The series is broken up into the following chapters:
- Part 1: Products -- What Can I Sell, What Should I Sell?
- Part 2: Pricing -- What's the Best Pricing to Sell?
- Part 3: Promotion -- What are the Best Ways to Increase Awareness? Entice Purchase?
- Part 4: Placement -- Where Should I Be Selling?
- Part 5: Policies -- What are the Business Policy Best Practices I Should Employ?
- Part 6: Procedures -- How Can I Operate at Scale?
Almost all of our customers come to us with their hands so full of manual processes that they cannot even start to think about adding new listings, much less new sales channels. Once they have our solution in place, their attention immediately turns to growing their business: marketing activities, adding listings, and adding sales channels.
This article will explore sales channels: options and key considerations. This will include marketplaces as well as eCommerce platforms.
So. Many. Marketplaces.
If you have your own eCommerce website, then marketplaces are the next place to add as a sales channel. But with so many to choose from, and with each having its own learning curve, it’s natural to wonder which will be the best for your business.
And that’s the exact right question to ask: “Which marketplaces are best for driving sales in my business?”
There are several important factors to consider:
- Traffic (i.e. potential buyers, now and in the future)
- Buyer types
Let’s take a look first at the major players and how they stack up according to considerations that you need to monitor the most:
The clear behemoth in the group in terms of traffic and growth. The real concern with selling on Amazon is competing against Amazon’s own retail unit. Typical relationships where a retailer is selling the same product alongside Amazon lasts at most 18 months before that retailer is out-competed by Amazon.
Our recommendation: the sales potential on Amazon will remain great for the foreseeable future. The best way to win, and continue to win, on Amazon is to take the stance that Amazon will eventually creep into your category. So keep an eye on SKU performance and be prepared to switch out to other SKUs or other categories entirely.
The original “500 pound gorilla” amongst marketplaces, eBay’s growth has been largely flat in the last several years. That being said, there’s still a huge number of buyers and eBay is not going to compete with you -- and well-run B2C merchant are selling over 300% more than the typical eBay B2C merchant. Also nice: their final value fees on some categories are much lower than other marketplaces. However, to add a significant number of listings you must pay eBay up to $350/month regardless of sales volume.
Our recommendation: eBay continues to be a stalwart source of meaningful sales -- but you must be prepared to adhere to their seller standards (e.g. uploading ship tracking data for at least 95% of your orders) and recommended best practices (e.g. include GTINs -- see our series of best practices).
Still a relatively new marketplace, Walmart is 15% of Amazon’s size. However, they clearly have Amazon in their sights and, if they can execute, are probably the best positioned to give Amazon some true competition. And competition in marketplaces is a great thing as that means they will compete to get well-performing sellers with great inventory. The challenge for early adopters, then, is that you will be occasionally subjected to the marketplace’s “immaturity” such as: an inability to predict volume, categories being suddenly swamped with new inventory, changing standards, and the like.
Our recommendation: because Walmart is gunning for Amazon -- and has the resources to do it -- now is a good time to get started so your operations can evolve as Walmart scales. As well, while there are relatively few merchants competing for the buyers’ attention, you will have a definite near-term sales advantage.
Though owned by Walmart, Jet still operates largely independently from Walmart.com. The advantages are similar to Walmart’s marketplace in that it’s a new marketplace so early adopters can take advantage over those merchants that are waiting. Also, Jet’s buying experience and marketing caters more to the “millennials” so you are likely going to reach a different set of buyers than other marketplaces. The major downside to merchants is that you can’t just “dip your toe into the water” and try out Jet as there is no way to manually create listings or manage orders -- you just use a 3rd-party tool.
Our recommendation: if you are already operating at scale, then our recommendation is the same for Jet as it is for Walmart: get in now despite the likely bumps in the road as Jet evolves and matures.
So what of the other marketplaces such as Wish and Jane? The primary question remains the same: “Will these marketplaces drive sales in my business?”
Take a look at their focus, traffic, and marketing: will the marketplace align with your sales goals? For instance, Reverb is likely a great place if you are dealing in musical instruments -- that much is obvious. But what about places like Jane?
At first blush, a fashion retailer might think it an easy extension to their sales strategy. But you really need to dig deeper to see that their target audience is likely mothers in their 20s and 30s seeking a true and unique deal. If you can get a deal that suits this audience, then go for it! Jane’s merchandisers will gladly work with you to find the right mix and pricing to make it worth everyone’s while.
It’s not uncommon for merchants new to the CommerceESB platform to have most of their sales come from one channel. And further, it’s not uncommon that the channel is a marketplace like eBay or Amazon. In fact, many do not have their own eCommerce site -- or it may just be a token attempt to have some sort of presence.
So for those merchants, or those that are looking to ramp up their direct sales, picking the right platform becomes paramount as you will want your eCommerce platform to grow as your business grows.
For merchants looking to operate at scale, one way to look at which platform to invest in is by flexibility, operational complexity, and, of course, cost. We’ll take a look at a few of the major players and see how they stack up:
- Shopify & BigCommerce: both of these solutions are great for early-stage retailers who lack IT resources and want to get a professional eCommerce site up-and-running with little-to-no effort. The tradeoff is in flexibility and cost: as you grow, your needs are likely to get very sophisticated relative to your category. For instance, “fitment” (the ability to know if an item fits your car) becomes crucial to a car-parts retailer. These platforms may eventually have what you need natively or via 3rd-party plugin, but until then you have to create something custom or do without. Also, because their business model is tuned to a small business (often taking a cut of every sale), their business model doesn’t scale as your sales grow -- it just gets too expensive.
- Magento (Community Edition): on the flip-side of Shopify-like solutions is Magento, and specifically it’s open-source community edition (CE). Until the emergence of Shopify/BigCommerce and Woo Commerce (below), it was the defacto solution for pretty much any retailer. Why? Because it’s free! The problem, of course, is that whereas the software is free the IT resources needed to setup, configure, and maintain the solution are not -- and Magento can take a lot of IT resources. It is, however, supported by a huge universe of 3rd-party plugins and is extremely flexible via customization -- meaning it can serve pretty much anybody’s needs.
- WooCommerce: sitting between the Shopify/BigCommerce and Magento CE worlds is Woo Commerce. Like Magento, it’s essentially free -- you just need to pay a hosting provider. However, and better yet, it’s very similar to Shopify/BigCommerce in that it requires very little IT knowledge to setup and configure. A great middle ground!
What do we recommend? We like the functionality of Woo Commerce, the ease of setting it up, and the business model (no fees!). Find a good hosting provider, and they’ll take the rest of the complexity on their shoulders -- a win for everybody!