Consider the bee and the flower.
Bees cruise around, gathering nectar from flowers that they then turn into delicious honey. Flowers also benefit from their fuzzy friends. When a bee lands in a flower, pollen will rub off and stick to their hairy bodies, which is then transferred to, and pollinates, the next flower they visit.
This is what we call in biology, a ‘mutualistic’ relationship. Bees get to eat. And flowers have a pollen delivery service.
But mutualism isn’t exclusive to biology. In fact, most of the best successes of the business world can be attributed to mutualism in one form or another. Take a look at the modern software industry, for example. It’s the mutual success of both developers and designers. Developers – a predominantly left-brained bunch – are very good at making complex, technical systems, but not so great with concepts such as ‘usability’ or ‘colour’. Designers, on the other hand, are very right-brained, and generally prefer pencils and crayons to Server Instances or the Transmission Control Protocol.
But when these two unlikely forces join, what do we get? Incredibly intelligent software that’s easy to use and looks great. Mutualism.
Ecommerce is a tough game. As an online vendor, your fingers probably feel red raw from scratching so many backs, while yours remains as itchy as ever. You’re no doubt already wondering who you can team up with in one of these quid-pro-quo relationships.
Third party marketplaces
Third Party Marketplaces probably aren’t a perfect example of ecommerce mutualism, but there are definitely positives to using their services.
You see, Amazon, Facebook Marketplace, eBbay, Etsy, and more, all offer you the ability to list your products on their platforms. Of course, they will take a small cut of the sale – but you get the ability to sell your products to their enormous audiences.
Using third party marketplaces helps to boost your sales. This, in turn, helps to boost your referral sales and loyal customers.
It’s certainly a win-win. But there are a few cons to consider before you jump in.
The downsides of third party marketplaces
If you have a luxury brand or a strong brand style, third party marketplaces might not be for you. While you do have access to the added potential buyers, you’ll also need to sacrifice control over your branding and product positioning.
For example, your high-end watches might look amazing on your custom built website – but probably won’t be shining with an appropriate measure of bespoke magic in just one 128px thumbnail in a seemingly endless sea of 128px thumbnails.
If branding is paramount in your brand or industry, marketplaces might not be for you.
Secondly, while most marketplace fees are calculated as a percentage of the sale, you’re going to want to make absolutely sure your margins can take the heat. Get a solid understanding of the platforms fee structure before you list your products. For highly competitive products, percentage rates can rise.
That means if you’re selling a highly-commoditized product, and have to offer the lowest markup possible, marketplaces also might not be worth your while.
Now we have that out of the way, let’s take a look at the two big players: Amazon and eBay.
Amazon started out selling books, before slowly moving into new markets, and then, years later, allowing other vendors to sell their own products through the gargantuan network it had created.
Because Amazon is itself a retailer, it is a little harder to take your own brand direction on their platform. They’ve tightly locked down their consumer experience, and if you want to list one of your products on their platform, you’re simply going to have to behave and not ask any questions.
That being said, while Amazon maintain complete control over the shopping experience of their network, they do an incredible amount of great work to make it easy for vendors to sell through their platform. Case in point: their recent integration with Shopify.
Amazon’s fees can be quite complicated. There are referral fees, selling fees, shipping fees, minimum costs, and variable closing fees, so it is definitely worth checkout out their pricing plans before you go any further with the platform.
eBay has come a long way from its past reputation as an online garage sale. While, yes, in the past it was used primarily to buy and sell second hand goods on auction, now 80% of the items sold are new, not used, and 86% of their Gross Merchandise Volume comes from fixed price sales. eBay is a fully fledged marketplace, with a huge amount of extremely loyal account holders, and can be very profitable for ecommerce vendors.
The main difference between eBay and Amazon, is that eBay do not offer any shipping or fulfilment options. This shouldn’t be too much of a worry – as an ecommerce store, you should already be across that.
Like Amazon, eBay have a native Shopify app that can plug in to your site and automate product uploads and consolidate your inventory between Shopify and eBay. This makes things much, much easier for ecommerce brands.
eBay has a much simpler payment structure (probably due to not offering shipping and fulfilment), but be sure to read up on it here before you get started,
Your main focus should be your own ecommerce store – but if you’re looking for a secondary channel and a new audience, eBay or Amazon might be for you.
This is, of course, dependant on your brand, profit margins, and more. You’ll need to closely study the selling fees of your products category before you jump in. In some cases, Amazon can ask for up to 20% of the sale! It may not be the lifesaver it appears to be. While the bee and the flower work in perfect harmony, sometimes business can be a little more taxing. Jeff Bezos isn’t worth $141 Billion because he was handing out free nectar.
If you have any questions, or are looking for other ways to boost your customer base, loyalty, and purchase frequency – get in touch! We’d love to chat.
Author: Jackson Hills