Sell on Amazon, Compete with Amazon or Both? What E-Commerce Strategy is Right for You.

March 10, 2017

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As the e-commerce world continues to grow, online giants like Amazon continue to add value to customers by making shopping for a wide variety of products easier than ever and at a lower cost. Not to mention that the marketplace giant has made fast, free shipping a commodity and has gained customer trust through friendly return policies.

As a consumer, what Amazon and other online marketplaces offer is great, but as an e-commerce company striving to get attention of the same consumers, your job is more challenging than ever. So the question arises: you’re not Amazon, so how do you compete with them?

This question is the start to many others like Do I sell products on my own site? Do I sell products through Amazon or another online marketplace? Do I sell products on both my own site and an online marketplace and if so, how do I make it work? Let’s take a look at the different strategies, the pros and cons and tips for being successful.

1. Selling Only on Amazon or Other Online Marketplaces

Selling on Amazon or another major online marketplace is tempting for most companies for a very simple reason: volume! The traffic to Amazon’s marketplace is an e-commerce company’s dream. High traffic, lower marketing costs and great back-end infrastructure are some of the most common reasons companies decide to use one or more online marketplace options. Selling through Amazon and others however come with certain downsides as well that you should consider before deciding on an e-commerce selling strategy.

These online marketplaces want the focus to be on the products, not the sellers. After all, they want the consumer to build a relationship with them, so they continue shopping on their site, not yours. In order to keep the focus on their relationship, many offer limited control when it comes to brand presence, communicating with customers and strict guidelines on what items you can sell and not sell.

In addition to limited control, low margins and fees are a major setback to selling through the marketplace behemoths. Most of the marketplaces have fee structures that take a percentage on every sale and charge listing fees, with amount varying category to category. For companies who have low-margin products, selling through these channels may not be viable. Even if it is viable, selling on these online marketplaces means smaller margins, so it is important to do your research to ensure that the revenue from the order volume gained through these marketplaces is greater than the cost of selling on these sites.  

2. Selling on Your Site & Amazon: How to Leverage Amazon as a Way to Establish Credibility & Visibility

One option for e-commerce companies who want to capitalize on the Amazon traffic to help establish credibility and visibility for their brand is to only offer a select few products on the platform. Companies can increase brand exposure by reaching shoppers who may have not found them directly. The hope is that this increase in brand recognition will drive customers back to your site next time to make the purchase. By only offering select products, you also protect your brand from cannibalization. Choose items with greater margins to ensure you won’t lose money and are able to set a competitive price to compete with other sellers on the site.

3. Selling Through Your Company’s Channels

Selling solely through your own webstore will yield greater margins, provide full control of the brand’s reputation and customer experience as well as increase loyalty since you are the one building the relationship with the customer. If you decide to go this route, here are some tips to help you compete with Amazon and the other online marketplaces.

Tip #1: Focus on Experience & Customer Service

One of the biggest benefits of selling through your company’s channel is that you have complete control over the entire customer experience. Creating a visually appealing site that is easy to use and has a robust product search through is vital. Also, keep in mind site speed and checkout speed. According to Kissmetrics, 52% of online shoppers state that quick page loading is important to their site loyalty. Also, 1 second of delay (or 3 seconds of waiting) decreases customer satisfaction by about 16% and 40% of online shoppers abandon a website if it takes more than 3 seconds to load. In other words, if your company is doing $100,000 in sales per day, a 1 second page delay could potentially cost you $2.5 million in lost sales every year.

Focusing on customer service is another key to competing with the marketplace giants. Make it easy for customers to get in touch with you by providing multiple channels of contact including chat, contact center and email. Some people still want that person-to-person contact that they cannot get with the major online marketplaces which will provide you a competitive edge.

Being competitive price wise is also important to keep in mind. For more information on setting competitive prices while still making a profit, check out this article by Digital Commerce 360.

Tip #2: Create Confidence in Your Product & Brand

Amazon and other giant internet retailer’s customer friendly return policies have put consumers’ minds at ease when online shopping. It is important to do the same when creating your return policy to help create confidence in your brand and products. Another great way to build trust is customer reviews. New customers want to validate their purchases, so seeing happy customers gushing over your products help justify their purchase and provide an enjoyable shopping experience. Encourage customers to go online and review their experience by sending follow-up emails after purchases or adding a custom insert in their package.

Tip #3: Partner with a Third Party Logistics Company

Let’s face it – consumers consider free and fast shipping the norm rather than a value add these days. Partnering with the right order fulfillment partner can help you reduce shipping costs and therefore enable you to provide customers more attractive shipping options at a lower cost.

A good fulfillment center partner will have negotiated rates with all major carriers and will pass the savings on to you. Your 3PL provider should be an expert in product distribution and can provide you recommendations on the best packaging and shipping options for your business that are cost effective. Choosing the right partner will provide peace of mind that your customers receive the right provide, at the right time and in good condition.

Choosing to sell solely through your own channel may not give you the traffic advantage, but with the right marketing strategy and implementing the tips above, it could yield higher revenue and a larger, loyal customer base for future success.

If you are looking to outsource your order fulfillment, contact us today. We can help you lower your shipping costs and provide an exceptional order experience at your customer's doorstep every time. 

Topics: 3pl provider, 3PL, Fulfillment Companies, Fulfillment Services, order fulfillment, amazon, ecommerce order fulfillment, ecommerce fulfillment, Fulfillment Center, 3pl company, 3rd party logistics, third party logistics provider, direct fulfillment

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