Online marketplace sales are growing rapidly and deserve significant attention. In fact, recent reports suggested that sales from marketplaces like Amazon, Ebay and Tmall now account for approximately 62 per cent of all global online retail sales.
When it comes to why Australian brands are not selling on marketplaces, inexperience and resource challenges are often the main barriers. However, local brands must work around these issues, given that 80 per cent of Australian consumers today shop online – and of those – 97 per cent purchase goods on marketplaces.
So, with clear benefits existing for Australian brands to sell through marketplaces, why aren’t they?
Marketplaces – are they worth the effort?
For some Australian brands, marketplaces aren’t considered a significant enough channel to invest in. This is an incorrect assumption and a potentially damaging long-term strategy. For instance, Amazon only began operating its Australian marketplace in December 2017. Since then, Amazon’s Australian operations have grown significantly, with sales reported to have hit $1.75 billion.
Amazon is only just getting its infrastructure in place in Australia. Once it builds out its infrastructure, it will become more aggressive in its marketing to acquire new customers. When this happens, consumer sales will amplify, and brands not involved in the channel will face challenges. Brands that are too late to recognise Amazon’s value will be challenged to establish their presence in a crowded market. And as more resellers come to Amazon, gaining control of customers becomes harder and more competitive.
The perception of devalued branding
Another reason for brands not selling on marketplaces is the platform’s association with price-sensitive shoppers, relating to a brand’s fear of looking ‘cheap’ or ‘on sale’. While this fear is understandable, it’s simply not the case that marketplaces are only for low-priced goods.
Luxury designers are selling through marketplaces like Amazon, with high-end brands like Dundas reporting that its Amazon sales account for up to 30 per cent of “direct-to-consumer” sales per month and that buyer reaction to the brand being on Amazon was “strong and increasing.”
It’s true that when more expensive products are stacked up against many other lower-cost ones, it’s easy for consumers to choose the cheapest. It’s also true that for shoppers that are looking for a cheap buy – there are many brands that can cater for this on the marketplace. But this is the same as any shopping centre. Just because someone enters a shopping centre doesn’t mean they are your ideal customer, which is why brands need to develop and execute an effective marketplace strategy to ensure that their brand can be discovered and successfully engages consumers to make a purchase.
Lack of expertise
For a lot of brands, even if they wanted to be more involved with online marketplaces, they lack the resources and expertise to be successful. Under-resourced (or inexperienced) sales and e-commerce teams mean that even if a brand desires to sell through marketplaces, it isn’t possible.
Without a hands-on e-commerce team leading the way – successfully selling through a marketplace becomes extremely challenging. Even if a brand has internal resources to begin selling on marketplaces, they need a marketplace strategy – including marketplace management, fulfilment and inventory logistics, content and advertising, and returns and customer support.
This is where e-commerce accelerators can offer support. E-commerce accelerators provide brands looking to grow their business through marketplaces with a mixture of services based on a model of buying stock and acting as the authorised seller for brands on platforms such as Amazon and Ebay. This enables brands to achieve profitable growth, control, develop new partnerships, and expand internationally.
The online marketplace is the future of retail
It’s inevitable that Australians will shop more on marketplaces and that the share of wallet from this channel will increase. And as more brands realise the financial benefits of being present on marketplaces, competition will intensify. Early adopters are already seeing the benefits of selling on marketplaces, which can not only broaden brands’ reach and revenue, but also act as a defence strategy against competition and unauthorised sellers.
For more information on how your brand can grow its e-commerce revenues today, get in contact with our team now.
