The Opportunity Costs of Not Controlling Your Brand Online

John LeBaron

December 7, 2020

Want to know a secret? Successful ecommerce brand leaders aren’t focusing on revenue.

It seems counterintuitive, and in many ways it is. Traditionally, brand leaders focused on revenue at all costs to grow their business, but in ecommerce, that strategy is no longer effective. Those at the very top are breaking the status quo by focusing both on their top-line and bottom-line growth. And to do that, they’re getting in control of their brand online.

The truth is that brand leaders can’t afford to not focus on control. It’s a key difference between massively successful brands and brands failing to make a profit, and it’s one of the most important things to ensure right now if you want your brand to thrive.

The opportunity costs of no brand control

There are four big opportunity costs of not getting your brand under control:

  1. Additional revenue
  2. Additional margin
  3. Brand equity
  4. Long-term sustainable growth

Additional revenue and margin costs

Let’s say you have no or little control of your brand online. Specifically, you aren’t limiting your distribution, you aren’t monitoring the brand experience across distributors, and you don’t have consistent advertising across channels. Without control, you may not initially have any problems. In fact, sometimes you end up with more revenue when you don’t have control because you have wider distribution. However, that ultimately ends up being a kind of mirage or temporary growth strategy.

Profit and Revenue Over Time Without Brand Control on Ecommerce | Pattern

Wholesale revenue is represented in blue, profit margin is represented in black.

Without control, even if your revenue is going up, your profit margin is going down. Why? Because by widening your distribution, you’re leaving the door wide open for price erosion.

Before the age of ecommerce, wide distribution was the gold standard. It was important to get your product in as many stores as possible because that was the only way to increase your revenue. Long-term profitability was practically guaranteed this way because there was less transparency in the shopping experience.

With the rapid rise of mobile shopping, however, this strategy has ceased to be effective. Consumers are constantly scouring the web for the lowest price they can find, and now they can compare prices from hundreds of distributors right in the palm of their hand. The more sellers you have distributing your product, the more options customers have to choose from, and in order to stand out in a packed lineup, sellers will start lowering their prices.

A dropped price is like a thrown gauntlet in ecommerce. Other sellers will be forced to lower their own prices to compete, including your brick-and-mortar sellers, and like a string of dominos, those prices will continue to be lowered to get ahead. Even if 20% of your business is eroding your pricing like this, it will impact every seller you have.

What happens next is that these sellers are left without margins. Maybe they purchased a product from you for $50 at wholesale and were selling it for $100 when an unauthorized seller got a hold of it and marked it down to $70. Suddenly, those authorized sellers are having to lower their price to $70 to compete and it’s eating up their own margins. So what do they do? They come to you and tell you they can only pay you $30 for your product. What began as lack of control or limitations over your distribution has now crunched into your own profit margins.

Brand equity and long-term growth

Lack of control online doesn’t just directly harm your revenue. It also indirectly harms your revenue by negatively impacting brand equity.

You may have a beautiful dot com site with high quality image stacks, engaging copy, and a responsive customer service arm to boot that draws shoppers to your product. When you cede control of your brand on other ecommerce platforms, however, you essentially give unauthorized sellers the freedom to represent your brand however they’d like, and given the chance, they rarely represent it faithfully.

Unauthorized sellers may use low-quality images to represent your brand or no images at all. They might provide bad descriptions of your product or very poor shipping options and customer service. Customers will see that and they will automatically associate it with your brand and brand experience. Your brand equity suffers as a result.

Without active steps to change course, lack of control can cause every one of your channels to become less profitable and ultimately cut into your long-term growth.

Control helps you capitalize on marketplace growth

Not only is control a key factor to your success as a business, it’s also the first step in capitalizing on marketplace growth. Once your pricing is under control and you have better brick-and-mortar performance as a result, you can devote more time and resources to things like making your advertising more consistent and powerful across channels, improving your product’s search rankings (which leads to more sales), and providing a thoughtful customer service experience across all channels that makes shoppers want to come back.

Gaining control gives you the space to really show up for your brand, and capitalizing on that will help you achieve a myriad of small wins that keep your growth sustainable. At Pattern, we call this process the Profitability Flywheel.

Pattern's Profitability Flywheel for Ecommerce Profit and Revenue Growth | Pattern

How to get in control of your brand

There are three main steps to start with that can help you get your brand under control:

  1. Rationalize your distribution on ecommerce
  2. Stabilize pricing
  3. Get expertise

Rationalizing your distribution on ecommerce

If you have many sellers, you’re going to need to start by scaling down your distribution. Less is much more when it comes to online control. Ideally, you should narrow your choices down to one to three sellers. This step may be difficult, but it’s critical to retain control.

**Stabilize pricing **

Once you’ve scaled down your distribution, you need to have policies in place that can prevent sellers from eroding your prices. Be strict about enforcing MAP. Make sure your sellers are aware of what those policies are and don’t be afraid to cut out bad players who don’t play fair.

**Get expertise **

Once your pricing and distribution are under control, you can start focusing on growth. Find a partner who has the resources to help you improve your brand’s online presence, your advertising, and your customer service. Look for trustworthy partners who are familiar with your brand and have the dedication to help it succeed.

One option is Pattern. Pattern is an exclusive ecommerce seller who works side by side with brands to help them thrive. Our in-house Predict software can help you find and eliminate the distributors who are eroding your prices, provide you with the best keywords to improve your products’ organic ranking, as well as up-to-date analytics about your brand. We make sure your image stacks and copy are slick and informative, and we provide shoppers with an exceptional customer service experience reflective of the brand experience you want to offer.

To learn how Pattern can help you gain control of and grow your brand online, contact us today.

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Sept 27, 2022

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/)
Sept 20, 2022

Global Ecommerce Weekly News: 20th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to raise pay and add extra work benefits for delivery drivers Following the rise in fuel prices and protests by Amazon workers, the ecommerce giant is raising its delivery drivers’ pay and adding more work benefits. Amazon has mentioned that it will be investing $450 million into rate increases along with an education program and a Delivery Service Partners program. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/amazon-to-raise-delivery-drivers-pay-and-add-more-work-benefits/) Amazon announces it will give away shipping software to merchants at no cost Amazon has recently announced that it will be giving ecommerce merchants free software to manage shopper orders on and off its platform as it extends its reach. The ecommerce giant will be ending monthly costs for sellers using Veeqo, a shipping software it recently acquired and instead offer to them a new, free shipping software. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/amazon-to-give-away-shipping-software-to-merchants/) --- Other Marketplace News --- Walmart unveils new virtual fitting rooms In an effort to drive clothing sales, Walmart has launched virtual fitting rooms while competitors reduce spending amid the cost of living crisis. The virtual try-on tool can be used by Walmart customers to virtually measure the clothing items and see how the products would look on them. Shoppers will now be able to see how over 270,000 clothing items on Walmart’s ecommerce site would look on their bodies. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/walmart-launches-virtual-fitting-rooms-to-drive-clothing-sales/?utmsource=Retail+Gazette+Subscribers&utmcampaign=2da7f0f8f8-EMAILCAMPAIGN202209150742&utmmedium=email&utmterm=0d23e2768b6-2da7f0f8f8-61040615) THG slashes sales and profit expectations The Hut Group has slashed its forecasts for 2022 as rising interest rates, inflation and energy costs take a toll on consumers. Previously, THG estimated its sales growth to be between 22-25% but after a recent evaluation, has lowered this prediction to between 10-15%. Initial predictions did not take into account the negative effects of ceasing sales in Russia and Ukraine along with the impact that the cost-of-living has had on consumer spending. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/thg-slashes-forecast-as-cost-of-living-crisis-hits-consumers-wallets/) --- Other Ecommerce News --- DHL and Post Office team up to provide click and collect services Through a partnership between delivery company, DHL and Post Office, a new click and collect service is to be tested at Post Offices before rolling out to over 1000 branches across the UK. Online shoppers will now have the option of choosing their local Post Office as a collection point, and DHL will fulfil the delivery aspect, opening up networks for both parties. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/post-office-partners-with-dhl-express-to-provide-click-and-collect-services/) US consumer watchdog plans to further regulate the BNPL sector The US Consumer Financial Protection Bureau (CFPB) has raised concerns regarding the collection of consumer data and the fast-growing nature of the BNPL sector, which includes companies such as Affirm and Klarna. The CFPB is worried that these companies could be negatively impacting consumers’ financial health and aims to put better regulations in place to ensure consumers are safe and empowered. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/us-consumer-watchdog-to-start-regulating-bnpl-sector/) Japanese ecommerce market estimated to grow by 6.9% in 2022 The ecommerce market in Japan, largely dominated by domestic online retailers including Reakuten and Mercari, is set to reach $194.3 billion USD in 2022, after seeing an annual compound growth rate of 5.2% between 2018 and 2021. This makes Japan the fourth leading ecommerce market globally, following China, the US, and the UK. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/13/japan-ecommerce-market-to-grow-by-6-9-in-2022/) Ecommerce brands are spending more on TikTok ads TikTok may soon be surpassing Facebook and Google as the most lucrative advertising channel, with ecommerce brands spending 60% more on TikTok ads in Q2. Facebook is still ahead as the top choice for ecommerce advertisers but only grew by 5.6% from Q1, while Google grew 20.5% in Q2, and Snap declined 10.8% in Q2. [Read more on SearchEngineLand](https://searchengineland.com/ecommerce-brands-spent-60-more-on-tiktok-ads-in-q2-387876)
Sept 20, 2022

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.