9 Reasons A Retailer Gave Amazon & eBay The Boot

Last week, I wrote about the Pros & Cons Of Selling On -- and How To Choose -- Third Party Marketplaces.  To quickly recap, benefits include increased sales, new customers, cost benefits and efficiency of marketing, fulfillment, and service. Cons included competitive pricing, marketplace costs & fees, loss of identity (branding), complexities of data matching, fulfillment and inventory, and huge time investment. Right after that I found this PracticaleCommerce article by Jamie Salvatori, founder and owner of Vat19.com, telling why he was going to abandon Amazon and eBay. I also noticed that in March, Reuters reported that luxury department store operator, Neiman Marcus, would shut its eBay store, to sell exclusively through their own website and physical stores.

So, what are the reasons for disenchantment with Amazon & eBay, i.e. Third Party Marketplaces?

Neiman Marcus' reasons may be as simple as the fact that they already get enough customer traffic to their own websites and stores; or so they would no longer have to pay a cut of each sale to the marketplace store. Here are some of Salvatori's reasons for shunning the Third Party Marketplace:

1. It's not a good idea in general to rely on a single sales channel, a single source of traffic, a single supplier, or a single employee for any mission-critical process -- in case they disappear one day unexpectedly. So it could be with your Third Party Marketplace arrangement.

2. Third Party Marketplaces like Amazon and eBay exist for their own benefit and look out only for themselves. Everything they do, even to help you, is with the goal of helping themselves.

3. Amazon & eBay deter you from building your own Brand. All of the branding on a Third Party Marketplace site is designed to reinforce THEIR sales channel and not your store. You want to build a unique brand that creates unique value for your customers. In exchange - those customers buy from you repeatedly and spread the word to their network. When you brand and market yourself, you can deliver a unique experience to shoppers they won't be able to get on Amazon.

4. Amazon or eBay could make an operational change that would render your business listing obsolete. Whatever you sell, they might decide to sell or even purchase the company manufacturing that product and eliminate any other Third party listings of that product.

5. Amazon or eBay may decide to ban the sale of whatever you’re selling. For whatever reason, they could initiate a rule or procedure excluding your product(s) and you’d be out of business if they were your only outlet.

6. Amazon & eBay preclude building repeat business. The customer remembers making their purchase on Amazon or eBay and not the seller store. There is no repeat business because the cheapest price will always win the 'buy box', so there can never be customer loyalty.

7. Price Competition For Lowest Price. You are always competing on price. Competing only by price doesn’t give you a chance to utilize any of your strengths in marketing, merchandising, or customer service. 

8. It takes TIME to do listing, fulfillment, etc. You’d be far better served funneling that time toward building your own brand. Operating on any 3rd party channel is never "easy". It's always going to suck up valuable time that could be better spent on building your brand.

9. Traffic. While Amazon & eBay “solve” your biggest problem: traffic, they also prevent you from building your most important asset: traffic. Direct traffic is a million times better than “free” traffic from SEO because it can’t disappear due to an algorithm change.

Bottom Line For Your Bottom Line:

Investing in your brand and building up your own site and traffic is effectively investing in yourself… but don't burn your bridges wrote many of the commenters. "You can build up direct traffic and repeat business by taking advantage of the additional revenue that multi-channel selling can bring… To ditch these channels altogether would be foolish, especially if you are generating reasonable sales."  What do you think about the advantages and disadvantages for retailers working with Third Party Marketplaces?  Thanks.  Gilon


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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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