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Online Selling Trends 2014: Is Amazon a Friend or Foe to the Online Seller?

In our last installment of Online Selling Trends, we introduced the members of our panel and asked them about the challenges and opportunities that lay ahead for online sellers in the New Year. Today, they provide some tips on marketing and answer the question, “Amazon – friend or foe?”

Joining us on this year’s panel is GoDaddy SVP of Productivity Apps Steven Aldrich; Endicia General Manager Amine Khechfe; and StellaService CEO Jordy Leiser.

EcommerceBytes: What are the most effective marketing tactics online sellers can employ?

GoDaddy SVP of Productivity Apps Steven Aldrich: Marketing is not a one-size fits all proposition. The key thing that an online seller needs to think about is, “Who is my best customer and where can I find more of them?”. Start by asking your existing customers questions about how they found you and why they bought from you. Get in depth with them to find out common themes. That will help you decide if you should spend your time getting your listing keywords right or if you should instead be joining off-marketplace communities to build a reputation amongst a certain type of consumer.

For example, if you specialize in collectibles, you may be able to find communities of people online who love those collectibles. But, if you sell costumes to the general public, then you might want to spend time getting your listings worded right to attract the one-time customers searching for your product.

Endicia General Manager Amine Khechfe: Naturally, I think shipping can make or break an ecommerce deal and it’s one tactic that sellers can easily experiment with. Offering free shipping promotions can help set your business apart and give sales a boost (if done correctly).

In terms of just getting your business’ name out there – understanding SEO is pivotal, and product ads (either on Facebook or Google) can also help. With that, content is king – if you’re going to draw potential buyers to your site, make sure you’ve got what they’re looking for and that you’re speaking their language.

StellaService CEO Jordy Leiser: If a retailer provides great customer service, they need to communicate that to their customers.

We evaluate thousands of retailers and those that qualify are awarded the StellaService Seal, the only true signal of quality customer service on the Web. Retailers are now leveraging this award in search and display advertising, as well as email and print advertising.

What’s more, shoppers are looking for the seal. Multiple A/B tests show that the StellaService seal increases conversions and click-though rates.

It’s also worth noting that StellaService data is licensed by Google for use in several products, including Seller Ratings & Profiles, AdWords Review Extensions and Google Trusted Stores. Great customer service can only result in a positive marketing message.

EcommerceBytes: Is Amazon a friend or foe of the online merchant?

GoDaddy SVP of Productivity Apps Steven Aldrich: Amazon is both an enabler of sales and a fierce competitor with the balance between the two based on the merchant’s capabilities and objectives. Amazon brings tremendous strengths that online sellers can use:

  • Sales volume: Amazon is the place where customers start their shopping experience. It represent 30% of all ecommerce sales by attracting millions of organic visitors and huge SEM spend, gets a lot of eyeballs and can really drive volume very quickly. Searches for holiday gifts start more often at a search engine like Google but Amazon saw a big gain as 37% of consumers surveyed by SDL said they would start at Amazon.
  • Operations: Payments, fulfillment, shipping, customer service … a seller can rely on Amazon for the entire process except manufacturing/sourcing products.
  • Tools: For price discovery, listing, lending, and everything else you need to be a successful seller.

Amazon works well for sellers who:

  • Rely on arbitrage and move quickly to exploit price discrepancies.
  • Focus in niche categories and provide selection that Amazon doesn’t stock.
  • Maintain a lifestyle business and want to have no/very few employees and low fixed operational costs.
  • Offload surplus items and need to maintain minimum overhead.
  • Need to test consumer demand for new products. Amazon’s sales volume can give a quick read on interest in a new product or category.

Who does it not work well for:

  • People who want to build their own retailing brand as Amazon owns and services the buyer. This also creates a problem for a business that relies on recurring sales from the same customer.
  • Category intersects with Amazon’s bigger departments, e.g., electronics, books, home & kitchen.
  • Sellers of low margin products. Depending upon the Amazon services utilized, the fixed and variable fees can take many points of margin per dollar of sales. The business needs a very good understanding of margins, the price that can be sustained when inventory is made/purchased, and the forecasted volume.

Endicia General Manager Amine Khechfe: Amazon has become a virtual necessity for online sellers – there’s no other way to explain the 65% growth in marketplace sellers for 2013. And there’s no denying that Amazon’s marketplace allows small businesses to reach audiences otherwise inaccessible.

But on the flip side, online sellers – by flocking to marketplaces – relinquish a certain control of their business. Product pricing is now dictated by the marketplace itself, and oftentimes these e-tailers are competing with Amazon. So while the businesses might get an uptick in purchasing traffic, it can often take a toll on profit margins.

To sum it up, Amazon is really a mixed bag: it offers unique perks, but has its drawbacks. It’s up to individual merchants to determine whether the platform is ultimately helping or hurting their business’ growth.

There is no denying that Amazon has set a high bar that customers now expect. Companies, like Endicia, can help the independent online sellers provide shipping services (like returns and international) that previously were only available to the larger marketplaces.

StellaService CEO Jordy Leiser: Amazon.com is the example. They deliver a consistently amazing customer service and continue to innovate. I mean, these guys have robots in their fulfillment centers and are touting delivery via flying drones.

Many retailers will continue to chase Amazon.com.

In the last installment of Online Selling Trends, the panel discussed the challenges and opportunities they see facing online sellers in the year ahead. In the next installment, panel members will discuss Google Product Listing Ads and will tackle the question of ,”free shipping or no free shipping?”

Also see interviews with online sellers about the challenges facing them and the opportunities ahead in Online Selling Trends Part One, “Rising Cost of Shipping Presents Challenge”; Part Two, “Standing Out in the Crowd,” and Part Three, “Fakes Spell Trouble for Vintage Goods.”

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.