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.
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:
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.”
“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.
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 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 equation for success in ecommerce is:
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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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.
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.
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.
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.
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.
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.
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.
If you’re interested in expanding your brand internationally, you’re probably familiar with Tmall. Tmall is Asia-Pacific’s (APAC) largest marketplace, and indisputably the biggest ecommerce powerhouse in the world. It represents a huge opportunity for many brands, but entering the space is also a big challenge to take on.
At Pattern, we recommend brands looking to enter international markets should first focus on dialing in their domestic presence. Once you’re satisfied that your brand is well-represented and optimized locally, you’re ready to think about tackling new regions, like APAC, and launching on marketplaces like Tmall. Our top advice for entering Tmall is to understand and strategize around its three most important metrics: service, delivery, and content.
Service, delivery, and content ratings are the three elements that make up Tmall’s Detailed Seller Rating (DSR) score. Each component is scored on a scale of 1-5 that is displayed publicly on your brand’s Tmall flagship store page. This is meant to help consumers decide whether or not to purchase your products.
DSR scores are important because they’re highly influential in driving conversions—customers see DSRs as a way to quickly understand if a brand is trustworthy and worth buying from. They also matter quite a bit to Tmall itself—they monitor these scores and will take action to close flagship stores with low scores.
Let’s go over each element of the DSR score and some steps you’ll need to take to achieve high ratings.
Service is a huge ecommerce component in APAC marketplaces. In most other regions, product listings are static, and consumers use content and reviews to make a decision about what to purchase. On Tmall, consumers want to interact with your brand and test its validity before buying—each transaction takes at least one human interaction to convert.
So, to get a great service rating, you’ll need to have a large, established customer service team dedicated to Tmall sales that can offer real, human touchpoints and very fast response times. To get an idea of the speed your agents should be capable of producing, in our Tmall benchmarking exercise, 92.5% of brands’ customer service agents replied to queries via live chat within 30 seconds, 5% replied within one minute and the remaining 2.5% of brands took longer than a minute. So, look for a Trade Partner (TP) that has enough resources to compete with those numbers, support your sales, and maintain a good DSR score.
Another thing you’ll really want to focus on is a high-quality delivery experience for consumers. As in other regions around the world, Tmall consumers have high expectations for their delivery experience. In our Chinese consumer polling report that targeted consumers buying from Tmall Global, we found that 6% expected same-day delivery, 15% expected next-day delivery, and 46% expected 2-5 day delivery.They want to receive their products fast and they want the products to be undamaged and pristine upon arrival.
So, to achieve a high score for your delivery capabilities, we highly recommend partnering with a TP or ecommerce accelerator like Pattern (which serves as a TP) who has the ability to facilitate your distribution. Make sure your TP has the right infrastructure in place to support high-quality logistics experiences for all of your consumers—they should have an established, well-oiled delivery process in place and the capability to fluidly add you to their current fulfillment system.
As in every digital marketplace, content is a huge component of the decision-making process for consumers on Tmall—they can’t touch your product with their hands or see it in person before buying, so it’s important they’re empowered to make a good decision on whether or not to purchase based on the videos, images, and copy.
The goal is to make all of the content and relevant information on your flagship site easily-accessible—consumers should be able to visit your page and make a decision about whether or not to buy without navigating to a new site/page and taking their conversions with them. Images with text and extensive product details are a great way to do this, as well as making sure your service team can speak to all aspects of your product with any consumers (via text or chat).
As the world’s foremost brand partner for ecommerce acceleration, Pattern truly understands the significance of international expansion. With regional offices around the world, Pattern knows how to successfully launch and grow brands on Tmall and other marketplaces, with the data, insights, and marketplace intelligence to build the metrics that matter.
It’s important to have a fantastic brand presence, a knowledgeable guide, and a clear go-forward strategy for your best chance at success. With our in-country resources, expert teams, and extensive experience in growing brands around the globe, Pattern can help you get there.
Set up a call to get your international expansion strategy in motion.