Selling Products to Strangers Doesn't Cut It Anymore

It used to be that you could build a product, put it into as many channels as possible, and hope there were customers waiting at the end of those channels. From brick-and-mortar stores to e-commerce marketplaces the process was similar. Every product eventually found its customer.

This no longer works. Or, to put it in different terms, the products which outperform their peers are the ones which start with the customer. They start with the customer, understand their wants and needs, and then execute accordingly via relevant channels.

On marketplaces the customer is the marketplace. Not directly, since marketplaces have customers too, but as a concept. A marketplace just like a customer has wants and needs. All marketplaces have a different set of shoppers, unique search algorithms, and competing tools for advertising. Understanding those is in a way understanding the customer. This is why the channel shapes what is bought: “People do not shop the same on Amazon as on eBay, nor on eBay as in small websites, and neither in small websites as in retail shops. And so people do not buy exactly the same things on Amazon as they do elsewhere.”

Multi-channel is the process of selling on multiple e-commerce marketplaces. Amazon sellers don’t want to depend on Amazon for all of their sales, and thus they also list their products on eBay, Walmart, etc. Yet in many ways this is an incomplete approach. Just listing products on multiple marketplaces is not going to perform well. If inventory syncing algorithms were left on their own next week Amazon, eBay, Wish, Jet.com, Walmart, and even Etsy would have the same 500 million products listed. And yet the sales on Wish, and Etsy wouldn’t increase.

The selling point of multi-channel is that adding more marketplaces is better than adding less. But this view that every channel is just another channel is outdated. Of course products should be available to as many potential shoppers as possible, but there is more to it than automating listing creation. The challenge of listing products, managing pictures, and syncing inventory is solved. Many of the multi-channel tools will do that at a reasonable cost. But that’s probably not enough to fully capitalize on the channel. For example, the rise of ranking optimization and advertising on marketplaces is demanding a completely new set of tools and skills.

What often happens to a new brand entering a marketplace like Amazon is the disappointing number of sales. On the one hand Amazon marketplace has a volume exceeding $100 billion a year, on the other hand the path for a single brand to get a slice of that is unclear. The macro figures are impressive, but don’t matter on the micro level. Most recently Wish has entered the e-commerce marketplaces race, but with a fundamentally different model. It has no brand pages, and most customers don’t use search. Instead it rides on personalization and curation. A seller creating their products on Wish and hoping they sell themselves will be disappointed.

In the future of retail it is worth investing into understanding customers. Without that - selling to strangers - will have decreasing returns. Not treating marketplaces as strangers, even though most marketplaces share little brands can use to understand customer demographics, is a big part of that. Multi-channel is ultimately a tool, but not a strategy on its own, since it treats marketplaces as strangers.

Field of Dreams movie

In the 1989 movie, “Field of Dreams”, a farmer and baseball fan keeps hearing the “If you build it, they will come” phrase, and decides that if he can build a baseball field on his farm, then baseball players will come. This phrase has since become commonly used as a counter-example to teach that the mere act of building something is not going to attract an audience.

In retail creating a product, and putting it on the shelf is not going to sell it. By now thousands of new products get put on shelves every day. Instead it is worth understanding the customer. No more pushing units to strangers.

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Juozas "Joe" Kaziuk─Śnas

Founder of Marketplace Pulse, Joe wears multiple hats in the management of Marketplace Pulse, including writing most of the articles. Based in New York City. Advisor to other startups and entrepreneurs. Occasional speaker at conferences.

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