Online marketplaces are platforms where third-party companies can register as sellers and are allowed to sell products to customers directly, whereas e-commerce sites are online stores where the brand(s) sell their own products on their own website, and the product inventory is owned by the website owners.
They are often the places consumers go at the start of their consumer journey, whether it’s to look for ideas or to choose from a wide range of brands.
If a brand is new and wants the world to see them despite their small size (and hence, lower visibility), then having a spot as a search listing in an online marketplace is a good idea — selling products on these platforms would grant exposure that is otherwise hard to achieve on their own.
However, there are some downsides to putting your brand up on online marketplaces.
Resellers on online marketplaces may damage brands’ image.
One of the biggest threats of online marketplaces is that products sold on these platforms do not have a distinct branding, and risks difficulty in building customer rapport.
The quality of customer experience and engagement online with the brand is also impacted as the online marketplace owner owns the customer relationship and rapport, and interaction is more present between the marketplace owner and consumer, not with the brand.
The customer experience with the brand on the online marketplace platform would also be less unique and personal as compared to when on its own brand website, which would allow for more leeway for creativity and expression. The freedom a brand would have in customising its own seller landing page would be limited, which makes it difficult to index a unique brand identity e.g. cosmetic brand Kat Von D’s rocker brand image.
The Worrying Case of Wandering Eyes…
It is status quo on an online marketplace to compare and contrast — as is the case with regular, real-life markets.
On marketplaces, a brand’s products can be quickly compared against the competition, knock-offs, and the site’s home label (e.g. ASOS brand) on price, quality and other measures such as price (although, if you have a unique product, the competitive comparison may be less of a concern).
Someone looking to buy a pair of new headphones from Bose might see in the related products tab a Sony listing with higher reviews and a better price point, and as a result be tempted away from Bose.
Given the plethora of brand choices a marketplace spoils consumers with, it would be challenging for companies to command customer attention to just the offerings of their brands.
Resellers may tempt consumers away with their lower prices.
Sellers are often also subject to a price war because the products are undifferentiated, and brands might lose customers to resellers of their products.
On Amazon, for example, if one were to enter a simple search for a Macbook charger, many search results would appear, and it is likely that there would be many third-party resellers selling the same model of Apple chargers alongside Apple’s own seller profile.
Faced with so many options of the same product, consumers would likely end up making their decision based on price, ratings and delivery time. Customers are often looking instinctively for the lowest prices, and resellers from other countries may be able to sell the product for a lower, discounted price than what the original brand sells it at.
Additionally, if resellers’ prices and the original retail price do not match, this might potentially lead consumers to think that the product is not worth what it is.
The Search Algorithm may work against you.
Online marketplaces like Amazon and Lazada often give suggestions based on what users search for previously. While this would be ideal for brands who have household-name status and are synonymously associated with the product, the search algorithm does not work for all.
Should a brand have products that are low in search intent (in other words, products that people should just discover through broad topical searches but won’t know of the specific category), then the products wouldn’t be showcased as often.
Markets also may trap their sellers by forcing them to pay for promotional slots to gain visibility in order to stand out from the crowd.
