Marketplaces steal your profit. If you are selling on Amazon, Ebay, Rakuten or similar you are giving away profit that you could be keeping for your company. These marketplaces pit products against each other to push prices down, and increase volumes, with no regard for your bottom line. That is because they do not have to worry about your costs, if you are making a loss on each unit Amazon still makes a profit. They take a percentage of sales price, not of gross profit. So the question here is: should you sell your products on marketplaces?
Should you sell your products on Marketplaces, and How Should you Do it?
Marketplaces, give you access to customers. Gaining new customers is difficult and expensive. Although online marketing is a fantastic way of acquiring new customers, why would you reduce your sales potential by limiting your reach?
You should be on as many relevant marketplaces as possible, however, you should always be trying to push people onto your own website. This way you can take home 100% of sales revenue, without having to hand over your revenue to marketplaces.
Differentiate Yourself to Successfully Competing on Marketplaces
In every sense of the word, being different is the key to success online. This encompasses a whole myriad of areas; however, we will explore two areas relevant to marketplaces now, both based around product offering.
If your product is different from your competition, this means that you protect your business from having to compete only on price. It is commonly accepted that there are two main ways in which companies can gain a competitive advantage. The first is to compete on price (which doesn’t work online) and the second is to be different (a lesson from a porcini mushroom). In summary, competing on price internationally is doomed to fail. There are just too many companies who can sell products cheaper than you can. So, make sure you are different.
Make your Site Different From your E-marketplace Presence
The second area is that your products on your website must provide something more than what you offer via the marketplaces. As I mentioned, the key to success online is to drive your customers to purchase on your website. If you can develop products that act like a funnel, take customers from purchasing a high volume of low margin products on e-marketplaces, to purchasing a secondary product on your website at a much higher margin.
Not everyone will buy this second product, but you will make more money on it! These customers have a much lower acquisition cost than customers that have never purchased before. However, if you do not give them a product exclusive to your website, you will not be able to get them to shop from your website.
Consider for a minute, high end designer clothes companies. You will often find perfume, among other lower value items, on Amazon. You will never find the top of their line. This is because they want you to buy this directly from them. Keep this idea in mind when you are selling products on e-marketplaces. Make sure that you are making every effort to push people to your site.
If you’re wondering either or not you should sell your products on marketplaces. E-marketplaces provide a “ready-made” option. If there is already desire for the type of product that you sell, then marketplaces offer an excellent gateway to selling online.
And what about you, what are your best tips to sell on marketplaces? Tell us below or tweet us!
Find out more about how e-marketplaces fit into international e-commerce strategy.