Third-Party-Marketplaces Make Pricing More Competitive Than Ever

Selling on Third-Party Marketplaces is an attractive way for retailers to increase exposure and sales using the built-in services and procedures of a ready-made market. At the same time, the Third Party Marketplace benefits from adding extra inventory at no additional cost, and gaining an even wider reach over prospective customers. Before you join a Third-Party-Marketplace, however, make sure you first know the pros and cons, (Pros, Cons & Pricing Considerations of Selling On Third Party Marketplaces) and then study the individual Marketplaces. Each one has its own system, processes, limitations, advantages, and quirks, and regardless of which one(s) you choose, it takes time to provide the data and learn the ropes.  And price competition remains one of the most important factors to consider.

 

Some of the better-known Third-Party-Marketplaces are Amazon, eBay, Newegg, Sears. Walmart, OneStopPlus and Best Buy. There are many more, each with their own distinctive buyers, demographics, and customer buying habits.

Sears, for example, is an older market, shoppers are typically females who like to buy from Sears, and are known to make more purchases at one time. Statistics also indicate this audience is not shopping around as much as was thought.

On the other hand, Newegg customers are males between 18 and 35, "techies", who think Newegg is a great experience and has great customer service, so they like to buy and spend time there.

It's recommended that newcomers start out with a large, well-known Marketplace like Amazon or eBay to get their feet wet because their rules and procedures are well codified. As a retailer itself, Amazon is known for providing tools to help Third-Party-Sellers become part of a seamless shopping experience, including “Fulfillment by Amazon”, which involves shipping your inventory in bulk to Amazon and letting them handle shipping.  eBay is known as a massive marketplace or internet mall, which is attractive to shoppers searching for a particular product, but without a particular vendor in mind.  

A key factor in selling on either platform is that you know your marketing costs up front. This is important because costs to market your products on a private web site, if not controlled, can easily grow to unexpected levels quickly. Although both eBay and Amazon charge a fee per sale, these are known costs that retailers can anticipate and bundle into their sales price.

Successful Third-Party-vendor, Stephen Leitch, CEO of SavingsMall.com, says  to start slowly. He started selling on Amazon, eBay and Buy.com and grew from there into a mass retailer with hundreds of SKUs across categories that include electronics, music, toys, instruments, and babies. (Retail Touchpoints Webinar, Expanding To Third-Party Marketplaces).  

The advantage of signing on with a Third Party Marketplace, said Leitch, was that his company could succeed quickly without spending immediate marketing dollars on trying to create a website and brand and becoming known; but now, with great success in the Third-Party-Marketplace, Leitch said he can build own website, drive traffic to it, and keep ahead of the competition.

Some of the special categories for which certain Third-Party-Marketplaces are known: Consumer Electronics - Newegg; Home & Garden - Sears; Health and Beauty - Sears; Toys, Kids and Baby - Sears; Apparel and Jewelry -- Sears; and Plus Sizes - One Stop Plus. ( The pros and cons of selling on Amazon and eBay, on Shopify. 

Leitch says, no matter which marketplace you go with, "The most important thing of all is price competition."  Pricing is our biggest challenge. The customer is looking for best price.  We might sell something for less than we could; vendors who got  the product for less can list and undercut on their own sites without the Marketplace overhead.

When asked if any site was easier to deal with than the others, Leitch said Shop.com doesn't require a lot of extra data; start with Sears before you consider Newegg, and "The more categories you span, the more difficult it's going to be."

As mentioned earlier, retailers have to meet rigid standards of each Third-Party-Marketplace. There are consequences if you don't (meet them) -- and Marketplace terms are new and changing, so everything may be fine today, but tomorrow they could exact a penalty for non-compliance with their procedures.  Furthermore, the biggest challenge regarding keeping your data and fulfillment up-to-date is that there are always new requirements to be fulfilled -- the job is never done.  

Bottom Line For Your Bottom Line

* Customers are engaging with retailers who are "there" i.e. appear in appropriate Marketplaces.

* Everyone's key is to offer best products, big selection, at best possible prices.

* Third-Party-Marketplaces make pricing more competitive than ever.  "The good news is that we do pricing and assortment intelligence on Third-Party-Marketplaces just like we track any other competitors," says Upstream Commerce's Co-Founder and CEO, Amos Peleg.   

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Gilon Miller, CMO

About Author

Gilon is a seasoned marketing, sales and business development executive with over 15 years of experience in the software and Internet business. He is the Founder and CEO of GuruShots. Previously, Gilon was the CMO of Upstream Commerce, VP of Marketing at iMDsoft and Director of Global Marketing at SAP. He earned an MBA at the MIT Sloan School of Management and a BS in Electrical Engineering from Tufts University.
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