July 27th was a big day in the history of eCommerce when the US House Antitrust Committee called the big guns from Amazon, Google and Facebook testify.
Jeff Bezos, the pioneer of eCommerce in this era, was seen sharing that though Amazon has policies against using seller-specific data to support their private label business, but he can’t guarantee that the policies have never been violated.
All that glitters is not always gold. Though marketplaces like Amazon might give an initial boost, they are not exactly your partners in growth.
- Not suitable for long-term growth.
- Market place model is not profitable for individual sellers.
- Non-sustainable Commission Structure.
- Pricing wars drive down profits.
Marketplace Listing: Not Suitable for Long-term Growth
Ecommerce marketplaces appeared like a boon for millions of small business owners when they launched for the first time.
The prospect of opening your business to the online world without much investment appeared lucrative.
But over the years, most business owners have realized the pitfalls of listing their products on a marketplace. Some of the negatives include:
A marketplace is designed to profit the holding company and not the sellers, in the long run. They need maximum number of sellers on the platform to showcase variety. Naturally, this means the competition increases with each passing day.
As more sellers come on the platform, the sales figure goes down, even for the highest grossing products. The nature of the model doesn’t allow any individual seller to grow after a point.
Non-sustainable Commission Structure
Everyone who has been listed on a marketplace understands that it leads to the undercutting of profits. This is because every marketplace charges a hefty commission on each sale that you make on the platform.
Sometimes, the commission percentage forces a seller/business owner to inflate prices which makes a product hard to sell.
Marketplaces thrive on their ability to offer the lowest prices for every product. So, owing to the pricing wars online, your sales, both online and offline takes a hit.
As more sellers crowd the marketplace, you are bound to play a tight game or be kicked out.
Competition by Self-Owned Private Label
It is now a well-known fact that marketplaces launch private labels or sub-brands. Jeff Bezos said that he can’t guarantee that the policy of using seller data to nurture private labels.
So, this means that marketplaces are using data from your success to launch an unfair competition.
Personalization: The Key to Growth in eCommerce
If you have been in eCommerce for a while, you know how much shoppers love personalization.
80% of shoppers are more likely to buy from a brand offering a personalized experience. Personalization influences shopping decisions and lead to repeat sales too.
But do marketplaces care about personalization? Not really. A marketplace platform, by design, is meant to offer choices, not specifically personalized ones.
When it comes to product presentation, a marketplace offers limited scope.
You can find out more about personalization and what apps can help you at ShopThemeDetector.
How Your Website Gives You an Edge Over Marketplaces?
Presentation is the key to launching and marketing a product in the modern world. So, clearly, if you are new to the market, you will be lost in the sea of millions of similar sellers on a marketplace.
Instead, launching your platform gives you an edge over competitors and offers you several advantages:
Personalized Shopping Experience
Having your platform gives you the power to analyze consumer behavior online. How they spent time on a web page, what products they added to cart, what they bought recently and a lot more.
All the data you acquire will help you in creating a personalized shopping experience that your customers will appreciate.
Niche Development & Nurturing
When you launch your platform, you can control the categories you want to be seen for. You can create a niche store easily online and target specific customers instead of having standard product listing on a generalized marketplace.
You better know that specialization is the key to efficiency and growth. You can promise an experience to your prospective buyers instead of just selling them a product.
Better Control over Product, Pricing & Promotion
When you own it, you control it. From product to price to promotion channels, your website would not limit you. Instead, it will support your endeavors.
Marketplaces limit the way how you can showcase your products. There are guidelines for product placements, images, descriptions, etc. But with your store, you can make the rules for how you want the product to be presented.