay or Amazon do,” Lavery says.
“They’ve had years to become known as world-class online retailers.” It takes time to build reputation, but the marketplace giants already have that.
By taking advantage of the history and reputation of marketplaces, brands can prioritize other aspects of their business. “The biggest virtual marketplaces have mobile apps as well, expanding their reach, and, again, you don’t have to worry about designing or maintaining an app,” writes Ajeet Khurana, CEO at Zebpay. For many smaller businesses or startups, maintaining an online store seems like something out of reach. Marketplaces can be an easier and quicker way to get products into the hands of customers.
But if you are going to play with the giants, you have to play by their rules. And their rules always benefit them in the end.
Albert Ong, Marketing Manager at Jazva, writes that Amazon charges high fees for sellers and those who use Fulfillment By Amazon (FBA). In exchange for high traffic and a well-established platform, Amazon expects a cut of your sales and access to the customers who buy your products.
“Many people who shop on marketplaces assume they are buying from that marketplace (even though they are purchasing your products),” writes Kristina Lopienski at ShipBob. “The customer is going to remember the marketplace the next time they buy again — not your brand.”
That has important implications for brands. For one thing, any customer data that gets collected with go to the marketplace provider, not to the brand. That means it’s much harder to form strong customer relationship with anyone you sell to in a marketplace. Marketplace brands are thus constantly selling to new customers, not loyal ones.
Further, marketplaces can gatekeep at their discretion. Abhishek Jaiswal, Co-Founder of CedCommerce, uses Walmart as an example: “Walmart expects its sellers to offer the same products at the lowest point on its eCommerce marketplace. If it finds out that a particular seller is offering the same product at a lower price point somewhere else, (even if another seller is doing it), it will de-list your item.”
What’s more, Amazon and Walmart have their own product lines. If your brand competes with Amazon or Walmart in a product category, which brand do you think will get preferential treatment in the marketplace?
Marketplace Listings vs. Owned Sales Channels: Brands Should Assess Where They Fit
Regardless of whether you partner with marketplaces or completely own your sales channels, you will find yourself competing with Amazon, Walmart and others at some point.
Brands therefore must consider how they will respond to this competition and differentiate themselves. This might mean leveraging marketplaces for access to more customers. This might mean doubling down on an owned eCommerce channel. But it’s not always an either/or choice.
William Goddard, Founder of IT Chronicles, writes that flexibility and openness to both channels can help brands get an edge. Figure out what will work best for your current marketing strategy, then proceed from there.