Using online marketplaces to bootstrap a retail empire

Industry Insight

Marketplaces such as Amazon and eBay attract a large number of prospective customers, with Amazon pulling 178 million viewers per month and eBay reaching 125 million shoppers in the same time frame, according to data from comScore. For smaller retailers or young startups, this huge potential audience makes these marketplaces an ideal place to start their enterprise – Amazon and eBay can serve as the first brick in the road to a greater retail empire.

Bootstrapping with Amazon and eBay
So, why do many retailers kick off their startups with Amazon and eBay? The aforementioned audience is often one of the biggest driving factors. For merchants just starting to develop their own brand, being able to potentially reach millions of customers right off the bat is a huge perk. They can hitch their own company onto the credibility that Amazon and eBay have developed over the years, allowing them to engage a group of prospective customers that already have a lot of trust in the marketplace at which they are shopping.

Amazon and eBay are both incredibly easy to use and very seller-friendly, making these two marketplaces ideal leaping off points for their bootstrapping initiatives. This is partially the reason why so many sellers have opted to sell on Amazon’s marketplace, which was home to upward of 2 million retailers as of 2014 – it is just so easy to get started and get selling. In fact, many marketplace sellers never even move on to selling outside of the site.

Branching out from marketplaces
While selling on marketplaces is often a great first step toward building a successful retail empire, there is no denying that these channels have their own flaws. These drawbacks include:

  • Seller fees: Amazon and eBay take a cut of every sale made on the sites, which eats into sellers’ margins over time.
  • Policy changes: When retailers sell on marketplaces, they must play by the marketplace rules. At times, this can lead to policy changes that are not favorable for the seller.
  • Increased competition: Anyone can sell products on Amazon, including Amazon itself, which can create competition for merchants, particularly those in niche markets. A retailer could “own” a category one month and be forced to deal with dozens of competitors the next.
  • Ownership of customers and their information: When people make a purchase from a marketplace seller, the owner keeps all the information, such as browsing history, order history and demographic information. Without this data, merchants may have trouble improving their own offerings and initiatives, which can set them back.

As such, many merchants often move on from marketplaces – although they can still incorporate Amazon and eBay into their sales channels, those sites are no longer the sole places they sell goods. The next step for many retailers is often establishing a standalone, branded eCommerce website, which they can use to begin interacting directly with their customers. Merchants can begin promoting these sites by including promotional material in marketplace orders, utilizing search engines and optimizing comparison shopping engine listings.

From there, the next logical step is to open an actual brick-and-mortar store. While not all retailers need physical stores, they can be highly beneficial for maximizing customer reach and improving order fulfillment and turnaround times. Nowadays, many merchants leverage their brick-and-mortar stores as mini-distribution centers, allowing them to trim the number of days it takes for customers to receive online purchases.

Tying it all together
As retailers begin to expand to new and more channels, they will need a better way of managing all of these different sales avenues. Even just selling across multiple marketplaces can be a challenge in itself, but when brick-and-mortar and brand websites are thrown into the mix, it becomes even harder.

A back-end eCommerce solution such as SalesWarp can help retailers make the transition from being a single-channel marketplace seller to a full-blown omnichannel retail enterprise. SalesWarp is a highly scalable solution that can help with omnichannel order fulfillment, product information management, inventory management and the creation of robust customer profiles, which will assist merchants as they take on more customers from a variety of channels. Scalability is key, as it enables retailer growth from inception all the way to becoming an omnichannel power house.

As retailers look to grow and expand, it is only natural they will need a little help to do so. With the right eCommerce solution, they will be able to respond quickly to increased demand and streamline operations along the way.