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.
While the expansion of free returns on Amazon will undoubtedly lead to an increase in returns volume, the retailer has amassed unmatched logistics prowess. Instead of being overwhelmed by returns, Amazon further elevates the customer experience. But at what cost to the retailer who gained the sale and helped to grow not only their business but that of the mighty Amazon?
Clearly this is good news for Amazon — and consumers. Because of its scale and sophistication, Amazon can handle a high volume of returns. But for other retailers trying to keep up, it’s not a simple matter of flipping a free returns switch: Retailers need to weigh the benefit of an enhanced customer experience with the cost of managing free returns.
I won't go into detail too much as the article in the link below 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 other trade offs 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'?
While free returns create opportunities for retailers, they can rack up huge costs if not managed well on the back-end. Surprisingly, many retailers don’t have systems and processes to swiftly and efficiently manage and resell returned goods. Items are often piled up in warehouses or back rooms at stores, depreciating in value. Then, items are often shipped around to wholesalers and liquidators trying to find a buyer.