While manufacturers and distributors have been selling online for over 20 years, many merchants are still trying out eCommerce for the first time. Selling online today is more challenging than ever. Buyers want more than a simple online portal for repeat purchases. Instead, they’re demanding sophisticated online shopping experiences not far from what they’re used to for personal purchases. B2B merchants should look to build out an eCommerce presence that acquires new customers, serves existing, and overall creates a healthy revenue stream.
eCommerce is a strategic investment that takes considerable time and resources, not to mention it’s usually a cultural shift for a B2B organization too. One of the first decisions you might make is whether to sell on a marketplace like Amazon or make the investment in your own branded web store.
This guide walks you through the differences of these go-to-market eCommerce strategies and why the answer is probably that you should be selling on both.
Today’s Modern B2B Buyer is Different
First, why should you be selling online? The reality is that buyer purchasing preferences have changed.
Take a look at what the modern buyer looks like now:
- 80% of B2B buyers will be Millennials by 2020.3
- 74% of B2B buyers report searching at least half of their work purchases online.3
- On average, B2B researchers do 12 searches prior to engaging a specific brand’s site.4
- 33% of B2B buyers turn to Amazon Business or Google to begin their purchasing journey.2
- Today, 68% of B2B buyers prefer doing business online versus with a salesperson.1
There are more than a dozen stats like these above and all point to a digital-savvy buyer who’s looking to research and complete their purchase online. eCommerce can no longer be an afterthought for your business or you risk getting left behind.
Now the tough question is, where and how do you start selling online?
Why B2B Sellers Should Sell on Amazon
Most sellers start on Amazon for good reason. As mentioned above, research indicates that buyers turn to marketplaces to search and find products they want. In addition to selling where your buyers are looking, here’s the benefits of selling on Amazon:
Low Barrier to Entry
As a marketplace, Amazon represents a relatively low barrier to entry. It’s a well-established marketplace with one of the biggest audiences across the globe. Any merchant can be up and selling on Amazon in a short period of time. To start, sellers only need to worry about their product listings, account management, pricing, and fulfillment. If you want to test out the eCommerce waters, Amazon is a feasible way to start.
A main reason to sell on a marketplace is the little upfront costs it takes to get started. You don’t need to invest in the design and development of a website. Nailing branding and messaging isn’t crucial. It’s free to set up of account on Amazon and sellers only need to consider Amazon’s selling fees and fulfillment costs. Otherwise, sellers get to piggyback off Amazon’s industry-leading site experience.
As mentioned above, potential prospects are already looking on Amazon. One-third of buyers turn to Amazon to research the products they’re looking for. This means you don’t have spend as much time and resources on advertising and brand awareness to drive traffic to your site. Instead, your focus will be on enriching your product listings and winning the Amazon Buy Box to get in front of as many potential buyers as possible.
Overall, Amazon is a “relatively easy” way to start selling online. It overcomes some of the toughest challenges for new online sellers like driving web traffic, developing an online storefront, and executing a favorable online shopping experience.
Why Amazon Isn’t a Long-Term eCommerce Strategy
Despite its obvious benefits, most sellers find out that Amazon isn’t the only path to eCommerce success. It might not even be your best path to success online. Sellers must consider some of the drawbacks of relying on a marketplace to grow revenue, establish a brand, and build lasting customer relationships.
You Don’t Own Buyer’s Data or Relationship
A big benefit to online selling is the ability to gather data on your customers. You can track everything from what links they click to the lifetime of their purchase history. In turn, you can improve and personalize the buying experience at every step. The better you know your customers, the better you can provide for their needs.
When selling on a marketplace like Amazon, you don’t have access to rich data about your buyers. At least, not in the same way as you would by selling directly to buyers from your own website. Amazon owns that data, and they don’t share most of it with its sellers. They know what products are ranking, what actions users are taking on their site, and more. Amazon uses that data to their advantage. If you rely on Amazon to gather important data about your users, you’ll miss out on important insights, making it hard to make the right decisions later.
Third-party sellers on Amazon also don’t own the customer relationship. You’re one vendor out of millions on the platform. When buyers receive their products, it’s in a box from Amazon and not your company. All seller communication is done via Amazon’s platform and their service reps. In other words, buyers will be more used to doing business with Amazon, not your brand. This makes it hard to control your interactions with buyers and the consistency of it.
Amazon has almost three million active third-party sellers on their marketplace. While it’s great to tap into their established audience, it’s also an extremely competitive space to sell on. You’ll be listed with hundreds of other direct or indirect competitors. Even if you’re the first of your category, you can tip of other manufacturers, distributors, or Amazon’s private label to try to market a similar product, most likely sold at a lower price.
While Amazon makes it easy for you to sell on their platform, it’s easy for everyone else too.
Dealing with Low Margins
Buyers turn to marketplaces for low prices and free or discounted shipping. Amazon provides the perfect space for buyers to compare sellers by price. Selling on Amazon often turns into a pricing war that’s a race to the bottom. Not only must you continually lower your price, but you’re also paying Amazon fees for every purchase. It’s easy to see how your margins on products quickly become squeezed, deteriorating your opportunity for profit. We haven’t even factored in returns yet, either.
If your competition continues to sell lower, then your hand is forced to sell at the same price or risk losing the sale every time. It’s a harsh reality of selling on Amazon that sellers must consider.
Over the past few years, Amazon and its sellers have dealt with the problem of counterfeits. It’s perceived that Amazon isn’t doing enough to stop the issue either. In some cases, counterfeit items can even be sent in lieu of your own authentic products because of commingled inventory. Due to it, notable brands such as Birkenstock and Nike have refused to do business with Amazon. Counterfeits can be a considerable problem because they affect customer trust and brand image.
While Amazon presents a quicker way to sell online, your opportunity can be limited by risks like these above. Instead, merchants realize that the real opportunity lies in investing in your own branded website.
Use Amazon to Complement Your Own Web Store
The point isn’t to forgo selling on Amazon (unless experience tells you otherwise). Selling on Amazon certainly has its strategic purposes. When first starting out, it can be a great way to acquire new customers that you didn’t have access to before.
However, Amazon, at the end of the day, is a marketplace. It presents serious challenges that can hinder your overall revenue and ability to build longstanding relationships with customers. Therefore, merchants should consider Amazon as one part of your overall online strategy.
Controlling the Buying Experience Online
While a buyer might first encounter your brand on Amazon, your ultimate goal should be to drive that customer to your own branded web store where you control the buying experience going forward.
A branded web store gives you much more control over your online experience than you’ll ever have with your Amazon account. With a web store, merchants can collect first-hand data about how buyers interact with your brand online. This data – such as where they click, when they abandon a cart, what products they buy, and more – drives effective strategy for the life of the business. You’ll know how to evolve for their needs and market to them. You’re in full control of how your brand interacts with buyers and you can keep it consistent at every touch point.
Overall, building a branded web store is a long-term investment in your brand. It gives you full control over your buyer’s experience. While Amazon might be a first step or one step along the way, the ultimate goal should be drive repeat buyers to your web store.
Building out a modern eCommerce site is a project in itself for a B2B merchant. While it takes some serious thought and cultural changes to implement a successful digital transformation in any organization, it’s the type of experience that your buyers demand.
To guide you through selling on your own web store, check out these helpful articles:
- Why Manufacturers and Distributors Should Sell Online
- Get Your B2B Sales Team On Board for Your eCommerce Migration
- How to Choose the Best B2B eCommerce Platform for Your Business
- How to Navigate B2B eCommerce: Go-to-Guide for Manufacturers and Distributors Selling Online
- The Death of A (B2B) Salesman – Forrester
- How B2B Companies Must Deal with Younger Online Buyers – Digital Commerce 360
- Make Your B2B Business a Digital Business – Forrester
- The Changing Face of B2B Marketing – Think with Google