63% of Second 500 retailers sell on marketplaces to gain exposure.
3balls.com Inc., a retailer of used golf clubs, has a standard seller arrangement with eBay Inc., but the merchant’s relationship with the marketplace goes far beyond that. Through an agreement with eBay, the Professional Golf Association and the TV network Turner Broadcasting, 3balls.com created the PGA Golf Guide, a publication that assigns value to used golf clubs. EBay feeds data on its used golf club transactions to 3balls as part of the arrangement and the retailer has set prices for about 6,000 golf clubs that golfers use as a benchmark much the same as the National Automobile Dealers Association sets used vehicle pricing levels based on age and condition.
In addition to benefiting from the sales data, 3balls, No. 506 in Internet Retailer’s 2013 Second 500 Guide has come to rely on eBay sales over the 10 years it has used the online marketplace, says Doug Smith, vice president, business development and marketing. “EBay has always provided us a liquid marketplace to turn our product efficiently,” Smith says “EBay provides us consumers’ eyeballs.”
Smith declines to disclose how much of the web-only retailer’s revenue comes from eBay, other than noting it was a “significant share of total sales.”
Data gathered for the 2013 Second 500 Guide show the 90 retailers supplying online marketplaces sales data derived an average of 14.8% of 2012 web sales from online marketplaces, or $98.6 million of $664.7 million in total web sales. 63% of retailers—313—ranked in the Second 500 sell on one or more online marketplace.
Not all e-retailers have opportunities like 3balls to use marketplace data, but many smaller merchants can take advantage of online marketplaces, says Luke Evans, manager of marketplaces services at ChannelAdvisor Corp., an e-commerce technology and services firm that helps retailers feed their product data and images to e-marketplaces, comparison shopping engines and Internet search engines. “One of the main issues smaller retailers struggle with is battling larger retailers—with larger budgets—for shopper traffic,” Evans says. “Marketplaces help level the playing field for smaller retailers because the onus is on the marketplace to drive traffic. The retailer gets the benefit of all of the advertising and branding done by each marketplace.”
Among retailers ranked in the Second 500, Amazon.com Inc. is the most-used online marketplace, with 194, or 39%, of the total. Coolibar Inc., No. 539, is a consumer brand manufacturer that sells online only on its own web site, Coolibar.com, and on Amazon. While some sellers balk at Amazon’s commission fees, Coolibar, which sells apparel and accessories that offer protection against the sun, sees selling on Amazon as nothing but a benefit.
“If you have an opportunity to have a retail storefront in the busiest mall in America, why wouldn’t you do that? We get more than twice the exposure there as our web site,” says Alan Higley, vice president digital marketing and e-commerce.
“You just cannot beat the size of the audience available through the Amazon marketplace, Higley says. “Everyone complains about commissions but it’s a relatively low-cost expense for such exposure.” Amazon takes a commission of between 6% and 15% of the purchase price, depending on product category.
Coolibar also sells on eBay, and uses ChannelAdvisor for marketplace management and comparison shopping feeds, Higley says. Once Coolibar set up its product feed for Amazon, rolling it out to eBay was easy, he says. “There are huge economies of scale for adding marketplaces once you roll out to one,” Higley says. He declined to disclose how much of Coolibar’s web sales came from online marketplaces in 2012.
One advantage to selling on eBay is that shoppers there can pay with PayPal, Higley says. PayPal is a payment method eBay shoppers trust, but is not available on Coolibar.com. The merchant is looking into offering that payment option on its own web site and targeting spring of 2013 for launch.
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