Total e-commerce sales revenue now makes up over nine percent of all U.S. retail sales. And, it’s only going up with giants like Amazon in the space. The wide-offering e-commerce marketplace grabbed nearly 44 cents out of every e-commerce dollar spent in 2017, according to estimates from eMarketer.
By contrast, other “giants” like eBay, Apple, and Walmart made up a collective 14 percent of all e-commerce revenue. Amazon saw its market share climb nearly six percent from 2016. And right about now, you’re probably wondering, what are my chances of outwitting the e-commerce giants?
Three Choices for SMBs
- Well, you could join them.
After all, over 50 percent of all Amazon’s gross merchandise revenue (GSV) comes from third-party sellers. And, they’re not the only choice. Walmart’s marketplace grew to 50 million listings in 2017, while Alibaba launched a network allowing American sellers and Chinese companies to agree on distribution deals.
- On the other hand, you could “fight” them.
Go your own way, design a site, ramp up marketing on various channels, figure out storage and distribution, set up a customer support system. It’s a lot of work, but the profits and glory are all your own.
- Or, you could do the in-between.
Whether you sell electronics online or baby products, e-commerce hosting sites cater to independent SMBs that don’t want to exclusively sell through a marketplace but don’t want to go through the effort of hard-coding their own site, either.
Pros and Cons of Each Strategy
Joining a marketplace — especially Amazon’s — gives you access to an advanced fulfillment and logistics system, but its commissions can be costly. Branding your own independent site gives you complete customization and freedom to operate your business, yet it’s the most complex and time-consuming route. Hosted e-commerce platforms can be expensive with monthly subscriptions, but they also provide a nice balance of streamlined features, while allowing a company to operate on their own web property.
Amazon’s Effect on Consumer Preferences
Regardless of how you want to sell your products, Amazon is molding e-commerce preferences. A survey by Radial found 34 percent of U.S. shoppers expect two-day shipping, whereas a majority of U.S. shoppers expect free shipping. Sixty percent of shoppers put purchasing products at the lowest price possible as most important to them. Yet, around 30 percent of all e-commerce products are returned—compared to under nine percent for physical retail stores.
Does Branding Still Matter?
Going it alone in e-commerce can require a significant investment in logistics. Even strong brands with good customer retention will lose out if customers feel they are paying too much, or waiting too long. Furthermore, if it’s a hassle to return stuff they’ve purchased, or too expensive, customers will definitely look elsewhere. However, the “strong brand” part can’t be overstated, as it’s a prerequisite in today’s e-commerce landscape.
Even in large marketplaces where the traffic is sent to you, proper branding might be the only difference between your kitchen-counter compost jar being added to a shopping cart over another one. Plentiful choices are in theory good for the consumer, but they can also be burdensome for someone with limited time. This is when people are looking for a strong brand to reassure them.
The current e-commerce landscape may look a little scary, but the path to growth still hinges on creating a powerful brand that resonates with consumers. If you can do that, you’ll outwit the e-commerce giants and win your own sliver of the e-commerce pie.