I was intrigued to read in the Times the other day that Amazon is being sued for £2.7 billion by UK third party sellers. This is a collective lawsuit on behalf of 200,000 British retailers alleging anti-competitive practices.
The lawsuit alleges that the US company has engaged in a variety of tactics to exploit its dominant position in the supply of e-commerce marketplaces in the UK. The claim is that Amazon discriminates in favour of its own offers over those of other retailers and in favour of its own logistics services, which is known as FBA or Fulfilment by Amazon. You can find out more about the article here.
It’s scary stuff. Many online retailers concentrate a lot of energy and time on their Amazon sales – but safeguarding your revenues of the future is important too. So, what can you do?
Sell in lots of places
We find that our most successful retailers do not focus wholly on Amazon sales. They tend to have a multiple marketplace strategy, which means they have their own website, often written in Woo Commerce or Shopify, as well as supplying via other websites, such as Amazon, eBay, or indeed the new marketplace sites such as diy.com. There have been allegations for some time that, in some marketplaces, that if branded sales are highly successful, the marketplace may see that and manufacture its own product to replicate it and put that up at the top of the charts. Thats a bitter blow if you have spent a long time establishing a customer base for it to be targeted by the marketplace with an own brand, lesser priced product.
A multimodal strategy is an effective way to spread the spending of your customers – with you owning the collective data on your sales – not just a singular marketplace. Sell in lots of marketplaces, control your inventory centrally so people buy what is in stock, but hold on to your data – so only you know the true picture of your sales.
Build brand loyalty – and encourage direct purchase
As an online retailer, it’s particularly important for you to build a relationship with your individual clients. To build your loyal tribe. To encourage them to buy from you directly. This means you protect your direct-to-consumer sales – with no one monitoring what your most lucrative lines are.
Choose independent logistics partners that only do logistics – not sell their own lines – or sell your data
This doesn’t mean you have to insource your logistics. There are lots of logistics solutions – companies who make their money purely from providing you with ecommerce fulfilment services and who have no ambition to supply your clients direct.
On this note I would also check out what your logistics company does with your data. Do they call themselves a tech company? What does their SaaS (software as a service) agreement say about the utilisation of your data. If what appears to be a ‘tech’ logistics company has plans to sell your data that may provide a great asset to your future competitors.
And, of course, with lots of independent outsource ecommerce fulfilment solutions, such as good old Diamond Logistics, it’s easy not to have to rely on Amazon for fulfilment. You would also be surprised how much less independent fulfilment cost compared with companies such as Amazon – it can be a lot more cost effective using an independent provider, for starters Amazon charge a commission, often referred to as a referral fee, that is a percentage, usually around 15% of every sale you make that goes straight to them before you pay any fulfilment associated costs. Something people might not know is that you can sell on Amazon but not be fulfilled by Amazon – as many of our clients do. But if Amazon is prioritising its own goods or selecting goods that are FBA (fulfilled by Amazon), then that puts you at a slight marketing deficit – if the allegations in the above lawsuit are proven to be true.
It’s not easy establishing a successful online business but those three steps might just help you protect your hard earned revenue streams. If you need a company that can help achieve your sales, make fulfilment easy and safeguard your future incomes then Diamond is the right choice for you.
