Connecting Products to Multiple Channels
As the e-commerce landscape continues to fragment into various experiences that involve different audiences and sales channels, the need to engage with consumers where they’re shopping — and help them feel connected to your brand — becomes more critical than ever. Marketplaces are rising as digital malls, with many curating experiences for their specific target audiences and specializing in particular categories. In addition, shoppers seek inspiration and peer recommendations through social media. Even in physical retail stores, consumers search for comparable pricing or products or reviews to help increase confidence in their purchase. If you’re not present where buyers are looking, you risk losing those critical connections that allow you to link to a more extensive network and build a more robust platform for your brand.
Engaging with D2C Channels
The Popularity of D2C
Many brands are entering the world of direct-to-consumer (D2C) sales for a variety of benefits, both financial and logistical. Beyond simply diversifying to reduce risks and increase resiliency, goals for brands going D2C include:
- Increased sales — Over 50% of consumers prefer purchasing from brands over retailers if given the opportunity, in part because brands are a more trusted source of product information.
- Larger margins — Eliminating an intermediary boosts revenue, as long as additional fulfillment, advertising and other operational costs don’t eliminate those margins.
- More customer data — Many retailers aren’t transparent with customer data that can indicate which products are selling, who is buying what and more. More interaction with your customers means more knowledge about what they like and how to market to them in the future.
- A broader assortment of products — Many retailers will not carry your entire line of products, so going direct gives you flexibility on product assortment, as well as pricing, branding and more.
Website or Webstore?
Almost every brand has a website to showcase its products. But not all brand websites are webstores, and making a website shoppable is not trivial. While it’s in the DNA of some brands, including digitally native vertical brands (DNVB), others see themselves more as manufacturers and may not invest in internal resources to manage a customer-facing e-commerce platform.
Selling D2C on a brand website has many advantages, though, if your organization can execute it. Many of the benefits we listed above are amplified in a webstore scenario, such as larger margins and no marketplace commission, unfiltered customer data (you even retain the email addresses to build your database) and a full assortment of products.
No matter which platform you decide to build on, turning a D2C website into a thriving new sales channel comes with two massive challenges:
- Integration. Ensuring your website works in sync with your overall structure from a perspective of product data, fulfillment and, crucially, inventory is vital. Unless you get integration right, the effort your website will require could outweigh the benefits.
- Marketing. A website doesn’t spontaneously generate traffic. In the next section, we will discuss how brands can drive traffic to their sales channels, including a brand website. Without an ambitious marketing strategy, though, it’s unlikely sales will surge.
Operating an underperforming webshop is almost as resource-consuming as running a successful one. If your brand cannot execute well on integration and marketing, then it may be to your advantage not to sell on your brand website. You can still work to transform visitors into consumers by funneling them to shoppable channels.
Selling Through Third-Party Marketplaces
Marketplaces made up 67% of global e-commerce sales in 2021, exceeding $3.2 trillion. Marketplaces offer a chance for brands to expand their global footprint and tap into the millions of active consumers searching for products.
Brands that successfully sell on marketplaces tend to follow three distinct phases: 1) launching successfully, 2) building a winning strategy and 3) defending their position.
Phase 1: Launch Successfully
The key to getting started with marketplaces is to bring compelling product information to purchase-ready consumers without causing channel conflict. This means addressing data feed requirements, resolving listing errors, registering your brand (where required) and more.
Phase 2: Build a Winning Strategy
Once data feeds have been mapped, and expansion strategies have begun, it’s time to put some advanced strategies in place — ones that will not only improve performance but help your brand maintain a competitive edge, too.
Phase 3: Defend Your Brand’s Winning Position
Achieving ongoing success on marketplaces requires persistent effort. And it’ll continue to increase in complexity with each expansion and additional channel. As a result, you’ll need to continually take steps to defend your position from competitors and protect profit margins, including advanced advertising, competitive benchmarking, ongoing repricing and winning the marketplace’s buy box at a high rate, where applicable.
For a more in-depth look at the essential strategies brands need to get the most out of marketplaces, check out our eBook, The Three Phases to a Winning Marketplace Strategy for Brands.
Winning on Amazon
Amazon is unique due to its sheer size and influence in the industry. It’s often the first location brands turn to when selling their products because it’s the first place consumers visit to buy products. According to a recent consumer survey we conducted in August 2021, Amazon is the first place 50% of shoppers in established Amazon markets (the United States, the United Kingdom, Germany and France) go to when they want to buy a product.
Seller Central vs. Vendor Central
Amazon is both a retailer and a marketplace. As a retailer, Amazon purchases inventory in bulk and resells it at a profit, via a wholesale model. And as a marketplace, Amazon lets sellers list items on its site and takes a commission on sales.
Both models coexist on Amazon. And for most consumers, the shopping experience is almost indistinguishable.
As a brand, though, choosing between the models makes a world of difference. Here is a summary of the main differences in responsibilities between the two (though there are exceptions).
The brand is responsible for:
- Fulfillment and logistics
The brand is responsible for:
- Advertising and promotions
- Shipping to Amazon
Historic brands with a culture of wholesale activity tend to favor Vendor Central. Conversely, DNVBs with habits of selling D2C often choose Seller Central. All options are on the table, though, and some brands leverage both models in parallel. One example would be selling most products through Vendor Central and using Seller Central for end-of-life, lower-margin products.
The Amazon Buy Box
Whether selling through Vendor Central or Seller Central, winning the Buy Box should be a key goal for your brand. Amazon groups all offers for a product on the same page. And the Buy Box is how it funnels clicks to the offer it deems most relevant.
You could think that when Amazon sells a product “in direct” (wholesale), it systematically claims the Buy Box for itself. But that is not always the case. If a seller comes up with a better price and has a good reputation, it could get the Buy Box and the lion’s share of sales that come with it.
Although Amazon doesn’t reveal exactly how it determines which sellers earn the Buy Box, you can employ some tried-and-true tactics to help you own this prized piece of real estate.
Working with Wholesale Channels
Adding retail channels to your online distribution can be a massive boost for your business. And for established manufacturers with a strong wholesale culture, retail usually makes up the bulk of online and offline sales.
Choices in Retail Partnerships
Large brands sometimes struggle to address all requests to distribute their products. Accepting too many retail requests bears the risk of increased intrabrand competition. It also could mean not having enough internal resources to guarantee each retailer gets the attention it requires. On the other hand, an exclusive distribution (where you have an exclusive distributor or retailer) may be too restrictive and inhibit your growth.
Mature brands often opt for a selective distribution. This is a system in which you identify the specific needs of your brand or products and select online retailers in line with your needs.
Drop Shipping: A Gateway to Retail Partnerships
For smaller brands or brands trying to enter a new market, having too many retailers may be the least of their problems.
Many retailers might push back on a less-proven brand and refuse to list its products due to storage and logistics concerns. And obviously, they may want assurances that whatever inventory they pay for upfront will sell. In that case, drop shipping your products for those retailers is a logical solution, provided you can fulfill the orders when you receive them.
Business-wise, drop shipping is an entirely different approach. It resembles traditional retailer sales in that the retailer negotiates a B2B price, sets the resale price and sells. But it’s a lot more like selling on marketplaces in that no B2B sale is made until a B2C conversion happens. And, of course, you are responsible for shipping each product.
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ChannelAdvisor, a CommerceHub company, helps brands and retailers list their products across hundreds of channels, stand out with effective advertising, easily syndicate product data, provide a better path to purchase for customers, and make better business decisions with retail analytics.