Online Retail Today

Gold Mine or Minefield? How Manufacturers Can Succeed With Online Marketplaces

in-store fulfillment
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With the holidays approaching, online marketplaces have a potential for unprecedented reach and revenue through eCommerce. Manufacturers building direct-to-consumer channels online may be tempted to try selling through third-party marketplaces to gain visibility with new audiences. But with existing retail partnerships hanging in the balance, careful navigation of marketplace options is a must.

Third-party marketplaces, where individual merchants sell goods through another brand’s platform, have never been more popular due to their breadth of selection and perceived competitive pricing. Marketplace sales account for half of all eCommerce transactions, according to research from Internet Retailer. Why wouldn’t brand manufacturers want a bigger piece of the eCommerce pie?

Marketplaces offer sellers the opportunity to connect with new buyers who haven’t yet found their way to brands’ standalone eCommerce sites. But the equation is tricky. In addition to losing a cut of sales to marketplace operators, brand manufacturers risk undermining existing retailer partnerships; indeed, protecting dealer networks was the top concern of brand manufacturers surveyed about marketplaces by the CMO Council. Respondents also expressed hesitation about customer data ownership and privacy and knock-off or counterfeit items circulating on marketplaces. 

To navigate these potential hazards and realize the benefits of marketplace exposure, brand manufacturers should:

 

Think eBay, not Amazon. Amazon.com may offer the largest third-party marketplace around, but it can be difficult to win the “buy” box without dedicating significant resources to product feed management and customer service. And Amazon is strict about owning the customer relationship, negating one reason manufacturers begin selling direct-to-consumer in the first place. Very small brands without standalone eCommerce sites or retail networks may find Amazon gives them a much-needed boost; other manufacturers are probably better off opting for eBay, which hosts listings for dozens of brands and empowers sellers to connect with customers directly.

Explore niche marketplaces. With 75 marketplaces generating 90% of marketplace revenue, according to Internet Retailer, brands have plenty of options beyond Amazon  and Walmart. The variety of marketplaces available not only enables manufacturers to connect with niche category audiences or new markets abroad; listings on smaller platforms can be less expensive and more effective due to a relative lack of competing sellers. And retail partners are less likely to object to marketplaces for focused segments they don’t serve.

Limit listings to unique items. To ensure marketplace items don’t compete with retail partner offerings, and to limit the potential for counterfeiting, brand manufacturers can create exclusive offerings such as gift sets or one-of-a-kind SKUs, or feature “long-tail” items with niche appeal to the marketplace audience.  Such curated selections can not only reduce channel conflict, but can help manufacturers avoid duplicate product page content from proliferating across the Web, which can negatively impact search engine optimization.

Learn how Kibo’s industry-leading commerce solution can help manufacturers sell direct while supporting retail partners, like Boscov’s. 

     When it came time to build out the technical infrastructure of the BOPIS program, the retailer partnered with omnichannel              commerce provider Kibo to create a scalable platform that integrated with its in-house e-Commerce solution and the                        handheld inventory devices used by in-store associates.

     …Having successfully rolled out its in-store pickup program, the Boscov’s team is now looking to expand its use of the Kibo              platform to manage ship-to-home order fulfillment as well.

Let us know: do you sell on third-party marketplaces? Why or why not? Partner with Kibo to make it easier.

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