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We all know that Amazon and eBay are the powerhouses where almost everyone now shops at some point or other. I've no data to support that, but I imagine, every web user has at least visited these sites once. We also know that they both have very successful marketplaces where many retailers, particularly SME retailers sell their products, often in parallel with their own retail site.
Given this, it's always surprised me that relatively little is written (beyond the Dummies guides) on how companies can optimise their sales on these sites. Especially since conversion rate optimisation (CRO) for retailers is such a hot topic.
So I was pleased to have my curiosity about this topic answered, I hope you find it interesting too, even if you don't sell on these marketplaces... EASY is relevant for all retailers. Thanks to Matt for sharing his fascinating story.
You can find out more advice on his Last Drop of Ink blog.
Howdy Dave, thank you for the fab introduction.
I can actually pin point the start of this journey to a week’s holiday and a single book. I picked up a book called “Learn HTML in a Weekend” and by the end of the holiday, with no computer, I had taught myself HTML and everything just stemmed from there. After building a computer from an article in the PC Advisor magazine, it was natural that I’d end up on the Internet & find eBay. But what I didn’t count on was on the impact those actions would have for the next 10 years. If you like video, you’ll find me on Youtube here describing this very books impact.
After researching eBay over Christmas in 2002/2003 I had decided that I was going to start a business on the first week back and promptly did. By June I had quit my full time job and for the next 3, that’s what I did, “I sold on eBay”.
It wasn’t without its ups and downs and looking back, there are so many areas in which I could have done things differently, many of the mistakes I made and have now seen, I ensure that the businesses that I work with don’t run into the same ones. There were several high points too, such as holding the first official eBay PowerSeller meeting, being PowerSeller of the Month a few months later, BBC News 24, an interview with Peter Day for Radio 4 and the scariest of them all was a live on BBC Radio Bristol.
I ended up working for the software tool that I had used as a business called ‘MarketWorks’, this for me was brilliant. I got to speak to and help so many different people and it’s where I first started to see a multitude of different business models in action with the online marketplaces. After being head hunted from a diamonds company a few years later, I was given the chance to re-write the rule book on 3rd party software for merchants that use the online marketplaces such as eBay & Amazon and that’s what I did for the next 3 years. Looking after the implementations team at eSellerPro.com I was able to meet literally hundreds more fantastic people and businesses that used the online channels.
While there are hundreds of others businesses turning over obscene amounts of kit on the marketplaces, the eBay account that you’ll instantly recognise is Tesco Outlet and they were launched on eBay within a few days, testament to both the internal team and the software that enabled them to move so quickly.
After leaving eSellerPro two or so years ago, leveraging the knowledge I have picked up from so many different business models, I have been helping individual businesses bring their business to the marketplaces and expand to their full potential. I’m a lucky man, I get to work with great people with good problems.
It’s important to note that the barrier to entry for the marketplaces such as eBay & Amazon is exceptionally low. If you have an idea for a product based business, then due to the sheer potential and reach that these marketplaces offer and at a minimal cost, a “proof of concept” can be quickly conducted and things can move exceptionally quickly.
These marketplaces are exceptionally important to the businesses that I work with. In most cases one or both will account for up to 90% of their total revenue and I work with them to even the balance of risk across each of them and allow them to explore other channels at the same time as focusing upon both internal and external efficiency.
If we look at what you’ve described as “brand power” of eBay & Amazon, these channels account for an obscene body of potential buyers.
In the case of Amazon, you can market your products for literally free on a basic account and for around £30 a month, list as many products as you can cope with. Not bad for the access to the UK’s #1 shopping site as shown in this Hitwise report and also note that Amazon appears in this twice, with the UK site 1st and then the US site in 8th.
As for eBay, the insertion fees are in the realms of pennies and free if using the anchor eBay shop (although that does cost £350 per month) and the potential again is huge for SME’s as with some 17 million unique viewers each month and 40 million listings live on the eBay UK site alone, the buyers (and sellers) are there.
We all need simplicity and in the latter part of 2011 I put together a model was so straight forwards, I made it spell “easy”. I explain this further below:
E is for Efficiency
This is broken into two parts, internal efficiency and external efficiency. Internal efficiency is everything that your customer does not see, this is internal processes, software, supplier routes, data creation and so on. External efficiency is everything your customer does see, this is from the way the data is shown in listings, to the branding used to customer services.
By putting a line between what the customer does see and what they don’t, I’ve found it to be exceptionally helpful to business owners distinguish between the two and while focusing upon efficiency as a whole, they know whether its internal or external.
A is for Add More Sales Channels
There has been consistently two spikes in growth for the eCommerce businesses I have worked with, the first is through efficiency and the second is when they add additional sales channels.
Whether the marketplaces like me pointing this out or not is neither here-nor-there, but there is a cap to the number of potential buyers on a single marketplace on a single day and as such by adding more sales channels, the amount of exposure for the products increases, thus sales (although it needs to be approached in a structured, efficient manner)
S is for Stock
Again keeping with the simple theme, there are two directions that stock can go, wider or deeper. To go deeper implies that you buy more product, thus gaining a cost advantage that either equates to more profit margin or a more competitively priced product or to go wider implies a range of product, thus attracting a wider audience with complementary products.
Y is for Why or Who is running the business
This is the tricky one, as the previous 3 stages work towards the branding of the business. The obvious component is the company’s logo, the way it looks and acts. But it’s really the business owner(s) that add the magic to the business, why they do, what they do.
This is pretty much the right order to follow through with a business, starting at efficiency, ensuring that everything is slick as it can possibly be, although this can take months abd needs to be the foundation. Working with efficiency to leverage more sales channels and working on the stock element, while all along, the business owners are adding their magic to it all.
I can tell you now, small business owners are fantastic to work with, I love this environment, there is never a boring day and I don’t help businesses, I help people and there is nothing more rewarding than that.
You’re going to have to excuse me, I’m putting my “data freak” hat on to answer this. If a business is looking for better results on Amazon, then data is the key.
Data is the life blood of an eCommerce business [Dave: I have written an article here on this topic] and the Amazon marketplace should only be one part of this. That’s from the artwork used in the product data, browse nodes, descriptions, 5 compelling benefits of the product to pricing and the order data manipulation to ensure the entire operation is as slick as can be.
If you’re looking for a quick win, then immediately sign up for Fulfilment By Amazon (known as FBA) and gain access to the single minded Amazon Prime buyers who want their orders delivered next day, for free through their Prime subscriptions.
If we look simply at both eBay & Amazon, there are similarities. Both marketplaces allow 3rd parties to list products for sale, they facilitate the buyer-seller transaction, both aid the transfer of funds and both have some hand in the entire process. In both cases they will take a percentage cut of the sale, but that’s really where the similarities end.
The fundamental difference between eBay and Amazon is that eBay is a pure marketplace, where they never sell their own products, just facilitate the introduction of buyers to sellers, whereas Amazon is their own platform and allow 3rd parties to sell products to their customers.
The inventory structures for both differ too, whereas on eBay each seller creates their own listings (ignoring the eBay catalogue) on Amazon, a single listing is created and multiple merchants can sell on the same record. Both approaches have positives and negatives.
Also while eBay own PayPal and PayPal accounts for a obscenely large amount of payments made for eBay purchases, Amazon control all the payment process and that’s why Amazon fees can appear higher on face value, with eBay’s changes last year to their pricing model, they’ve become comparable if you account for the PayPal fees.
Demographics generally differ between the two marketplaces also, as a general rule of thumb as a business you can expect slightly higher prices to be made on Amazon and have an awful lot less customer service overhead, when compared to eBay, which at times can have ferocious customer service requirements. That shouldn’t put you off of eBay I quickly add, its just a different set of demographics that need to be accounted for and both are viable platforms to leverage and support hundreds of thousands of businesses in the United Kingdom alone.
Thank you for taking the time to interview myself Dave, I certainly hope the above has provided real value for your readers and if I can leave you and them with one parting comment, it would be:
If your business is not leveraging the online marketplaces to their full potential or even not at all, then you’re leaving a truly obscene amount of potential on the table.
[Ed: Thank you Matthew for sharing your story and experiences about this fascinating, but not often discussed area].
By Dave Chaffey
Dave is CEO and co-founder of Smart Insights. He is editor of the 100 templates, ebooks and courses in the digital marketing resource library created by our team of 25+ Digital Marketing experts. Our resources used by our Expert members in more than 80 countries to Map, Plan and Manage their digital marketing. For my full profile, or to connect on LinkedIn or other social networks, see the About Dave Chaffey profile page on Smart Insights. Dave is author of 5 bestselling books on digital marketing including Emarketing Excellence and Digital Marketing: Strategy, Implementation and Practice. In 2004 he was recognised by the Chartered Institute of Marketing as one of 50 marketing ‘gurus’ worldwide who have helped shape the future of marketing.
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