Should I Join the eCommerce Marketplace as a Seller?
If you’re a brick-and-mortar retailer now faced with the eCommerce switch, which, according to data published by IBM, has accelerated by five years since the COVID-19 pandemic outbreak was announced, you’ve possibly been faced with the dilemma of whether you should be starting your own eCommerce website or if joining as an eCommerce marketplace seller on platforms such as Amazon, would be a better move.
Well, the first question is, what’s the difference? Traditional eCommerce websites are typically the businesses shop window that enables the business to directly sell their items to customers. Marketplaces on the other hand are different, allowing different businesses to sell their products side by side.
Let’s look at what eCommerce actually covers.
What is Ecommerce?
When we talk about eCommerce, we refer to any online commercial transaction, or the sale of any product or service online and the transfer of funds or data to carry out these transactions. There are differing perspectives on the number of eCommerce categories that businesses can utilise.
Shopify is a leading eCommerce software service — among others — that companies can subscribe to, where a shopping cart solution is offered to sell, ship and manage the entire sales process of online business transactions (Shopify, 2020). According to Shopify, there are four main categories of eCommerce, as presented below.
What is B2C?
Business-to-consumer (B2C) refers to where a company sells a product or service directly to a customer; for example, a customer purchases a pair of running shoes directly from the brand’s website.
What is B2B?
Business-to-business (B2B) refers to where a business sells its products to other companies; for example, the brand behind the running shoes sells stock to a reseller business.
What is C2C?
Consumer-to-consumer (C2C) is where consumers sell their items to each other, for example, through a third-party platform, such as eBay.
What is C2B?
Consumer-to-business (C2B) would be where a consumer approaches the brand to offer their services to promote the brand’s product, for example, a consumer of the latest running shoes offers to provide a review of the brand to their own online audience such as through YouTube and charges a fee to the brand in return for this exposure.
Are there any other eCommerce categories?
Other online sources discuss an additional category of eCommerce which represents Administration or Government Bodies. Either a local government purchases a computer software online or an individual consumes online information or conducts transactions with a government organisation; for example, with distance learning, information sharing and electronic tax filing. These are typically referred to as either C2A, B2A, C2G or B2G. The ‘A’ representing Administration, or the ‘G’ representing the government.
The reality of government eCommerce was pertinent to the COVID-19 pandemic outbreak, given the government’s digital adoption to reach people on an individual basis; for track and trace, for example.
Another example of the government’s momentous digital shift is Britain’s Supreme Court, which is the latest requirement for proceedings to be heard and for evidence to be put forward digitally, a rule that will reform the judicial system forever.
What are the benefits of eCommerce?
Consumer Behaviour Data Analysis
Whether new to eCommerce or well-rehearsed, being mindful of anything that influences the behaviour and outcome of the shopper’s visit is vital for all retailers. And as online shopping behaviour can be recorded — which isn’t possible in physical retail — with digital retail comes the ability to track and analyse customer behaviour, which can help shape the most effective marketing strategies.
Providing the Consumer with Convenience
Meeting the needs of today’s consumer is essential. Online shopping intentions can be influenced by many factors such as:
- The level of comfort in carrying out a transaction
- The level of trust in reliability and cost-efficiency
- The level of risk involved related to time, security, financial, social and performance
Retailers need to keep ahead of such demands. Other factors such as effort required and habit — individual behaviour associated with repeated activity — and social influence all impact online shopping intentions.
Strategic Positioning and Greater Reach
Ecommerce creates opportunities for smaller retailers by making it easier for the consumer to visit and carry out a purchase. It also offers strategic placement for local producers and smaller retailers as well as a wider reach.
Ecommerce: Mobile Commerce
For the technically astute consumer who can navigate the internet, it is expected that they’ll be more able and willing to use the internet to shop repeatedly. Still, even for the less technically astute consumer, eCommerce technological advances allow for ease of online purchase.
Mobile is becoming the most crucial part of eCommerce, and with mobile-commerce retail sales estimated to have hit the $3.5 trillion mark by the end of 2021 (Eguide, 2020), and 45% of consumers stating that they use their mobile device more since the COVID-19 outbreak as a shopping channel, businesses that adapt to the popularity of mCommerce are reaping the benefits of a growing customer segment.
Google’s algorithm ranks websites mobile-first now. A survey conducted last year by Venditan found that Google’s mobile-priority indexing affected 19% of retailers, and a further 52% were unaware of how severely their website rankings were impacted. This is significant, given that 43% of eCommerce site traffic comes from organic Google search.
Mobile shopping offers immediacy and portability to the consumer. Amazon has set the mCommerce bar high, reflected in the 72.8 million US consumers who use the Amazon app to shop monthly. With this mobile consumer experience, brands and independent retailers must compete to stay relevant.
Experiential as Opposed to Transactional
Amazon has helped to lead the way in the digital shift of interaction between the retailer and consumer. The exchange has transitioned from transactional to experiential, and retailers capture this experiential transition by utilising new technologies.
New technologies enable an enhanced shopping experience that provides shoppers with instant satisfaction and a polished eCommerce digital strategy.
A satisfactory purchase experience can be linked to characteristics such as the enjoyment of the shopping experience itself. However, this is impacted by the website’s interactivity, the user experience online, ease of process and availability of information.
Another critical consideration is the reduction of search investment when the consumer is faced with time pressures, so the eCommerce digital strategy needs to be constantly reviewed and updated.
The Online Marketplace
An online marketplace is sometimes referred to as an ‘eCommerce marketplace’ or an ‘online eCommerce marketplace’.
Forbes describes the ‘online marketplace’ as either an app or a website that enables commerce from many different sources. Their business facilitates the transaction between other companies and their consumers rather than stocking their own inventory.
Where eCommerce retailers focus on targeting consumers, the online marketplace must attract consumers and sellers to promote through the platform. Brands are crucial to the online marketplace, and consumers are essential to the brand.
The Online Marketplace: The Retailers Battle
Though brick-and-mortar retailers had already been battling fiercely against online marketplaces such as Amazon, these difficulties have now dramatically intensified. Consumers are likely to maintain online behaviours acquired since the outbreak, and retailers have had no choice but to transition to meet the consumers’ needs online. The battle has now shifted. It is directly between the online marketplace and the eCommerce retailer.
It is more likely that a consumer will download an app for one marketplace offering a broader range of products, than many different individual retailer apps. This reduces the effort and time involved in downloading and managing multiple applications. It also reduces the number of perceived risks in any transaction, such as product risk, convenience, non-delivery and financial risks.
The risk involved when carrying out a purchase with a trusted online marketplace such as Amazon is reduced. The online marketplace caters to the possibility of visiting multiple retailers simultaneously while comparing alternatives and at a lower cost to search.
The Online Marketplace: Retailer Brand Equity
Online marketplaces account for over half of online retail sales globally. The global reach and dominating online presence of marketplaces are attractive to smaller retailers, especially for those with little branding or coverage. Any business can list their product on a marketplace, which means many retailers compete against each other to sell the same product.
With boosted levels of supply within the marketplace, a price war between competing retailers is inevitable. One challenge for retailers choosing to operate through an online marketplace is the barrier to brand equity both inside and outside the platform.
Not only is there a knock-on effect to the brand if the price battle with competitors continues — as the perceived product value will devalue the brand — but online marketplaces also offer little brand exposure within its ecosystem, meaning brands could lose out on building their customer loyalty. In most cases, customers who have conducted a product search through the marketplace platform will go on to finalise the purchase there rather than visiting the brand’s website directly. This also contributes to the loss of internet domain authority on searches engines such as Google and Bing.