Brands need to embrace ecommerce in a wholistic fashion if they want to succeed in this not so new emerging channel.
Apart from listing and selling on online marketplaces, there are other ecommerce avenues available and to be actively considered
These include
1. Brand Online Store
2. Influencer and Social Commerce Selling
3. Omni Channel – Offline to Online and Online to Offline
4. Brand own marketplace for retailers and distributors
5. B2B Marketplaces
Each channel has its own challenges and customer acquisition costs. Many brands currently use online marketplaces to be able to generate sales through a relatively lower cost of customer acquisition
Listing on online marketplaces can be done in one of the following ways:
1. Sell to the wholesale entity of the online marketplace who in-turn will list the products under their seller ID
2. List the brand products on online marketplaces with the brand itself being the seller
3. List and sell on online marketplaces through distributors or service partners who will list and sell on behalf of the brand
Where the brand does not have its own presence in the country it could sell in one of the following ways:
1. Sell on cross border ecommerce platforms that do not require the brand entity to be located in the country of sale
2. Export goods to an importer cum distributor who will then list and sell on behalf of the brand
As a brand specially one that is entering a new geography where there is a need for the brand to have a local presence and entity or an importer to be able to sell in that country, the brand can and should consider setting up their brand online store as well
When a brand lists and sell their products on online marketplaces the cost of customer acquisition is relatively lower (but not so low anymore) than driving traffic to the brand’s own online store
However, the disadvantages of selling on marketplaces too need to be considered
The disadvantages are not so much in the area of sales but largely in the area of brand.
Take an example of a brand that spends $100000 on a platform like Amazon. There is no surety of sales that will get generated through this marketing investment. In addition, when consumers visit the brand page or product page there is a high chance that the same consumer will be offered competing products at similar or lower prices on the same page as the brand’s own product. So now the brand has spend a $100000 and also got visibility and potential sales for its competitors
One may argue that the brand too gains from spends of its competitors because just like in the case of the brand, the competitor too may spend money on Amazon and drive traffic to their product page wherein the brands products may also be displayed at the bottom as an option for the consumer
While it is difficult to assess this brand investment overflow into the pockets of the competitors, chances are that every investment made on marketplaces will have a diluted effect. In some cases, it may educate the consumer and make them more aware of competing brands than they may have never seen or heard of before
Not only does the brand not get its full share of voice for its investment when selling on online marketplaces, it is also restricted by online marketplaces in a few other areas:
1. Restrictions on packaging communication
2. Restriction on ability to reach out to the consumer after the sale
What should a brand be doing to balance sales vs. brand in the ecommerce space?
Brands can do the following to balance out investments in ecommerce in a way that they benefit sales as well as impact brand saliency.
The brand can create and maintain and sell through a local online brand store in the country where it is selling its products directly to consumers. This may be done by the brand or through an appointed online store retail partner
The advantages of having a brand online store are many
1. Control on creative communication and ability to engage better with consumers
2. Consumer information and data that can be used within legal limits to get better insights and direct knowledge of consumer buying behaviour
3. Ability for the brand to use the brand online store at special events where the brand is launching new products and initiatives and can have similar communication put on the brand online store
4. Better control on packaging and communication that goes inside the packaging
5. Ability to sell free or paid samples
6. Flexibility in terms of product bundling
7. Most importantly uncluttered communication with the consumer that does not include communication about direct and indirect competitors
While setting up and operating a brand online store and driving traffic to it is probably more expensive for a brand than just selling on online marketplaces, the brand needs to look at the brand online store more as a marketing initiative that will also generate sales
Given that ecommerce is here to stay and the consumer is getting even more connected through digital media, brands that have their own brand online store will gain from such an initiative over a medium to long term
If you would like to know more about the nuances of operating your own brand online store and need guidance on how to go about the optimum way of operating such online stores in multiple countries including your own country, please contact Tiger Pug on Whatsapp +6583886673 and email contact@tigerpug.com
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