Why Having Multiple 3P Sellers Kills an Ecommerce Advertising Strategy

Tony Morales

January 27, 2021

Advertising is the ticket to making more ecommerce sales, but what many brands don’t realize is that the effectiveness of their advertising can be hampered by the number of sellers they have distributing their product online.

Having more sellers might seem like an easy way to raise awareness of your brand across a myriad of different markets. This may have some truth in brick-and-mortar settings, but online the truth is that the more sellers you have, the more harm it does to your advertising strategy. Multiple 3P sellers aren’t your secret weapon for making sales, at least not for long. They’re one of the biggest obstacles stopping your brand from growing long-term.

Why multiple 3P sellers are bad for ad strategy

Having multiple 3P sellers might make sense from an advertising perspective when you initially think about it—the more sellers you have distributing your product, the more far-reaching your brand and therefore, the higher your revenue, right? Not quite. It’s far less idyllic than that. The reality is that multiple 3P sellers can corrode your brand’s longevity right under your nose, harming your pricing and, more to the point, wrecking your advertising in the process.

Having multiple 3P sellers harms your ad strategy in five primary areas:

  1. Conversion rate
  2. Buy Box ownership
  3. Cohesiveness
  4. Ad bids
  5. Pricing

1. Multiple 3P sellers harm your conversion rate

Your product listings are, in many ways, the face of your brand. How they look directly impacts your conversion rate, and since converting traffic to sales is your goal as a business, it’s really important that your listings look sharp. To keep them looking sharp, you have to stop ceding control to so many 3P sellers.

Multiple 3P sellers don’t have the same incentives you do to make listings for your product look clean and consistent. While you’re concerned about how consumers perceive your brand, many 3P sellers are far more concerned with how they can compete on price to get ahead. This means they may get sloppy and lazy, posting low quality images of your product or providing too few images in the stack to give customers a good idea of what your product is and how to use it. They might post poorly written copy, not provide enough information, or fail to effectively utilize the space on the page to engage customers.

All of these things work against you by making your customers lose confidence and trust in your product, the buying experience and, by extension, your brand. That’s a key thing to remember. How your product is portrayed by one seller reflects on your brand as a whole, and if you have too many sellers doing a shoddy job of their listings, you’re going to tank both your conversion rate and the way consumers view your brand.

2. Multiple sellers affect your Buy Box ownership

The Buy Box on Amazon is prime real estate. It can jet propel your sales and conversion rates and get your brand invaluable exposure. Winning it also unlocks Amazon’s coveted sponsored ads. That means you want to win the Buy Box as often and consistently as possible.

While winning and maintaining the Buy Box isn’t hard to do with one 3P seller and a strong presence on Amazon, having multiple sellers can put a lot of jarring stops and starts into your ad strategy and give you less control, even leading to Buy Box suppression as you lose out on pricing control.

Amazon gives a higher percentage share of the Buy Box to the strongest seller on a listing. That seller might get 80% of the day, for example, while a lower-ranking seller gets the remaining 20%. Without 100% of the Buy Box, you can’t have 100% ownership of the day, which means you can’t decide when your sponsored ads run. They might run at a time that isn’t very conducive for sales as a result.

Another downside of having too many 3P sellers is that you essentially have to round robin winning the Buy Box. It can take a lot of time and work to coordinate everything.

3. More than one 3P seller makes your strategy less cohesive

For an ad strategy to be most effective, it needs to be aligned across targeted keywords, competitors, and content and look the same across all channels. It takes a lot of work to organize it all, and (as you can imagine) this is significantly easier to accomplish with fewer sellers.

The wider your distribution, the more work you have to do for a successful ad campaign, like communicating with all sellers on promotions, calendaring sales, supplying marketing materials, and more. In this scenario, you can’t always count on a wide network of sellers to execute your sales effectively. What typically ends up happening is your ad strategy is inconsistent and incohesive among your sellers, therefore not as strong as it could be.

4. Multiple 3P sellers may increase the cost of your ad bid

Aside from wrecking your conversion rates and requiring a lot of coordination, a wide distribution of sellers can also cost you more in ad spend. Without strong communication between your sellers, it’s very likely they’ll end up competing on the same keywords and drive up the cost of the bid for them on Amazon, resulting in a lower ROI and intrabrand competition. The last thing you want to do is watch ten different sellers waste your advertising dollars to compete with each other and win few sales for you in the process.

5. More than one 3P seller causes price erosion

Selling on ecommerce marketplaces is like juggling: the more balls you have in the air, the harder it is to manage them. When you don’t have control, one or more of them will go rogue and then soon all of them will come toppling down on top of you. In ecommerce, price erosion is when the balls fall.

Price erosion is what happens when a seller drops the price on a product below MAP to get ahead and win the Buy Box, forcing other sellers to lower their prices on that product to compete. These sellers will keep moving on price to beat each other out, and pretty soon, your product will have been stripped of both its value and its margins. This not only harms your brand online, but it damages your relationship with your brick-and-mortar distributors by corroding their margins. Left unchecked, this price erosion will keep happening and it can lead to a profitability death spiral where your products fail to make a profit. Pretty bleak, isn’t it?

The worst bit is that when price erosion is happening, advertising can make it worse. Any attempt you make to advertise a product that isn’t already in the Buy Box will inevitably drive traffic to the listing with the lowest price. Inadvertently, you’ll end up accelerating your own price erosion and the profitability death spiral.

How Pattern can help

One way you can solve your advertising problem is by narrowing your 3P partners down to exactly one: Pattern.

Pattern is like the Swiss army knife of your ecommerce business, because we offer you every tool you need to clean up your channels, enter new marketplaces, and grow your profits long-term. When it comes to multiple 3P sellers, we pinpoint and help you eliminate the bad players eroding your prices, sharpen your listings, help you win the Buy Box, and do the grunt work to make your advertising strategy cohesive across all channels.

We use data science to revitalize your brand presence from top to bottom and help you win big on ecommerce. We can also take your brand into new frontiers like Walmart Marketplace or even further to international marketplaces to help your brand make a global footprint. We aren’t just one of your sellers. We’re a partner that loves your product as much as you do and puts your success first.

To get started or learn more about how a partnership with Pattern can help your business, contact us with the form below.

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Sept 6, 2022

Global Ecommerce Weekly News: 6th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon announces new inventory and distribution service, AWD Amazon has launched Amazon Warehousing and Distribution (AWD), providing inventory and distribution services to its sellers as a means of addressing current supply chain issues. AWD is now available for sellers using Fulfilment by Amazon (FBA), i.e. outsourcing their fulfilment to the platform. Amazon has plans to expand the service outside the platform in 2023. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/02/amazon-introduces-new-service-to-help-solve-supply-chain-challenges/) Amazon Web Services (AWS) launches in the UAE AWS, Amazon’s cloud-computing platform offering, has launched its second region in the Middle East and now provides its services in the UAE. The move will now allow anyone in the UAE who utilises cloud technologies to harness AWS’s advanced platforms and APIs. An estimated $11 billion USD is expected to be added to the UAE’s GDP thanks to the implementation, with an average of 6,000 external vendor jobs to be created annually. AWS is now available in 87 zones across 27 regions, with sights set on expanding further across Australia, Canada, India, Israel, New Zealand, Spain, and Switzerland. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/30/amazon-web-services-launches-region-in-uae/) --- Other Marketplace News --- Lazada to launch in Europe Alibaba-owned ecommerce platform Lazada is set to launch in Europe, marking a refreshed internationalisation push from the company. The move follows toughening economic conditions and performance in Southeast Asia, advancing the need to tap overseas markets. In Europe, Lazada will face tough competition from giants like Amazon and Zalando. Lazada’s exact entry strategy is to be confirmed and will be reliant on macroeconomic and market conditions, according to Lazada CEO James Dong. [Read more on DigitalCommerce360](https://www.digitalcommerce360.com/2022/09/01/alibabas-lazada-to-take-on-amazon-zalando-in-europe-push/) Chinese ecommerce giant Pinduoduo to launch cross-border platform in the United States Pinduoduo, a Chinese ecommerce giant rivalling Alibaba and JD, has announced it will be launching a new cross-border ecommerce platform. The marketplace is set to launch in the United States next month, as part of the company’s larger push into new markets. Pinduoduo found success in China thanks to its rock-bottom price offerings and harnessing of social commerce marketing, emulating strategies similar to fast-fashion giant Shein. [Read more on Yahoo Finance](https://uk.finance.yahoo.com/news/pinduoduo-launch-international-e-commerce-034129263.html) Alibaba launches its biggest B2B sales event, ‘Super September’ China ecommerce giant, Alibaba, has now launched its month-long B2B sales event ‘Super September’. The event provides 40 million buyers and 200,000 suppliers with the ability to connect on the platform, showcasing a ‘virtually unlimited’ number of products. The event hopes to foster new cross-border business relationships to tackle supply chain challenges currently faced by businesses. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/alibaba-launches-super-september-b2b-sales-event/) --- Other Ecommerce News --- Klarna’s losses quadruple in first half of 2022 BNPL provider, Klarna, has reported losses of $581 million USD for the first half of 2022. This figure is almost four times larger than a year earlier, where $129 million USD in losses were reported. The company attributes the losses to employee costs, technology investments, and rising credit losses. Klarna’s figure reporting comes amidst worsening economic conditions, fresh legal and regulatory scrutiny, and pressure from Big Tech competitors. [Read more on The Financial Times](https://www.ft.com/content/483451db-9221-4ca4-83a6-b4ddc6bfcfbb) [Read more on the Guardian](https://www.theguardian.com/business/2022/aug/31/klarna-losses-more-than-triple-as-consumer-spending-slows) One fifth of Snap employees to be laid off amidst poor financial performance Social media platform Snap (‘Snapchat’) has announced it will be laying off 20% of its employees and closing out a number of projects following a year of poor financial results.The move will see 1,200 employees globally lose their jobs, saving the company an estimated $500 million USD in costs. Snap is currently valued at $20 billion, an 84% decrease from its valuation of $130 billion last year. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/01/snap-to-lay-off-20-of-its-workforce-and-wind-down-a-number-of-projects/)
Aug 30, 2022

Global Ecommerce Weekly News: 30th August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon set to shut down Amazon Care Amazon is closing its telehealth service, Amazon Care, which launched in 2019 as a trial program for its headquartered employees. Later the service was rolled out nationwide for employees and other companies. The ecommerce giant has now made the decision to move away from the healthcare space, believing it was not the right long-term solution for its enterprise customers. [Read more on CNBC](https://www.cnbc.com/2022/08/24/amazon-is-shutting-down-amazon-care-telehealth-service.html) Peloton closes new deal to sell on Amazon Following a recent deal, Amazon customers will soon be able to buy Peloton fitness equipment on the marketplace, marking Peleton’s first move outside a direct-to-consumer model. According to Peloton’s CCO, there are already around half a million searches on Amazon for Peloton products every month, despite having no presence on the marketplace. Some key products include the original Peloton Bike, retailing for $1,445 and Peloton Guide for $295. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/24/peloton-strikes-deal-to-sell-fitness-equipment-on-amazon/) --- Other Marketplace News --- 60% of Malaysians are buying from local sellers on Shopee A recent survey of nearly 3,500 respondents found that nearly half of the shoppers prefer to purchase from local sellers due to shorter delivery times. Other shoppers decide to shop locally due to the quality of the products made in Malaysia and an interest in keeping the economy running. As a result, smaller local merchants have been able to grow their businesses, and shoppers benefit from shorter delivery times, products of high quality and supporting local businesses. [Read more on The Malaysian Reserve](https://themalaysianreserve.com/2022/08/25/around-60-malaysians-are-buying-from-local-sellers-on-shopee/) Flipkart’s social commerce platform Shopsy crosses 100 million users Flipkart launched a social commerce arm, Shopsy, in July of last year, which has now surpassed 100 million users, ahead of its target timeline being the end of 2022. This acquisition of new users has made Shopsy one of the largest platforms of its kind in the country, and is expected to onboard a further 100 million by the end of 2023. The platform is centred around boosting local entrepreneurship and powering ecommerce for consumers across tier 2+ regions where users face challenges around trust and navigation when shopping online. [Read more on Business Standard](https://www.business-standard.com/article/companies/flipkart-s-social-commerce-platform-shopsy-hits-100-million-users-1220828006851.html) Meta joins Amazon and Walmart in bid for Indian ecommerce market Amazon mentioned earlier in the year that it would be building a logistics division in-house through its purchase of a 51% stake in Ecom Express, an end-to-end logistics firm, to make ecommerce deliveries more efficient in the country. Walmart operates Flipkart in India and is set to continue its investment in the marketplace. In an effort to compete in the Indian ecommerce market, Meta has partnered with Indian ecommerce company, JioMart, to offer customers a grocery shopping platform within its WhatsApp chat feature. [Read more on Pymnts](https://www.pymnts.com/news/retail/2022/meta-joins-amazon-walmart-indian-ecommerce-market/) --- Other Ecommerce News --- Ecommerce in Spain worth €57.7 billion in 2021 Spanish ecommerce saw 11.7% growth compared to last year, largely attributed to cross-border sales. In the final quarter of 2021, ecommerce sales in Spain were at €16.9 billion euros, at least 60% of which came from cross-border sales. Transactions from foreign locations to Spain generated a turnover of €1.56 billion in Q4, a growth of 27.7% compared to Q4 a year before. [Read more on Ecommerce News](https://ecommercenews.eu/ecommerce-in-spain-was-worth-e57-7-billion-in-2021/)
Aug 23, 2022

Global Ecommerce Weekly News: 23rd August 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to add mental health support to primary-care service Amazon is set to move into mental health therapy with its primary-care division, following its recent acquisition deal of One Medical. The plan is to partner with virtual behavioural therapy service, Ginger, to offer its Amazon Care users with on-demand access to mental health services, licensed therapists and psychiatrists. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/11/amazon-plans-to-add-mental-health-support-to-primary-care-service/) GMB union calls for £15 an hour minimum pay at UK Amazon warehouses Amazon recently offered its warehouse workers a 3% pay rise, which in comparison to the June inflation rate of 9.4% left employees disappointed. Following this, hundreds of Amazon warehouse workers stopped work last week, protesting against the minimal pay increase, seeking a minimum of £15 an hour. Recent protests consisting of employee walkouts and sit-ins aim to get a better offer out of Amazon. [Read more on The Guardian](https://www.theguardian.com/technology/2022/aug/09/gmb-calls-for-15-an-hour-minimum-pay-at-amazon-warehouses-in-uk) Amazon third-party sellers have received their first-ever holiday fee hike Amazon’s third-party marketplaces account for close to half of the company’s online sales. The company introduced a 5% fuel and inflation charge to its third-party sellers earlier this year, and has now implemented another inflation increase charge. Commencing 14 October, any seller who uses Amazon’s fulfilment service is subject to the price hike, which is set to be an additional 35 cents per item for products sold in the US and Canada. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/17/amazon-third-party-sellers-have-received-their-first-ever-holiday-fee-hike/) Amazon puts a pause on UK grocery shop roll-out as the cost of living increases Amazon has slowed down on its UK roll-out of till-free Amazon Fresh grocery stores following disappointing sales and the rise in cost of living. Allegedly, the company is no longer looking for potential sites to expand and if more stores are opened, they will likely no longer use a till-free system, as consumers become more cautious about spending. [Read more on The Telegraph](https://www.telegraph.co.uk/business/2022/08/21/amazon-pauses-uk-grocery-shop-roll-out-following-disappointing/) --- Other Marketplace News --- Shopee overtakes Alibaba across international markets Shopee has surpassed Alibaba and taken the top spot for sales outside of China. Singapore-based marketplace saw a year-on-year increase of 51.4% at the end of Q2 of this year, while Alibaba saw a 3% drop during the same time period. This can be seen as a promising development for start-ups and their ability to compete with some of the largest ecommerce giants in the market. [Read more on Exchange Wire](https://www.exchangewire.com/blog/2022/08/18/shopee-surpasses-alibaba-in-international-sales-amazon-searches-for-entertainment-exec/) H&M reopens its official store to Alibaba’s Tmall ecommerce platform It has been nearly 18 months since Alibaba removed H&M from its Tmall platform, following H&M’s criticism of human rights abuses in Xinjiang. It is estimated that over a million people, predominantly minorities in the area, have been unlawfully detained in camps across the city. Brands including Nike, Adidas, Burberry and Converse were swept up in the controversy, however H&M was one of the first to be targeted for speaking out about the issue. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/16/hm-returns-to-alibabas-tmall-platform-16-months-after-xinjiang-controversy/) Klarna launches new feature allowing UK consumers to view full online order history Buy-now-pay-later company, Klarna, has launched a new feature on its shopping app, which allows UK consumers to view their full online order history, regardless of whether they purchased the product using Klarna. The feature also shows delivery tracking and aids consumers in managing their online purchases more conveniently. [Read more on The Industry](https://www.theindustry.fashion/klarna-launches-new-feature-allowing-uk-consumers-to-view-full-online-order-history/) --- Other Ecommerce News --- Online marketplaces responsible for £280 billion business turnover in the UK Nearly 900,000 UK businesses are currently selling on online marketplaces, generating an estimated £282 billion worth of sales each year. This figure represents 6% of the UK’s annual business turnover, highlighting the notable contribution that marketplaces make to the UK economy, along with the potential for further growth in this area. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/08/09/online-marketplaces-responsible-for-280-billion-business-turnover-in-uk/)