How to sell on Marketplace & selecting the right channel strategy for your category

Digital marketplaces, channel management

A category manager / leader can decide to have multiple ways to reach out to their end consumers. Depending upon who they are, what they are selling, and what make sense from cost perspective.

• Offline (Retailers (Large format retailers or small Kirana shops, wholesalers / Distributors)

• Online (Can have their own e-commerce website / mobile apps, marketplaces like Amazon, Flipkart, Myntra, Bigbasket)

As I said in the past, My goal is not to just provide you another theoretical framework but also give you the firsthand account of what you will be doing in a particular role within the category management universe.

A category managers - ecommerce working in FMCG / consumer goods companies is expected to maximize the sales and profit of the categories and achieve sales budgets and remain competitive in the marketplaces.¹ Hence, you need to know how do you work with Marketplaces.

Few key points to aid in your decision-making to decide on your channel strategy:

Challenges with Marketplaces :

• They eat into your margin.

  Read this for fee: https://services.amazon.in/services/sell-on-amazon/pricing.html

  For different category, you have different referral fee. Then you have closing fee, Fulfillment fee (shipping fee, FBA specific fee).

  

• Amazon owns the customers and their e-mail address.
  Check their Policy: (Marketing communications are prohibited. If you receive customer information such as addresses or phone numbers to fulfill orders, you may use that information only to fulfill orders and must delete it after the order has been processed. You may not use customer information to contact customers (except through Buyer-Seller Messaging) or share it with any third-party. )

  This means that you will not able to create brand loyalty. Customer acquisition is important from long-term business point of view and you will not be able to build that via Amazon. They are Amazon’s loyal customers and not yours.

• Amazon and all these marketplaces have too much power because they own the platform. They can shut down your account and that can have business impact. < Refer the previous post on this>

Challenges with building your own e-commerce website: Mainly it boils down to 2 buckets : cost and capabilities

• High customer acquisition cost ( cost of marketing initiatives, social media - Facebook ad, google ad etc.)

• Technology cost (Hosting, developing e-commerce website although you can use various ecommerce solutions - Shopify, magneto etc.)

• If you are a small business owner with limited product offerings, and fulfilment capabilities, it doesn’t make sense to have a stand-alone website because you need to scale to get return on your investment.

• market share - If all your major competitors are on these marketplaces, and customers are buying through these marketplaces, you can’t afford to be not there.
  Customers are buying online through Marketplaces, hence you can’t afford not to be there. It’s an opportunity cost for you.

  
  So finally, as yoda would say :

In this article, we will be covering how to place your products on Amazon and this can be replicated for other marketplaces.

Let’s take a category as a case study. Few days back, I was searching options to buy bicycle so let’s take bicycle as an example. Assume, You are a local manufacturer of bicycle and you mainly sell through online.

These are the major activities you will be performing :

1. Amazon SEO

Your goal is to be on the first page of search. Probability of customers browsing next pages keeps getting lower and lower.

How do you do that?

• Keyword research - What people are looking for? When they go to google or directly search on Amazon, what they write. If you don’t have big budget, you can use Amazon search bar to see what people are looking for. You can also see proper cataloguing for bicycle.

You can use keyword planner to find out relevant keywords, and other information i.e. competition, ad impression share, average monthly search and cost associated with the keyword in case you advertise using that particular keywords.

You can see that electric bike is a popular search these days and competition is also high, hence your page bid is high (range Rs. 4.49 to 14.98). This also informs your market research - what people are buying these days.

You can also do google search to see what questions people are asking and understand their motivation to buy a product:

You can see that people wants best and affordable. Some people buy cycle for weight loss purpose. This will help you to develop product messaging in an effective manner.

• Title, description with proper metatags; thumbnails and reviews / rating (verified purchase reviews is important)

2. Amazon Ad : If you are not a known brand and want to grow inorganically, you can try amazon advertising - display ad, video ad, sponsored product etc.

3. Amazon choice : For some products on Amazon, you will see a badge of Amazon choice. This definitely attracts more customers to your products.

   

Essentially, a product marked "Amazon's Choice" is an item that many buyers have purchased and were satisfied with, as told to Amazon through reviews data. If you hover over the icon, there is a description that reads: "Amazon's Choice recommends highly rated, well-priced products available to ship immediately."

Read <this> to understand how you can become Amazon choice. and <this> to become the best seller.

Do you need to give discounts to attract more customers to your products and stay competitive?
There are alternative ways to become the customer choice in the Amazon / Flipkart and other Marketplaces other than providing deep discounts.

1. Amazon ad :- Amazon and Flipkart offer Paid Account Management - a KAM/RE is assigned to you, the cost will be ~3k per Month. They share details about demand for your product in the category, what are trends in category and how you can bid for ad spots on portal.

2. Proper cataloguing: Placing products in right category

3. SEO : Understand how SEO of platform work - this depends on products ratings, returns, delivery time etc., The description should have details with right search keywords. Add images, video, technical details etc. Product reviews and rating.

4. Take part in daily spot offers that the platform offers.

I believe by now we have a good understanding of how we can be present at marketplaces and grow our category.
Look forward to comments or insights related to Marketplaces.

1. https://www.iimjobs.com/j/category-manager-ecommerce-1-3-yrs-664089.html