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Can retailers attract new customers through online marketplaces?

May 25, 2016 02:33 PM
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Many retailers sell a lot through online marketplaces like Amazon and eBay. What isn’t as clear, however, is whether merchants can acquire new customers through online marketplaces and, more importantly, if they can acquire loyal customers. A recent Internet Retailer consumer survey indicates that it’s possible, but not easy.

An online survey of 200 consumers in May found that 72.8% of Amazon consumers purchased an item identified as sold by a retailer other than Amazon, No. 1 in the Internet Retailer 2016 Top 500 Guide. 10.7% said they have not made such a purchase and 16.5% they didn’t know if they had bought items from an Amazon seller. Responses suggest that, at least on Amazon, the largest marketplace in the U.S., many consumers recognize that not all products sold on the marketplace are  Amazon’s own inventory, and that some shoppers are noticing the names of the sellers that are not Amazon.

The survey also showed that more than a third, 33.5%, of respondents purchased a product from a marketplace seller’s own website after finding the seller’s products on Amazon.com. 55.3% said they hadn’t and 11.2% said they don’t know.

While that shows some consumers do make purchases from a marketplace seller’s own website, the majority do not.

That’s the risk of selling on marketplaces, particularly on Amazon, where many consumers are looking for the best price, says Christian Ricci, an industry expert who has worked in e-commerce positions at Dell Inc. (No. 3 in the Top 500), Amazon and Sears Holdings Corp.’s (No. 14) marketplace division. Ricci is now chief technology officer at Indigenous Software, a web-based business management provider. “Retailers are not typically building loyalty with customers on marketplaces,” he says. “These are customers of the marketplace, not the retailers.”

What’s more, Amazon prohibits marketplace sellers from marketing to consumers who buy their products on Amazon.com, viewing them as Amazon customers. While some consumers look for the sites of retailers they buy from on Amazon.com, David Escobar, senior manager of e-commerce at Bealls Inc. (No. 359), says only 5-10% of consumers who buy products from Bealls Inc. on Amazon eventually land on BeallsFlorida.com, its  e-commerce site.

 “These are Amazon’s customers and they are lovers of Amazon. They may try you once or twice, but you have to do a really good job to make them repeat customers,” Escobar says.

Full results of the Internet Retailer survey and other in-depth analysis on the largest online marketplaces in the U.S., and how retailers are growing by selling on them, is available in the new published report “Online Marketplaces: The Shopping Mall of the Future.”

 

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