We are happy to host an insightful article from Alan Wilson, CEO of Expandly, about marketplaces, brand control and much more.
Here’s what he told us!
Once upon a time, you went to Amazon for books, eBay for a pre-loved bargain and Etsy for handmade items. Today, you can buy almost everything and anything from these online marketplaces, from electronics and clothing to groceries and even dog food. And big brands are taking note. In a move that’s shaking up the eCommerce industry and changing the face of retail, big brands are using online marketplaces to sell direct to consumer and access millions of loyal marketplace shoppers. But do brands such as Apple and Calvin Klein really need a helping hand?
Why brands are using online marketplaces
You wouldn’t be wrong to assume that household names have loyal customers, busy retail spaces and high-traffic websites. You, therefore, wouldn’t be wrong to question what they’re doing selling on online marketplaces among smaller retailers.
For many of these brands, the main goal of selling on online marketplaces isn’t to increase or retain sales. Apple isn’t concerned that someone looking to buy an iPhone 11 Pro on Amazon will be tempted by a Nokia 105 when the search results return nadda. What Apple is concerned about is when Amazon’s search results return Apple products from an unauthorised third party seller. Why?
Big brands have spent years, decades and, in some cases, centuries building their name and USP. From the story told and images used to their interaction with customers and packaging of products – everything is controlled. This control is lost as soon as a third-party seller enters the equation, and it can have significant reputational consequences.
Big names will also have spent considerable time setting the optimum price point and strategy for their products. For Apple and Calvin Klein, their price points are high in reflection of the quality and technology received. When a third-party seller goes against this price point, it diminishes the quality or value of the brand.
And finally, brands want to own the customer relationship to control communication, influence experience and collect customer data. When a customer buys via Amazon, their relationship and data is with the third party seller and Amazon, not the brand. This may impact how the customer interacts with the main brand in the future while also limiting the use of customer purchase history in future strategies.
We’ve already mentioned brands such as Apple and Calvin Klein going direct to consumer, and they’re not the only ones. Black+Decker, Under Armour and Lay’s have all taken their brands D2C. And, interestingly, customers like it too. More than half of shoppers prefer buying directly from brand names, and 40% of online shoppers expect 40% of their purchases to be directly from brands within the next five years.
Not everyone agrees. Earlier last month, Primark publicly asked its customers not to buy its products online:
Are they missing a trick? Well, initial figures suggest not. Primark recently announced the opening of 19 new stores over the next 12 months, but what does the future hold?
But with eCommerce sales already representing 22.3% of total retail sales and expected to increase to 27.9% by 2023, could this be commercial suicide. Names such as Toys R Us, Mothercare, Bon Marche and Karen Millen might think so. At Expandly, we’re definitely experiencing a significant increase in retailers looking to sell direct to consumer and tap into the online marketplace market, using D2C eCommerce software, fast shipping strategies and 3PLs to help.
Is this the future of retail? We’ll just have to wait and see.