While consulting local retailers about the possibilities and practicalities of global sales via e-commerce and online marketplaces, such as Amazon and eBay, I am amazed at the percentage of retailers who refuse (at least up front) to do business with said online marketplaces. Local Mom and Pop style retailers have a real chip on their shoulders when it comes to online marketplaces, blaming them for a decline in local sales due to convenience and lower prices.
The question is can local retailers benefit from selling their products on Amazon and eBay? And, are there practical marketplace strategies local retailers can implement that takes advantage of marketplace shoppers for the retailers own good?
The answer to both questions is YES! Here are some real world strategies and expamles every local retailer should consider when looking to build a relationship with online marketplaces.
Sell Your Merchandise at Your Same In-Store Pricing
The one singular complaint from local retailers against Amazon and eBay is that there is no way to compete with them on pricing. Every retailer I talk to believes they would have to lower their prices in order to get any sales from online marketplaces.
If two of the same item were listed on Amazon at different prices, why would anyone buy the higher priced item? All retailers know there is more to sales than just price. There is branding, customer service, product selection, and many other factors that go into running a profitable retail outlet. It is no different on Amazon.
Take Green Canyon Outfitters on Amazon as an example. They list their products at “normal” price levels. They do not discount their prices to compete with other Amazon sellers.
Looking at their listings, they are usually the MOST expensive seller of a product. Why does that matter? Here is a screenshot of their current feedback.
According to their stats, they have sold at least 8,908 items in the past year. Even though they have much higher prices than other sellers on nearly all the products they sell, they still have at least 8,908 transactions in the past year.
The average order value on Amazon in June of 2012 was $47.31. Multiply that average order value by the feedback, and Green Canyon could have seen sales over $400,000 for the past year. Looking at my clients, I see the average order value being closer to $30. That still gives Green Canyon $267,240 in sales for the past year.
Why is this important? Remember, Green Canyon is selling their products at the same price you would see in any local retail store. They aren’t competing on price. This means their margins are the same as if the buyer walked into the store and bought the product, making Amazon a very profitable sales channel for the retailer.
As a local retailer, you can settle for selling products to your local Geo, or you can tap into the 244 million shoppers within the Amazon marketplace. What business owner wouldn’t want their products in front of 244 million potential buyers?
“But if I sell on Amazon, they will steal my sales data and start selling my items cheaper and better than I can.” That is the second most common response I have from retailers who are against selling on marketplaces. However, Amazon already knows your sales data. There are hundreds of people already selling the same products you refuse to sell. They don’t need your data — they already have it.
You do NOT have to compete on price. List your merchandise on Amazon for the same in-store price and see where the cards fall.
Another great way to use Amazon is to focus on branding. It has been pointed out that Amazon has 244 million shoppers. What better place to build your brand, than an active marketplace full of rabid buyers?
This strategy is a bit on the odd side, but it works. I have set up local retailers with an e-commerce presence, then moved them over to marketplace sales. The marketplaces will usually drive more product conversions than the e-commerce website in the short-term.
What happens is the marketplace buyers will start Googling the seller name from whom they bought an item. This leads to increased branded traffic, repeat business, and more importantly, converts marketplace buyers into the retailer’s buyers via their e-commerce brand.
When you setup a marketplace account, set it up with your company name. If the domain name of your retail store is taken (maybe another local retailer in a different Geo already has it), register a domain that best fits your business.
On your Homepage make sure your title tag starts with your company name. Ex: Joe’s SuperMega Pit Stop | Collectible Racing Gear. (No affiliation. Not even sure if this is a real company.) Make sure the local citations are uniform with your company name.
On Marketplaces, you aren’t going to be able to email the customer from your domain email. You will have to use the marketplace exchange. But, the marketplace exchange will display your Company Name in all email communications:
Notice Appliances Connection, the Amazon seller, has their company’s brand name in two places in the header of the email. The more sales that come from online marketplaces, the more people who engage with your actual retail brand.
Using Appliances Connection as a brief case study, I purchased a couch from them on Amazon two weeks ago. In a month or two when I need some more furniture, I am going to remember my purchase, but not the company that sold me the couch. I am then going to go back to my email to try to jog my memory. When I do, Appliance Connection is going to be front and center. The communication from Amazon prominently features the Seller’s brand.
I am then going to Google Appliance Connection, and this is the search result for their branded search:
Appliances Connection has a paid search presence, organic presence and a local presence. They have a perfect omni-channel shopping and branding experience. Since they have done their job monetizing their brand’s e-commerce business, I am now going to go to their site and buy direct from them. I will then become their customer, they will not have to pay a 12%-15% commission, and they can charge higher prices.
Branding on Amazon Without Actually Selling?
Here is a very creative example of branding. Marketplaces usually charge a 12-15% fee on items sold. Even Ebay/Paypal fees average around the 15% mark for my customers. Some items have very high sales prices, so the 12-15% fee is too high. Take forklifts for example. They can be quite expensive.
What do you notice about this Amazon listing?
It isn’t available. What is available is the brand name “Bolton Tools”. Since it is unavailable, people will Google Bolton Tools Forklifts. Chances are, this is one of the few places where they will encounter this brand of forklift.
Increase Buying Power
Every local retailer reading this can answer the following question. “How are Wal-Mart and other Big Box Stores able to sell items so cheap?” They can sell cheap because they can buy wholesale cheaper than you can. They can do this because they buy in larger quantities.
I have a client who uses Amazon and eBay sales to increase buying power. This local retailer DOES compete on price and on very slim, sometimes negative margins on the marketplaces. The idea behind this strategy is to simply reduce the cost of wholesale goods by buying larger quantities of the items they sell.
Most local retailers who are worried about competing with Amazon on price can’t even compete with the big box stores in their local area. This client figured it out. His marketplace sales, even though very low margins, allow him to buy his goods at the same low wholesale prices as the big box stores in his area. He can buy more because he has the volume to justify this, thanks to Amazon sales.
His margins are slim online, but he makes up for it in his local area. He has the ability to match the prices of large national retailers and still enjoy a high in-store margin on all his sales. In the end, his margins balance out.
Embracing Amazon & Online Marketplaces
To any retailers reading this who are against selling on Amazon and eBay, get over it. The only parties that are being hurt by not selling in online marketplaces are the parties that refuse to sell there. It is possible to create a marketplace strategy that compliments your sales goals and local brand. There are literally hundreds of millions of people nationwide (and worldwide) waiting for you to list your products so they can buy them.
NOTE: The author is not affiliated with Green Canyon Outfitters or Appliances Connection.