Advantec

The phrase ‘multi-channel’ ecommerce refers to selling your products not only on your own website but on multiple other sites too – like Amazon, eBay and numerous other emerging or niche platforms like Etsy, Asos – and even Facebook.

Here, our Director Andrew Brittain offers some advice to retailers considering selling their products across multiple online marketplaces…

More and more websites are following the Amazon model of opening up their sites as ‘marketplaces’ for other retailers to sell on. As a retailer considering multi-channel ecommerce, you’ll discover there are pros and cons but, in general, our experience working with many clients selling across multiple platforms is that it’s definitely a worthwhile and profitable activity – as long as it’s managed efficiently.

Firstly, let’s consider some of the marketplaces available to ecommerce retailers…

Amazon: Obviously top of any list of ecommerce marketplaces, Amazon has grown from an online bookstore to the world’s largest ecommerce business, through which it’s now possible to buy virtually any product imaginable.

Amazon cemented its dominance when it opened up its platforms to other retailers worldwide, enabling it to become the go-to destination for online shopping in virtually any category.

As well as being able to sell your products on Amazon, retailers can also choose to use Amazon’s own fulfilment services, meaning you can run an ecommerce business with all your products stored in Amazon’s warehouses, which are picked and dispatched by Amazon themselves.

eBay: The online auction site has also gradually morphed from a platform that connected sellers and buyers of used goods to more of a traditional ecommerce destination. Of course, the auction element still exists but the majority of products sold on eBay now are actually brand new items sold by retailers large and small.

Note the transformation in the last year or so in eBay’s user interface, which now features a shopping basket / checkout, which facilitates the purchase of multiple products in one transaction, rather than users conducting separate transactions with each seller for each item they buy. This reflects the growing trend for eBay being used as a commercial retail platform more than just a personal auction site.

Google Shopping: I hesitated to include Google Shopping here, as strictly speaking it’s more of an advertising platform than an online shopping experience, but there are similarities between Google’s platform and the other ecommerce marketplaces.

Customers are increasingly able to browse, navigate and refine their search for products on Google’s shopping search itself – before ultimately being directed through to the retailer’s own website to complete a purchase. So not strictly ‘multi channel’ – as the selling channel is still your own site – but still an increasingly popular destination in consumers’ buying processes.

Niche and brand sites: Amazon and eBay are clearly the big players, but other names like Etsy and Not on the High Street are popular with retailers selling unique or completely one-off products. Etsy and Not on the High Street are aimed at creative / craft businesses and their very appeal is that they are generally populated by small / sole-trader businesses so are not necessarily relevant to higher volume ecommerce retailers.

Some other traditional ecommerce retailers are starting to open up their platforms to other retailers. One notable example is fashion retailer Asos, with their ‘Asos Marketplace’ site, aimed at independent fashion boutiques. Often the criteria for being accepted as a retailer on these sites can be quite demanding, as the retailers are keen to ensure the businesses and products selling on their sites are closely aligned to their own brand values and target audiences.

Technicalities: Product feeds and order management

Perhaps the biggest factor retailers need to consider when selling on other marketplaces is how their products and stock will be added across multiple sites. Handling product data and inventory can often be enough of a challenge on your own site, let alone replicating all that stock data across multiple platforms.

The solution to this is to integrate your own site with the marketplace channels so that stock and product data exchange is automated.

All the major marketplace sites have ‘APIs’ – interfaces which allow websites to transmit data automatically between themselves. There are also numerous modules or plugins to ecommerce platforms (like Magento, Woocommerce, Shopify, etc) which will integrate your ecommerce site with the marketplace sites.

If you’re planning on conducting even a remotely serious level of business on the marketplaces, integration and automation is essential – the manual labour involved in uploading product data and keeping control of stock quantities and so on is far too onerous to be done manually.

You should treat your own website (or indeed your ERP system if you have one) as the ‘master’ product database which then feeds your product data automatically to one or all of the marketplace sites. This data exchange can be two-way, with order and customer data from sites like Amazon and eBay being fed back in to your own website’s database, ensuring all the separate channels can be administrated from one single location – typically your own website’s CMS.

The costs

Of course, selling your products on marketplace sites comes at a cost – and this further erosion of margin is what puts some retailers off.

Typically you’ll pay some form of registration / subscription fee – and then a percentage commission on each sale. For example, at the time of writing, Amazon charges small retailers a £25 per-month flat fee and then a percentage on each transaction ranging from 7% to 15% dependent on the category. This fee is charged on the total sale value – including shipping and tax.

Losing up to 15% from what are often very thin margins anyway can be difficult to swallow, but it should really be seen as advertising spend. You’ll typically be investing in other forms of marketing to drive sales from your website direct (e.g. Adwords or SEO campaigns). The marketplaces take care of the traffic generation and conversion for you so the fee you pay to them is really to be seen as an advertising media spend.

The pros and cons

Aside from the cost, there are a couple of other minor drawbacks to multi-channel ecommerce, but none which, in our opinion, should prevent you from doing it.

The administration headaches can sometimes be a bit off-putting. Ecommerce retailers’ resources are often stretched and the idea of having to deal with more admin – be it product data admin, customer feedback, returns, etc from multiple platforms is often not one to fill retailers with joy. However, as long as your multi-channel marketplaces strategy is well planned and properly integrated technically, as described above, the adverse effects can be minimised.

Another downside is the lack of brand loyalty you’ll get from customers buying from you on a marketplace platform. You have an opportunity to build relationships (albeit often a digital one) with customers who buy from your own website – increasing the chance of you being able to nurture valuable repeat custom from them. Someone who buys your product from Amazon has zero relationship or loyalty to you – their loyalty and relationship is with Amazon and you’re a relatively anonymous part of the equation to them.

Of course, this can be overcome with a proper marketing campaign – and you will still have the customer’s details at the end of the transaction to use for marketing to entice them back to you direct in future.

Another issue can be with reviews. Customer reviews on your own website are generally under your control but the reviews left for you and your products on marketplace sites are not. Obviously any reputable retailer should be getting a vast majority of good reviews anyway and the positive effects of these far outweigh the negative effects of (ideally just a few) bad reviews.

So there may be a few difficulties and hurdles to overcome with multi-channel ecommerce – but there’s one overwhelming advantage that dwarfs all these, which is: you’ll make more money!

There are some research studies (for example by BigCommerce) stating figures suggesting retailers selling on multiple channels are generating two or three times the revenue of those which don’t.

Anecdotally, having worked with many clients at Advantec over the years on their marketplaces strategy, it’s extremely clear that they can drive serious amounts of revenue to supplement that of your own site. We have clients who see revenue from marketplace sites like Amazon contributing anything from half of what their own sites generate, to some who are seeing two to three times more revenue coming from marketplaces than from their own sites.

However successful your own online retail presence is, the mathematical fact is that more people are shopping on Amazon or eBay than on your site – and if you’re not part of the action on those marketplaces, there are plenty of your competitors who are. Once you overcome the technical, financial and administrative hurdles of getting in on the action (something incidentally we at Advantec are particularly adept at), multi-channel marketplace ecommerce should form a major proportion of your digital revenues.

If you’d like help with this, or would just like some informal advice, feel free to get in touch!

 

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