Marketplaces Are Horrible, So Why Do We Sell On Them?

Readers’ Questions are in partnership with Emanaged and Online Seller Consulting.

We have been selling smartphones, tablets and accessories on our website, eBay and Amazon for almost 3 years now. Our sales were very good last year but now they have almost halved. We are also opening our first outlet store in about a week’s time.

Let’s begin with eBay, where some buyers abuse loopholes in the money back guarantee to return damaged items which were delivered in full working order.

Now we come to Amazon which is an even bigger problem. We have four main issues:

1. Other sellers on our listings keep changing the product details, meaning that the listing no longer matches our product. We only find out when buyers complain.
2. Buyers are allowed to open A-Z claims up to 90 days after purchasing an item, but can also do it after 6 months and get a full refund!
3. Amazon penalizes small sellers for a few invalid returns, negative feedback and A-Z claims when there are hundreds of other orders without any problem.
4. Unlike eBay, buyers do not bother to leave feedback. The only time they will leave feedback is when they are angry.

What can we do to tackle the issues mentioned above and increase our sales on eBay and Amazon?

– Salma G., Surrey

Damn those humans

Hi Salma,

I sense a simmering hatred for marketplaces. Hopefully you don’t manage customer service.

Jokes aside, I don’t blame you. Sometimes you get the bear (your strong sales last year) and sometimes the bear gets you (the dip this year).

Let’s remember that marketplaces focus on the buyer. They are following analytics to best serve the buyer, because the buyer is how they make a living. Buyers who feel protected on a channel, and can find what they are looking for easily at a good price, are going to stick around. Wouldn’t you?

So… this disdain for marketplaces isn’t really aimed at the marketplace. Buyers are increasingly being spoiled by how marketplaces are fine-tuning to their needs, causing game-changing ripples to businesses. The marketplace is a window into desired buyer behavior. You don’t hate the marketplaces, you hate all us buyer-humans with high expectations.

I’ll reply briefly to your points, which, let’s face it, are more of a big vent in nature. In fact, it must have been mildly cathartic to write it! But first let’s take a step back and ask why we bother to sell on marketplaces at all, if they are so bad…

Let’s talk big picture

Clearly, you’re frustrated, although that might be a polite manner of phrasing it. Before you march on Seattle with a flaming torch chanting “death to the listing dictator”, let me ask – why are you bothering to sell on marketplaces in the first place? Why are any of us?

For all the hatred of Amazon’s cumbersome support, with nonsensical, inefficient, loop-to-loop procedural chaos, Amazon connects you to hundreds of millions of buyers. eBay does too. What sort of marketing spend would you need on a website to get anywhere close? What sort of banner and billboard advertisement would you need to have that many eyes on your product each day?

More product searches start on Amazon than Google. Its official, the human race now goes to marketplaces to digitally window shop.

It’s projected by 2020 that marketplaces will account for over 40% of all online retail. That’s a huge amount of traffic when you factor in growing middle classes globally, population growth and the proliferation of new marketplaces.

Marketplaces also don’t seem to be shrinking. Far from it, they are springing up all over the place. Three big marketplaces are presently in production in the EU, one being Toys R Us, who, having fallen out of favor with Amazon years back, have realized the importance of the marketplace business model in attracting buyers.

Wholesalers and distributors know they can’t escape the inevitable changes. Given that marketplaces create a landscape of catalogued items with competitive pricing and service levels, suppliers are starting to realize their role in the ecommerce industry is shrinking. They can’t resell to hundreds of online sellers successfully, if all those sellers are then competing with each other over pennies. This year, lots of suppliers have approached our agency about selling directly online under new legal entities. Some might say this is naughty or immoral to cut out their retailers, but it’s smart for their long term survival.

Manufacturers and large brands are also seeing changes. Their older distribution networks are now competing with their direct online retail activities on marketplaces, creating internal departmental turf wars over old and new thinking. Brands are slowly cutting away their distributor networks because selling direct to consumers across multiple regions and demographics has never been easier, or more lucrative. The reason for this? Marketplaces.

Even the nature of a “big brand” is shifting. Buyers are still following big brands, but the days of truly huge brands dominating markets is dwindling in numerous industries, because marketplaces are allowing smaller brands to tap into a massive buyer pool. As long as they offer a good product for a good price, they stand every chance of being successful. Rather than big brands taking over more and more territory, marketplaces have offered a platform where small brands can compete for market share without the big marketing budgets they traditionally might have otherwise needed.

Marketplaces are changing ecommerce. There is no doubt. From a buyer mindset and expectation level, to the nature of distributor and supplier networks, the world is shifting on the back of marketplace growth.

I guess my point is, you can’t fight this anymore than you can stop the tide. It will continue to change, mature and adapt over the next decade, but you cannot avoid selling online without a marketplace strategy.

That means that you need to adapt and leverage marketplaces with new strategies, or you’ll miss the wave. Clearly your present procedures, team bandwidth, systems and catalogue are all contributing to frustrating outcomes on your marketplace channels. But you can’t change how marketplaces are going to continue to adapt to the buyer’s needs. You can’t fight the direction of the industry. You need to leverage what you can from it, which might mean a very different strategy online compared to the one you use in your physical store or on your website.

What can you do? Focus on what you control. If you are wasting too much time managing these aspects, you likely lack good systems, efficient procedures and focused insights. This needs to be as efficient, with as low an overhead as possible. If you are getting frustrated with policies, rules and buyer actions, you need to calibrate your plans, policies and expectations I’m afraid.

Electronics are tough online. They are tough in general, given their fragility, complexity and the occasional inability of buyers to distinguish a hardware fault from a software fault. I am sympathetic to your frustrations, but I also feel you’re looking for solutions in the wrong places and focusing on the things you cannot control.

You’re going to need to accept marketplaces, and how they work. Maybe that’s not selling your core physical catalogue on them at all? Maybe it’s slowly getting your own branded goods set up? Maybe it’s having a different catalogue and strategy on marketplaces altogether? Maybe it’s lowering your expectations in some areas, while thinking of new categories or niche products in other areas?

What you can do

Now we’ve looked at the big picture, let’s briefly consider each of the specific points you’ve raised in your question.

eBay

Yup, buyers do abuse the money back guarantee at times. Just like any apple tree has some bad apples, eBay buyers have been proven to complain more. What should you do? Use tracked couriers and make sure your refund policy is clear on what is, and isn’t, allowed to be refunded. eBay will mediate when you and a buyer are in disagreement, so simply make sure if, and when, that happens, your position can be strongly argued: “I gave the buyer the exact information on my policies page”.

Amazon: listing changes

If you resell other brands’ products, you’re going to have a bad time. Having your own branded goods dispels pretty much all the issues you flag here. Amazon is focusing on the buyer, and the buyer wants good product information. If Amazon didn’t police and lock its catalog, it would be like the Wild West on listings. You’re fighting other sellers actions more than Amazon’s. But, I do agree that the cumbersome case-per-ASIN details change procedure is impossibly stupid. Our agency burns hundreds of hours a year on this topic.

Amazon: A-Z claims

The new laws do allow for refunds up to six months. I had to spend a bit of time re-reading this to verify, but the act does not limit buyers to 30 days. Amazon is more stringent than eBay here and you can get dealt with unfairly sometimes. However, if these are so prevalent, perhaps the item is poor quality or not worth selling on Amazon? We have some electronics sellers and although this issue does exist, it’s not a big enough percentage of sales to warrant taking any action, other than eye-rolling. If the buyer breaks the item, however, you shouldn’t be out of pocket.

Amazon: metrics

This is simply how marketplaces work. Being focused on buyers, they need to make sure they keep coming back. A lot of the time, buyers attribute a poor experience to the marketplace, not the individual seller, so therefore the marketplace has to keep tabs on sellers. Marketplaces force a seller to adopt strict policies and procedures to ensure as few mistakes happen as possible. It’s a necessity of their business model.

I sympathize that there are times where the metrics are unfairly balanced due to circumstances you don’t control. If the postal service goes on strike in France, you should not be suspended on Amazon.fr for late deliveries (this happened to sellers last year). But there isn’t really a way that a marketplace can grow and operate without forcing you, the seller, to keep the buyer experience high.

Amazon: feedback

How often do you leave feedback when things go according to plan? You’re vocal now that sales are down from last year, but were you being vocal last year when sales were good? I don’t say much when things are going well, but I’m the first to write a long ranty complaint when something goes wrong. I’m just far too busy to write a one sentence positive review when things go right.

This is human nature, and the same happens on websites, forums and a great many other areas of life. We only really want to share, or be heard, when we feel an injustice. I think you’re annoyed at human behavior more than Amazon, who are considering themselves impartial to the product’s success.

Infrastructure

Admittedly, if you want to manage and grow on marketplaces, I would favor better tools which allow you to manage data better and draw more in-depth insights. As long as you are heavily optimizing your listings for each channel, and stock is synchronized, exactly which tools you use matter little.

Tools increase speed and efficiency however, so if you are logging lots of hours on tasks which more upmarket tools can do automatically, be sure to attribute a value to your time. That time might be best used elsewhere in the company.

Sales are down

The age-old question. Sales are down, you’ve tried everything, what should you do… sadly I have no idea. When sales go down, it can be one thing or a million little things added together – I wrote about this in a previous post. You have to either research and find the issues, or try out new ideas to see if you can amend the situation.

Sadly, you won’t be competitive everywhere on every item. You can’t force an equation to fit a desired outcome. Rather than force your strategy on marketplaces, use marketplaces to leverage new strategies specific to them.

Wrapping up

When faced with a strategy that isn’t working due to external factors you don’t control, all I can suggest is you don’t focus on said external factors. You instead focus on the strategy.

Marketplaces afford you with opportunities. Be flexible to them. You want to make money and lead a better life. Follow the opportunities without any strings attached. The most successful marketplace sellers do this and nothing else.