One of your key decisions is to decide on your multi channel ecommerce strategy. Do you want to prioritise sales on your own website or focus on building sales using Ebay and/or Amazon? What are the key factors to consider when building a multi-channel ecommerce business? What revenues can you expect from each channel? What are the software & operational issues to be considered? And how do you retain margins and avoid a race to the bottom against other online retailers?
For me, eCommerce should be a three legged stool generating sales from your own website, Ebay and Amazon. Being too dependent on one leg is a real risk to your business, but the pro’s and con’s of selling multichannel often involve retailers in a complex set of marketing & budgetary decisions.
The financial benefit of selling on the marketplaces is that Amazon & Ebay offer you a fixed “Cost Per Acquisition” CPA business model. You pay a final value sales commission on results meaning that you can plan your sales campaigns knowing what your costs & margins are.
On Ebay this varies according to category – but including PayPal fees this can typically add upto approx 12%
On Amazon the final value sales commission can typically be 15% but again, this varies on the services you choose.
There are many advantages to attracting shoppers to your own websites, not least because there are no sales commissions to pay, you can set your own T’s & C’s, work on developing your USP’s, promote special offers, offer loyalty & reward schemes and concentrate on turning new customers into repeat customers.
But here’s the gottcha: Google advertising runs on a Cost Per Click “CPC” business model, not a final value sales commission, and because the CPC costs are committed before any sale is completed, the cost of winning a new customer is a variable cost.
Therefore, you do need to tune your Google Adwords or Google Shopping campaigns to control campaign budgets, but it is a skilled and time consuming process. ”ROAS” or Return On Ad Spend is the all important ROI metric to focus on. Well managed campaigns can be run at a 10% Cost of Sale but I’ve also seen many Advertising Campaigns run away with 20% & 25% CPC costs – which is a strong incentive to plan your Google Advertising campaigns carefully.
So which is better? Selling on your own website or relying on Ebay and/or Amazon to do the selling for you? Having engaged with many online retailers over the years, the most popular strategy is to attract shoppers back to your own website if at all possible. But there are many shoppers out there who trust Ebay & Amazon and so retailers ignore the incremental revenue that trading on these marketplaces bring at their peril.
My ecommerce consulting helps you to build, manage and execute your multi channel ecommerce strategy, focusing on customer acquisition which are unique to your business, developing products, campaigns and special offers to attract and retain customers.