October 18, 2013, 10:45 AM

Finding the right online marketplace: six questions for retailers

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 Who does the customer believe is doing the selling?

Finally, consider the trade-off retailers may face when they join a marketplace between increasing sales versus building a brand. Those things aren’t necessarily mutually exclusive, of course, but sometimes you have to sacrifice one for the other. For example, merchants we’ve worked with here at Vendio say that Amazon Marketplace is good for driving sales in some categories but offers merchants little in the way of visibility. In fact, buyers believe Amazon is the merchant and will largely ignore the role the actual seller had in making a shopping experience a positive one. Amazon’s brand awareness and clout with consumers means riding the company’s long coattails can be a winning strategy. But vendors shouldn’t expect to build their brand while selling on Amazon or other marketplaces where the identities of individual merchants are submerged beneath the marketplace’s overwhelming presence.

 There are other options. In order to attract designers and manufacturers selling unusual or interesting products, some marketplaces will negotiate deals that include high brand visibility on their website. Often, however, the manufacturer will have to give up some 50% of the sale price of products on offer--winding up in a relationship that looks more like the traditional one between wholesaler and a brick-and-mortar retailer. Manufacturers also may be forced to sacrifice control of pricing and promotions.

 If you are uncertain about how a marketplace can help your business, consider attending one of the many marketplace seller conferences that take place periodically around the country, at which you can exchange business insights with experienced sellers before making a large commitment to a new marketplace.

Vendio is a San Mateo, Calif.-based e-commerce software provider that helps merchants manage online sales in major marketplaces.

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