🥗 The Do’s and Don’ts of Online Marketplaces

Hey there,

Welcome back for another bite to chew on.

Today, we’re diving into a big question: 

Is it better to sell directly to consumers or dive into online marketplaces?

For a long time, we were all about DTC.

It’s what boosted our growth and made us who we are. 

We’ve been digging into some numbers, and there's a compelling case for not just sticking to what we know.

Marketplaces can be seen as challenging, but new trends and data show a much more promising side that we think you should look deeper into.

Let’s really dig in and find out.

The Marketplace Struggles

Selling on an online marketplace brings up plenty of valid concerns. 

When we mention online marketplaces, what’s the first thing you think of? 

Tighter margins and smaller profits.

Marketplaces charge a fee for their services and don't provide the customer data you need for targeted marketing strategies.

No direct emails. No SMS marketing. No direct relationship with your customers. 

Without that follow-up, how can you make sure they'll come back?

It all sounds pretty rough honestly…

We definitely don't want to just give away money or lose out on direct marketing and customer retention. 

You might think this is where we can wrap things up. 

Case closed on online marketplaces.

Hold on a second…

This is where keeping a cool head and employing even smarter strategies can separate “pretty ok” success to explosive hockey stick growth.

(especially when most brands end the conversation here)

The Shifting Landscape

Think about it like this: 

A lot of shoppers start their search on marketplaces. 

They grab their phone or get on their computer and check out what Amazon or Walmart has to offer.

If you're not there, you're invisible to a huge crowd. 

Take Walmart+ for example, these dedicated shoppers pay for convenience and perks like free shipping and free home delivery.

According to the Wall Street Journal, Walmart+ has 59 million members.

They go straight to what they know and trust (and pay for).

Here’s a couple bites we’ve been chewing on: 

• One-third of all U.S. business flows through ecommerce

• Walmart marketplace has more than 120 million unique monthly visitors to Walmart.com 

Those are numbers you can’t ignore.

You’re More Ready Than You Think

Those numbers sound great, but how do I know when we’re online marketplace ready?

Well, you might be already. 

We’ve used online marketplaces as stepping stones for getting into retail.

Treat online marketplaces as another extension of your business.

With Obvi, our online marketplace revenue is up to 10-15% of our total revenue.

While that might not seem like a TON of revenue share,

think of the indirect brand awareness of the millions of eyeballs now seeing Obvi products online on Walmart, Rite Aid, iHerb, etc.

Tailor an online marketplace extension as another customer acquisition avenue.

Won’t an online marketplace cannibalize my DTC lineup though? Don’t your prices have to be low to even compete with other established brands online?

If you approach an online marketplace the same exact way as DTC, yes it certainly can…

We were guilty of this at Obvi at the start of going into marketplaces, but here’s how you fix it.

Yes, your prices have to be low, but who says you have to put your entire lineup of products onto that marketplace?

We’re using these platforms as testing grounds to get an idea of how certain products will perform at a retail scale.

This also initiates a relationship with these retailers, making a future transition to retail that much more possible.

Here’s a quick rundown of the Do’s and Don’ts of online marketplaces so your head can stop spinning with all these questions and details.

Let us put you more at ease so you can come up with a real strategy.

The Do’s and Don’ts of Online Marketplaces

Don’t:

Freak out about cannibalization

• Customize the online marketplace as an introduction to your brand and use your existing sales channels to further that customer relationship.

• Don’t go FULL SPEED AHEAD and change your ENTIRE website marketing, pushing and funneling every customer to whatever marketplace you chose.

• Make online marketplaces an extension of what you’re already doing.

Expect to “set it and forget it”

• You will get out what you put in with online marketplaces at an even greater level than DTC.

• Use 1-2 people on your sales team to focus directly on online marketplaces. You will need at least that amount of people power to succeed and grow there.

Be intimidated on set up times or relationship building

• Expect the application process to be anywhere from 4-8 weeks with most online marketplaces. It’s not like you’re throwing your products into 4000 Walmart stores (yet), and your account managers will help you do whatever they can to succeed. 

Treat advertising the same as DTC

• What works on your DTC front won’t work the same way in an online marketplace.

• Some online marketplaces have certain product image guidelines that you’ll have to follow, and your SEO, descriptions, titles, etc. will have to convey your value propositions immediately. This will most likely take some trial and error.

Do:

Prepare yourself for a slow burn of growth

• When we first put Obvi into marketplaces online, the revenue share was at MAYBE 1-2% on a good day… But that has grown to 10-15% in 1-2 years because we’re giving it the attention it deserves and it’s only continuing to grow.

Have cash and inventory lined up

• It is simple math here. If you’re adding an additional sales channel with millions of customers shopping exclusively on a different platform, you’re going to have to fork up the cash for more inventory.

• We can’t give you a number on exactly how much this will cost because everyone’s costs are extremely brand dependent, but it won't be cheap… Be honest here on what you can afford.

Be O.K. with learning as you go

• There is not a “success formula” for online marketplaces. We certainly didn’t get things right when we first started…

Use Online Marketplaces as a brand awareness and volume play

• Yes, the margins might be smaller, but the customer base is drastically larger.

• Use these ridiculously huge numbers to get more and more people introduced to and familiar with your brand.

Set your brand up for retail

• The relationships we’ve made through online marketplaces have made getting Obvi on retail shelves easier. That is a 100% fact.

• You can see how products perform with a new customer base, and if they crush, why wouldn’t an online retailer want it in their brick and mortar stores too?

Transforming Challenges into Opportunities

We’re not saying to abandon your DTC foundation and go all-in on online marketplaces (we definitely are not).

We are saying that the past stigmas and fears of going into online marketplaces seem like smoke and mirrors when you take the time to break them all down.

Ignoring marketplaces as too much of a hassle is a BIG oversight. 

They really open the door to more customers.

Look at Obvi’s Subscribe and Save numbers as another example:

We're seeing subscription rates on marketplaces that are three times higher than on our direct site.

What about our OWN brand experience?

If you’re asking that, we had those questions too.

You can still create it even without direct access to customer data, here’s how to think of it:

Buying on marketplaces gets customers thinking about your brand, visiting your site directly, and coming back for more.

How many times have you checked out a brand’s website after seeing them on an online marketplace?

It’s about setting up your brand as a legitimate player in your industry.

Reach Millions of Customers

Are you looking to branch out to a marketplace that already has a built-in audience of millions of shoppers who are looking for products like yours? 

Then, meet Walmart Marketplace. 

As one of the fastest growing eCommerce platforms in the world, Walmart Marketplace makes scaling any eCommerce business simple with: 

• Zero monthly or set up fees 

• Competitive commission structures 

• Flexible solutions for fulfillment, advertisement, pricing, and more 

And right now, sellers who join Walmart Marketplace can maximize their success on the platform with New-Seller Savings.

This limited-time offer allows new sellers to save up to 50% on referral and fulfillment fees.* _{*Conditions apply} 

So, get started on one of the fastest-growing eCommerce platforms in the world today. 

Learn more HERE

Thanks for Reading Along

Selling on marketplaces isn’t just about joining another sales channel,

it's about tapping into a vibrant and growing area of e-commerce. 

The benefits are clear: more visibility, new revenue streams, and reaching a wider audience.

We hope going over all of this with you has calmed some nerves and replaced them with curiosity.

If you’ve been wanting to make the jump, but still aren’t sure on what direction to go, let’s talk. 

Reach out and tweet at us: Ron’s Twitter - Ash’s Twitter

We’re always up for a good debate on the best eCom strategy.

If you need specific 1-on-1 help on how to get into marketplaces,

Schedule a MentorPass call with us here: Ron - Ash

Until next time, keep finding ways to improve!

All the best,

Ron & Ash