Supply-chain snafus are wreaking havoc across retail this holiday season. But online marketplaces likely will still offer a wide selection as many brands say this is not the time to pull their limited inventory from popular shopping sites like Amazon.com Inc..
Working with marketplaces despite their shortcomings—most notably that margins are better on a brand’s own direct-to-consumer site—has always been a balancing act. Traditionally, marketplaces are ideal to build exposure and/or to sell excess inventory. But this holiday season, the expectation among several brands and retailers is that marketplaces are crucial despite inventory shortages. The risk of losing placement is simply too high, retailers say.
“The supply chain crisis has been devastating. We are constantly battling out-of-stocks and the ripple effect that creates,” says Steve Douglas, who oversees ecommerce for the Malouf Companies, a home furnishings brand based in Utah. “We haven’t decided to focus on our own site as a result since we’ve deemed it more important to maintain positioning and momentum on third-party platforms so that we can keep placement when inventory comes back to normal levels at some point in the future.”
Working with, and around, marketplaces
Tanya Zrebiec, vice president of innovation and strategy for 1822 Denim, says her company also is not retreating from marketplaces, despite the limitations of doing business through a third party.
“One of the biggest things for us is brand building and having people find us,” she says, “and one of the best ways is to start selling your product on some of the marketplaces so that you can expand your reach.”
But for 1822, selling through a marketplace brings with it a particular challenge. The brand has invested heavily in an app-based sizing technology from 3DLook that lets shoppers snap a picture of themselves and get instant feedback on what size to choose. Amazon, which is ranked No. 1 in the 2021 Digital Commerce 360 Top 1000 and No. 3 in the 2021 Digital Commerce 360 Top Online Marketplaces, does not offer the sizing app in its the marketplace. So a shopper who buys 1822 jeans through the Amazon marketplace is unlikely to know about the app—at least for the first purchase.
1822 found a workaround for that problem: The brand includes a QR code with its products when a shopper buys 1822 jeans on the Amazon marketplace. That code lets the buyer download the sizing app when the product arrives.
“We couldn’t offer the technology on the Amazon site obviously, so we found other solutions,” she says. “The QR code prompts them to go in this technology, find the right fit, etc. and that helps market the brand.”
Less inventory, higher costs
Marketing a brand on Amazon is about to get pricier for some sellers. Citing rising costs, Amazon announced in mid-November that it was hiking the fees it charges brands that sell on the marketplace and use the Fulfillment by Amazon (FBA) service. The average price hike will be 5.2%, Amazon said.
The news angered many in the seller community.
“Amazon has no problem raising its fees in the face of inflation and rising costs, but they increasingly make it difficult for their third-party sellers to raise their prices in the face of similar cost increases,” says Jason Boyce, founder & CEO of Avenue7Media.com and author of “The Amazon Jungle.” “Amazon regularly uses Buy Box Suppression and Search Suppression to force sellers to keep prices low, even if it means the sellers take a loss.”
Sellers who fulfill their own orders won’t see a price increase, Amazon said.
More marketplaces, more tools
Some 24% of 100 retailers surveyed by Digital Commerce 360 between July and September of this year say they will increase the number of marketplaces on which they sell goods. Those retailers will have a wide variety of marketplaces from which to choose.
In November, Macy’s announced it would launch a third-party marketplace. That announcement followed a slew of similar news from both established retailers and start-ups. Lands’ End (No. 68 in 2021 Digital Commerce 360 Top 1000) and Hudson’s Bay Co. (No. 30) both launched marketplaces this year. Back in March, Verizon Media, owner of Yahoo, said it would build an online marketplace called Yahoo Shops. In October, crafts and hobby retailer The Michaels Companies, No. 106 in 2021 Digital Commerce 360 Top 1000, said it would soon launch a marketplace for craft-supply sellers. And in November, Jedora, a marketplace for jewelry, launched.
This surge in marketplace debuts is leading to a surge in the tools sellers use to optimize performance on them.
Helium 10, which has long sold search and pricing tools for use on the Amazon marketplace, rolled out similar tools for use on the Walmart marketplace earlier this year. In October, marketplace Poshmark debuted Closet Insights, a dashboard that provides sellers with inventory and sales data in real-time. Poshmark, No. 33 in the 2021 Digital Commerce 360 Top Online Marketplaces, sells both used and new apparel and accessories.
Meanwhile, mobile marketplace Wish unveiled a program in which sellers who meet certain standards for shipping and customer reviews will be eligible for commission discounts, faster payments and better placement for their products within the app. Wish is No. 15 in the 2021 Digital Commerce 360 Top Online Marketplaces. And in October, Amazon announced a buy online pick up in store service for local retailers.Favorite