Webinar Recap: Measuring the Financial Impact of Marketplace Control

Emilee Valken

April 2, 2021

Maintaining control of your brand on marketplaces is critical for your long-term growth. To maximize your brand’s health and profit, you need to regain control as quickly as possible. But what is the actual impact of marketplace control, and why should brand leaders care?

In this week’s Pattern webinar, we’re talking about what marketplace control is, why it’s so critical for your brand, and the financial impact it can ultimately have on your business.

What is marketplace control?

Having marketplace control means that your brand is being represented with integrity online, your product is being distributed via authorized sellers, and that product is being sold at authorized price points. Essentially, your ecommerce is a well-oiled machine across all channels.

Maintaining overall marketplace control requires control in three primary areas:

  • Pricing: price control is retained by enforcing a MAP policy, creating price parity across all channels, and adhering to national promos.
  • Branding: brand control is retained by ensuring the quality of your product images is consistent across channels, your copy is compliant, and your messaging is unified.
  • Distribution: distribution control is retained by only distributing through authorized sellers, meeting customer expectations for product quality, and aligning channel incentives.

Why does marketplace control matter?

Marketplace control matters because without it, every channel of your business suffers, including, and perhaps especially, your brick and mortar distributors.

Before the advent of marketplace ecommerce, brands were highly incentivized to use scaled distribution to get their product into as many hands as possible. With scarce ways to compare prices offline, scaled distribution worked really well. Marketplace ecommerce has completely flipped the script.

Marketplace ecommerce makes price matching instantaneous, because customers can see the price of a product from almost every single distributor who’s selling it, at the same time. That much access makes wide distribution a liability.

“Because there is so much transparency in the world today across retail environments, your success is really predicated on the degree to which you have very limited distribution and what we call selective distribution on your online channels,” said John LeBaron, Pattern’s Chief Revenue Officer.

Without pricing control, branding control, and distribution control, you open the door wide for unauthorized sellers to erode your pricing and harm your brand reputation by representing it poorly online.

Without control, an unauthorized seller can get their hands on your product, list it on Amazon for however much they want, and then markdown the price to get ahead on marketplaces and undercut authorized sellers, forcing other sellers to lower their prices in order to compete. Without control, these prices will continue to be lowered, and it will penalize your distributors who are trying to follow the rules. Pretty soon, your authorized sellers may drop your product altogether because—due to eroded prices online—they cannot afford the overhead to carry it, sell it, and price match.

These negative impacts are cyclical, particularly for your brick and mortar distributors. Without control, your brand will be caught in a profitability death spiral where you’ll consistently lose the Buy Box online—disincentivizing distributors from creating engaging and clean listings and fragmenting your ad strategy—and you’ll lose distributors who can’t afford to carry your product.

You’ll also watch your brand lose its value across all channels. According to LeBaron, the race to wholesale eats at your brand equity. With too-low prices, customers perceive your products as lower value. Lack of control on the distribution and branding fronts means that unauthorized sellers can easily misrepresent your brand in their listings and their interactions with customers, diminishing your equity further.

According to LeBaron, if brand equity is falling in one channel, it’s “certainly falling in other channels as well.”

The financial impact of no marketplace control

“Once you’re in that death spiral, it’s hard to turn it back around. You have to make certain changes to really recover from that,” said Jason Beesley, Pattern’s CFO.

Profitability Death Spiral

Tommie Copper is one example of a brand that didn’t address marketplace control immediately and were eventually significantly harmed by price erosion. Without control, Tommie Copper watched the pricing on their products plummet at the hands of unauthorized sellers, taking their margins with them.

Tommie Copper

Tommie Copper is just one example. LeBaron shared another example of a brand that sought out Pattern’s help to regain control of their business after price matching gutted their profits.

“We had a large retail consumer electronics brand that came to us, and they were paying Best Buy half a million dollars a month in price match guarantees just because they had 400 unauthorized sellers selling all of their products on Amazon, and they were just hemorrhaging profitability,” LeBaron said.

This brand didn’t know who the unauthorized sellers were, why they were dropping the price, or where they got the product because they lacked proper control.

“Not only does that price match guarantee really start to hurt,” added Scott Crandall, Pattern’s Head of Revenue Operations, “but you just lose credibility. You lose any leverage that you have with those retailers. They don’t want to have to deal with all of that, so they’re going to give shelf space to other people at some point who have that better price stability online.”

For some brands, having more control doesn’t necessarily provide significant gains, but it does act as a protective barrier helping your brand avoid scenarios like these later down the road.

“In some cases, getting control on ecommerce, even if it’s a net not loss or not gain from a pricing and margin perspective, is generally protecting or hopefully helping to reinvent and improve and turn around the profitability death spiral that’s happening in brick and mortar, which ultimately might be 80% or 70% of your sales, maybe higher than that,” LeBaron said.

The benefits of marketplace control

The equation for success in ecommerce is:

Revenue = Traffic x Conversion x Price

You need customers to see your listings in the right way at the right time, you need for them to be engaged enough to click, and you need pricing that is attractive and reasonable. Marketplace control, particularly distribution control, helps you maximize every element of the ecommerce equation, because single sellers have far more incentives to be the ones driving the traffic and the conversion and positively shaping your brand image online than a wide network of sellers.

“The issue in ecommerce isn’t getting to the end consumer. The marketplaces handle that wonderfully,” said Beesley. “The issue is more how you are doing that, and that’s why limiting your distribution really allows you to even further maximize that reach.”

Control on marketplaces protects your business and it speeds up profitability.

“As you have that selective distribution on Amazon, on these marketplaces, there’s really a great flywheel that starts to develop there, a really virtuous cycle,” Crandall said.

Your distributors are more invested in your brand’s image and success. They provide quality listings with dynamic copy. They focus on a better customer experience, and you have a more consistent, sharpened ad strategy that gives you higher rankings. Soon, instead of losing profits, you’re making long-term gains and really solidifying your brand presence.

To learn more about marketplace control, how Pattern can help you win on your ad strategy to further your brand’s growth, and what opportunities for growth are available to your brand, check out the rest of our conversation in this Pattern webinar or request your free demo.

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Global Ecommerce Weekly News: 27th September 2022
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Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)

How an Amazon SEO Agency Should Be Serving Your Brand
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How an Amazon SEO Agency Should Be Serving Your Brand

If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.

Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.

At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise  are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead. 

What is an Amazon SEO Agency?

An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.

A great Amazon SEO Agency partner will:

Prioritize Your Success

Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance

Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS. 

To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.

Provide Detailed Competitive Insight

A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.

It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.

Reduce Your Ad Spend Over Time

Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins. 

Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.

Amazon SEO Optimization and More

As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.

Contact us to learn more about our SEO optimization services.

4 Ecommerce Consultant Must-Haves
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4 Ecommerce Marketplace Consultant Must-Haves

Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces. 

Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.

So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.

Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products. 

What is an Ecommerce Consultant?

An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.

An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.

Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.

1. Brand Obsession/Specialization/Passion

At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services. 

2. Proven Results

It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.

3. Wide Range of Marketplace Expertise

It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.

4. Network of Resources

The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.

Achieve Your Ecommerce Goals With Pattern

Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces. 

With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.

Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.