You are a brand owner and have been familiar with the B2B game for years. Perhaps you already have experience in B2C with, for example, your own webshop. The eCommerce market for consumers has gained momentum, partly due to corona, a market that has been growing rapidly for years. The question remains how you can successfully start as a (brand) manufacturer on marketplaces and how does this relate to your current B2B customers? In this blog we discuss the possibilities of a marketplace and how you can use it as a manufacturer.
According to CBS, 71 percent of Dutch people aged 12 and older bought something online in the first half of 2020. And more than half of online purchases take place on marketplaces, according to research by the Hogeschool van Amsterdam.
There are great opportunities in the consumer market, but as a new player it is difficult to immediately achieve a large reach. Especially when more and more consumers use marketplaces as a starting point in their search for a product. Many retailers have already made the step to marketplaces and they may also offer your products there.
The eCommerce market is worth several trillions worldwide every year – both in B2B and B2C. If you have no ambitions outside the national borders, it is still an interesting market, because eCommerce is also growing strongly every year in the Netherlands. The lockdowns in 2020 and 2021 have only given this an extra push.
More and more parties are therefore entering the eCommerce market. Retailers are also starting their own marketplace, such as bol.com years ago and recently many other parties such as category leaders such as Leen Bakker, Blokker, Decathlon and fonQ. This blurs the traditional division of roles as producer, brand, wholesaler, retailer and marketplace. With these already fading roles, it is not at all crazy to actively sell on marketplaces as a manufacturer. And not participating while the consumer market is growing so strongly can be seen as missing the boat. Yet there are also reasons to continue to focus on only your current B2B activities.
If you haven't B2C experience, it is good to consider a number of fundamental differences with the “B2B game”. You usually have a personal relationship with your business customers. This allows them to ask questions in advance about specifications or how a product works. This is of course in development: digitization is also common in B2B and there are excellent platforms to serve business customers well online.
With consumers you do not have these contact moments in advance, which makes it extra important to show the product information commercially convincingly, complete and as correctly as possible. This contributes to the prevention of returns. Business customers are concerned with larger volumes per transaction and often repeat orders. And not unimportant: your business partners may have a specific price agreement that may differ from customer to customer. The consumer needs one clear price with which you sometimes also compete directly with your current customers. You can read how to prevent this in the blog How to deal with channel conflict in B2B eCommerce.
If you want to start as a marketplace seller, your organization must be set up for this. For example, consider logistics. Products must be able to be sent to your retailers in large volumes and individually boxed for the private consumer. You may have to set up separate flows in your warehouse for the latter. You can also outsource the fulfillment to a marketplace such as bol.com and Amazon. In that case, you send your stock to the marketplace and they arrange the packaging and shipping.
For example, outdoor toy seller EXIT Toys has opted to break loose the B2B and B2C market from an organizational point of view. They have set up a special order flow in the warehouse for the private market. Apart from the B2C-oriented content experts, the company only needs half a FTE to manage the marketplaces and steer on the most important KPIs. Far-reaching automation contributes greatly to this.
We strongly advise against selling on a marketplace as a test, before your organization is prepared for it. If your delivery or service is not fast enough or inadequate, you will receive a penalty from the marketplace. These penalties can ensure that your results drop or that you almost no longer make a claim on the buying block (with multiple providers). Or worse: you can be blocked, so that you are no longer allowed to sell on the marketplace. When you get a lot of penalties in a short time, it becomes difficult to overcome this. It certainly takes some time and marketing costs. If you have been “thrown off” from the marketplace, you will usually have to submit an extensive improvement plan. With this you have to convince the marketplace that you are taking serious steps to avoid penalties in the future. The marketplaces are entirely on the side of the consumer and the sellers settle for performance based on data. Working from a relationship is sometimes possible with smaller marketplaces, but not at all with parties such as Amazon.
Before you start, it is therefore important to have your logistics process and your services in order, so that the first order on the marketplace goes well. Of course it's okay to make mistakes every now and then, but you have to dare to learn from this and take immediate action.
The buying block on bol.com, the buybox on Amazon; when there are several providers of the same product (EAN), the marketplace determines who wins the buying block. This is determined on the basis of the delivery time, your performance and the price. The best offer is not always the lowest price, but it does have a significant impact. If you win the buying block, you will receive the order when the consumer clicks on the buy button. Although the other providers are listed elsewhere on the page, we see that 98% of consumers buy from the winner of the buying block.
There are concretely two possibilities when you enter the marketplace:
It is up to you to submit the correct title, product photos and product information to the marketplace.
You also remove a barrier for your retailers. They only have to hook up to the EAN code, you have already put all content such as product photos and detailed information correctly. That way you can boost the sales of your products.
Connecting to existing products is very easy: your retailer has apparently already filled in most of the information. But even then there is an important role for a brand. No one knows as much about your product as you do. You as a brand owner can offer added value here, especially with a view to the information-requiring consumer: only you know how to answer the most technical questions.
More product information not only ensures a consumer who is provided with his information needs, but your products also come up better in the filters that the marketplace uses and the conversion rate usually goes up.
Adjusting existing product information and product photos also gives you the opportunity to make your brand and products stand out better. Perhaps you as a brand owner have clearer product photos and can thus implement an optimization process.
Many brands and manufacturers have long wondered whether their presence on marketplaces creates a channel conflict. This channel conflict can depress a retailer's sales, but it doesn't always have to. By presenting optimal content and also making it easier to connect to new products, you as a brand can help your retailers to generate more sales. There are different views on the channel conflict and how a brand owner should relate to the retailers.
For example, as a brand you can compete for the buying block with your retailers. There are also brands that only focus on presence and product information, and use the suggested retail price on marketplaces. If the retailer(s) then no longer have stock of your product, you still win the order and consumers can continue to buy at all times.
If you want to avoid a channel conflict at all costs, as a brand you can:
We also speak to parties who take the entire marketplace business to themselves. That is a strategy to earn more margin on your products. One way to achieve this is through a selective distribution agreement. This way you can only allow your retailers to sell where they offer the greatest added value (for example in their own store and webshop). In this way you are the only supplier of the product on marketplaces and you can therefore determine your price yourself. You take this step at a strategic level and it can take a few years until you are the only provider on marketplaces. This will have to be arranged in all countries in which you and your retailers are active, but in practice it turns out to be difficult. Keep in mind that not every retailer will appreciate this strategy and make sure it doesn't violate competition rules, as stipulated in the law.
The B2C market is also very attractive for an originally B2B seller. Partly due to corona, consumers are increasingly finding their way to the internet and especially marketplaces. Selling on marketplaces is also easier for you as a B2B party than other B2C options: many activities are taken off your hands by the marketplace. However, the B2C customer (the consumer) is very information-requiring and, because there is so much on offer, also price-comparative.
The difference with the B2B game is that you actually have no contact moments with your buyer and therefore the product information must be in perfect order. You know most of your own products and even more than your retailers. There is therefore an important role for the brand owner. Before you start on marketplaces, it is important that your company is equipped for this and can not only ship products per pallet, but also send individual packages to the consumer. If this goes wrong, you will receive penalties that ensure that your products are considered bad, that you lose the battle for the buying block or are even removed from the marketplace.
Many brands that are now active on marketplaces are no longer afraid of a channel conflict. Because you put products on the marketplaces, your retailers can easily join in, so that you may also encourage them to sell more. In addition, you can act as a backstop when the stocks at retailers are exhausted. Or you do compete for the buying block and earn more margin yourself. You can reinforce this, for example, by starting a separate consumer label or by means of selective distribution agreements.
Joeri ter Beek is CCO at Vendiro marketplace integration software and has 15 years of experience in e-commerce at fonQ and Wehkamp, among others.
Do you want to know how your brand is currently offered on marketplaces? We are happy to make the Vendiro potential scan. This provides insight into the providers and the price level: https://vendiro.nl/nl/resources/potential-scan