Why retailers need to diversify beyond online marketplaces

Success in today’s online world requires retailers to apply a range of strategies in order to stand out from the crowd, to delight customers and to build value into their business — especially with Amazon on the scene.

For all the benefits of joining the Amazon marketplace — and there are significant benefits — retailers limiting themselves to only one or two online marketplaces are missing the opportunity to build brand equity and loyalty in their own business, potentially restricting the value of their business and their options in terms of an exit plan or future sale of the business.

Many sellers believe conducting eCommerce through Amazon or eBay alone equates to running a viable online retail enterprise, but limiting transactions to marketplaces presents nothing more than an avenue for cashflow, and isn’t ownership of a business in the true sense.

Marketplace selling – the benefits

Amazon’s renowned ethos is to deliver a better customer experience, which it makes clear in its mission statement. In terms of pleasing the customer, you could certainly align with worse. Joining the Amazon ecosystem also offers massive exposure, with a listing on Amazon putting your products in front of over 300 million potential customers according to the company. In terms of reach, those numbers are hard to beat. However, you’ll pay for the privilege — a flat monthly fee (about $AU 50), plus anything between 6-15 per cent commission on each sale, depending on the product category.

Stop viewing it as a fight to the death

So much discussion around Amazon’s impending arrival flagged the expected negative impact on local sellers. The truth is that online marketplaces do offer huge opportunity, but they are only part of the puzzle for those wanting to build a viable business.

How smart retailers will succeed

Amazon’s Australian entry, its size and the reach it enjoys will ultimately command change. But, online retailers should be viewing Amazon as one sales channel and marketplace of many available. Evaluating other marketplaces such as Google Shopping, Trade Me, Catch, My Deal, Etsy, Groupon is strategically wise.

The consumer of 2018 will continue to be very savvy. They have price parity, content overload, and peer reviews at their fingertips. They want to shop where and when they feel like it. This may include a branded website, a bricks and mortar retail store, a market or a ‘showroom’ for online merchandise. They also want a seamless returns process. Good news is this doesn’t need to be complicated.

Managing a diversified channel requires a complete retail and wholesale management platform that integrates e-commerce, point of sale, inventory and fulfilment functionality into a single view. Neto has developed a reputation among online retailers and wholesalers for simplifying the process and integrating all routes to the customer. According to many Neto customers, the back-office efficiencies of an integrated platform deliver cost savings in the region of 70 per cent. They also improve revenues by 40 per cent year-on-year.

A scalable solution that allows retailers to maintain control over customers, choose sales channels (including marketplaces), set inventory levels for each and multiple price points, offers more than immediate savings. It presents a chance to delight customers, develop loyalty and lay the foundation for ongoing, scalable business success.

Jason Titman, Director and Chief Operating Officer, Neto

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