Not using a strategy for ecommerce? You are giving away sales.
If you search on Amazon under equestrian sports, over 17,000 items are listed for sale. You can find halters, saddle pads, grooming supplies, saddles, and harnesses. Believe it or not, you can even click on a link that will take you from Amazon to sponsored websites that sell horse trailers.
If we put some numbers around this, 10 of the largest marketplaces (like Amazon and eBay) sold more than $100 billion worth of goods to U.S. consumers in 2015, according to ecommerce magazine Internet Retailer. It’s almost one-third of all e-commerce sales in 2015 according to the U.S. Commerce Department.
More than 79% of U.S. shoppers research and purchase online with 30% of U.S. shoppers researching products on Amazon before they purchase. That’s more than double any other online site. Amazon also has the largest customer membership program with 50 million Prime members in the U.S. The trend is to get you what you want, when you want it and delivered to your door faster.
While all of this sounds very enticing to any business owner, the world of selling online is very dynamic, even in the equine industry. It can be unforgiving and consumer expectations are high. The bar has been set by leaders such as Amazon and Walmart with competitive pricing and two day delivery on most items if you are a member or spend more than $50. There are some things you should keep in mind though, as you decide whether or not you want to extend your business into the ecommerce channel:
Have a strategy – This can’t be stressed enough. Are you the manufacturer or do you want to offer items and be a third party seller? There are different strategies for both. The focus here will be primarily for the manufacturer but many of the same concepts apply if you want to be a third party seller.
In either model, I’ve heard and have also experienced first-hand, the pitfalls of just throwing your products up on various marketplaces to see what might sell. It’s messy and a lot of unnecessary work keeping hundreds of items current, while watching the competition at the same time.
Do you have the technology and the resources to support your endeavor? The old adage, 20% of the items drive 80% of the revenue is true even in this channel. Start with a manageable number of items and grow from there as you learn which marketplaces work best with your products.
Don’t forget the 4 P’s of marketing – When entering this channel, if you don’t consider why and how you are selling via a marketplace, or even from your own website, you could possibly destroy your business.
Determine what products make a good representation of your company and start with those. Price them to include any costs such as “finder’s fees,” shipping, and your needed profit target. Be prepared to promote them or consciously choose not to. Just because the marketplaces will push to have the lowest price, following through and discounting isn’t always the best decision and could easily upset your brick and mortar customer base.
Sell on the value of the product, not only on price. The internet has removed discrete markets and associated pricing. Gone are the days when you could price higher in New York City just because it was a high demand market. Anyone can search, and find, your item at the lowest price anywhere in the world.
Finally, choose marketplaces that are reputable and a good fit for your products, you don’t have to be on every site. Think about them in this way like you would your other customers, where you have an opportunity to build a relationship and showcase your items to their best potential.
Terms and Conditions – READ THESE As painful as reading and understanding the terms and conditions is, hidden in all of that detail are the costs, fees and expectations for selling, handling payment, credit cards and shipping on a marketplace. It’s like riding your horse without safety equipment.
Amazon, for example, has a very clear statement that anything you sell on their site is being done with all the permissions and licenses of the manufacturer. The onus is on the seller and also on the manufacturer, not Amazon, that these permissions have been granted. Understand that sites like Amazon handle manufacturers differently than sellers and have different portals for managing your items. Know which would work best for your business. If you sell from your own website, be sure your terms, conditions and return policies are clearly spelled out and easy for your customers to understand and customer service team to manage.
Shipping and distribution… think this one through. Are you equipped to handle shipping direct from your warehouse to every consumer that orders, or would it make more sense to have the marketplace handle the shipping?
This activity can overwhelm your resources and ruin your reputation if not done well. It will also drive the decision over the types of marketplaces you want to sell on. Do they offer to carry inventory and ship for you or will you have to ship direct? You can expect to pay 3%-7% of the cost of your item for them to handle freight and cover damages. Do you have a relationship with UPS, USPS and FedEx or do you need to establish that capability? Explore all the costs associated, damages and return fees and be sure you price your items to cover these expenses. Late delivery fees can get expensive quickly.
Google and social media – if you are going to sell in the ecommerce channel, then Google will be part of that experience as will social media.
First, invest in Google. Everything is driven by search terms, keywords, and rich product content. How do you get your items to the top of searches and stay competitive? Where do people go after they find your item? Where do they buy it? Do they buy it? Do they purchase somewhere else? Google has advisors that will help you through the basics so you can monitor your business and manage your advertising.
There are also some very good providers out there that will manage content for you, link you with Google, keep your item detail current and suggest to your customers where to buy. They will even track visits to your website and shopping cart conversions. Shop around to find one that works well with your business.
Social media can offer many benefits from targeted advertising to networking on a mass scale. It’s part of the culture today. Don’t forget to add this in some capacity to your overall ecommerce plan.
Reviews – last but not least, monitor and respond to customer reviews. Take the high road and use a reliable, legitimate service such as Reviewbox or Bazaarvoice. Customer reviews can make or break a product and your reputation. These services collect reviews from various sites and allow you to respond. The best advice, don’t ever try to hide or have a review removed. Handle it as an opportunity to learn about your customers, what they want and how you can improve your offerings.
When planned properly, the ecommerce channel offers an opportunity for growth in the 25-30% range. You can manage it with many of the resources you currently have as long as you pay attention daily. It gives you an opportunity to connect directly with the consumer, see what they are buying and when and focus on those products that give you the best opportunity to hold margin and grow your business.
Ecommerce is much like taking care of your own horse. Know what you want from ecommerce before you get started, have a daily routine so you are familiar with what is happening with your products and how they are performing in the channel, take care to understand the terms that you are operating under and respect its potential strength as well as its potential volatility. If managed well, you will enjoy consistent performance, a beneficial relationship and extended brand awareness. All blue-ribbon objectives of any business.
ABOUT OUR GUEST AUTHOR
Melanie Grapes, CPIM, is from the Buffalo, NY area and has more than 20 years of business process, systems and operations experience specifically in manufacturing, supply chain, customer service and ecommerce sales and marketing. She has worked in the food, pharmaceutical and consumer packaged goods industries. Melanie enjoys archery, hunting, is a wildlife and pet portrait artist and is also “mom” to her two Siamese cats Zara and Kali and her horse Magic. Magic is a registered paint gelding who was rescued from a “meat trader.” He now enjoys a comfortable stable life with many friends at Kings Quarters in Alden, NY.