After a period of positively insane growth in which it has skyrocketed to, by some estimates, close to half of all the online sales in the country, Amazon is now facing a nearly equally as massive amount of criticism, business disruptions and reversals of fortune.
One of the reasons the physical 'Shopping Mall' was seen as a great place to be alongside the retail High Street is because it leveraged the power of the brand collective and was/is a 'social experience' e.g. you might want to go and shop for certain items but will get drawn into other stores because of their physical presence, along with the tempting offers you never knew about until you made the trip with friends or family.
The so called 'Christmas Market's are a really great modern day example of this behaviour, especially during the festive period.
Then came the internet, and with it the promise of eCommerce which could level the playing field for big and small retailers alike.
If your internet footprint is miniscule in comparison to some of those big name retailers, how on earth could you ever hope to grow and compete?
All sizeable online 'Marketplaces' have been a must for the smaller guy or girl to gain access to much bigger numbers of customers than they could garner on their own, so it's a logical assumption that the mighty 'Amazon, eBay' and others are an attractive place to get your product/service in front of millions of people that will spend, spend, spend and help to grow your business.
In the article in the link below from 'Forbes' they highlight how the global sports brand that is 'Nike' has not only decided to part company with the retail distribution base that helped grow that global empire, they've now decided that 'Amazon' is to also be excluded from selling their product, instead they are said to be investing in the rise of similar marketplaces from China.
I won't go into detail too much as the article summarises the issue in a logical view, however it's worthwhile considering that 'Marketplaces' are indeed a great place to grow your revenues, but at what cost?
Here's some of the trade off that you may or may not be aware of;
- You will pay a regular fee to list on the platforms.
- You will pay for your product listing via a commission, this can be 10% - 15% of the sale - great, I only pay when I make a 'Sale'.
- That customer belongs to the 'Marketplace' not you - so how do you create brand loyalty with your company?
- You don't have the ability to place any 'promotional' literature in any product parcels you send out - because this is an 'Amazon' customer, not yours.
- You cannot make any future direct contact with the customer, even though you may have delivered the item directly.
- There is a very strict criteria for operating on these 'Marketplaces' and if you don't adhere to them you will suddenly find your product/brand relegated to a page where no-one can find them - depending on the size of your revenues this could close you down - within days.
- When it goes wrong you don't have a 'personal account manager' looking after you - unless your a major global trading brand that is
- There is very little brand control by 'Marketplaces' for counterfeit goods - you are no longer in control of your brand reputation.
All in all, there are many pro's and con's to being on a Marketplace, but if your entire business revenues are reliant on a third party then you're business is operating in extremely turbulent waters.
Maybe it's time to take a look at 'Social Commerce' instead of 'Marketplaces' - with 3.7bn people on various social platforms around the globe, shouldn't you be thinking of ways to go cold turkey from 'Amazon'?
More than half of Amazon’s retail business is now done on its Marketplace model, by other companies using the e-commerce giant as a conduit to the consumer. Amazon, thank you very much, will still take its cut of any Nike sales on its site. And the consumer, by the way, won’t even notice the difference—or care.