It’s been said by many that selling on the big marketplaces is a “no brainer.” And if you’re a small-to-mid sized retailer or an up-and-coming D2C brand, it’s probable that selling your products on general marketplaces like Amazon, Walmart and eBay and/or specialty marketplaces like Wayfair and Houzz is a significant part of your D2C distribution strategy.
It makes sense on many levels. With Amazon especially, you’re simply reaching your customers where they’re already shopping. With the wildly escalating costs of social media, SEM, and affiliate marketing, hitching your company’s wagon to a marketplace with their own enormous resources is a proven way to rapidly kickstart your company or expand your reach with relatively minimal technical work and/or manpower.
The Pitfalls
Anyone who’s tried to spin up a business on Amazon or other marketplaces will tell you that it’s actually not a “no brainer” at all. Third party business comes with its own unique challenges and numerous downsides, an obvious one being the many costs: high fixed commissions per sale, not to mention the fulfillment, storage, shipping & return costs if you choose to house and ship your inventory from Amazon or Walmart’s fulfillment centers. And then there’s the sponsored advertising fees you’ll need to budget for in order to boost the visibility of your products among the millions already listed.
The most vexing, but often underestimated, downside of marketplace business is of course that you don’t own those customer relationships. Your day-to-day sales volume can be great, but also fleeting, because of the struggle to develop repeat business and LTV with your marketplace customers. And if the penetration of your marketplace sales to your overall business is greater than you’d prefer (20%, 50% or even more), the absence of those 1:1 customer relationships may pose a serious long-term challenge when you try to profitably scale your D2C efforts.
Develop a Strategy to Cultivate Third Party Customers
Simply exiting marketplaces in order to focus on your own D2C efforts is probably not realistic — at least not right away. You rely on your marketplace business for many reasons — not least of all the sheer volume — which helps keep the wheels turning. There’s also the massive exposure, branding, and social proof from the customer reviews.
Creativity is key. Amazon and other marketplaces have stringent rules that prohibit sellers from redirecting their customers back to your own domain to transact. With this in mind, there are common tactics you’ll see marketplace sellers using: Selling specific products on their own websites, sending post-purchase emails via the marketplace platform, responding helpfully to customer reviews, etc. All are good to do, but can be complicated and labor intensive, with hard-to-quantify results.
A proven tactic? The Package Insert. This sometimes overlooked, but venerable marketing tactic leverages the crucial doorstep and unboxing parts of the customer journey to produce consistent and affordable results. Retailers and brands have used package inserts for decades for product education, warranty registration, product samples, and discounts on future purchases. More recently, package inserts have also been used to encourage customers to promote products on their favorite social media platform.
Shopify even championed the package insert as a way to increase customer loyalty and revenue in this blog post, highlighting these key points:
- Packaging inserts can be low-cost, but yield a high return.
- Inserts can be highly targeted to the purchase the customer made.
- The cost of delivering the message — shipping the product — has already been paid.
- Package inserts are perfect for cross-selling, because you can tailor it to their purchase.
- The right inserts increase loyalty by making your customers feel appreciated.
Package inserts are of course either inserted at the point of pick & pack, or at the point of manufacture. You’ll need to determine which option is most cost effective and affords you the most flexibility for future iterations.
You won’t be able to utilize package inserts with shipments that are fulfilled directly by Amazon FBA or Walmart. You can however, safely use package inserts for marketplace sales that are fulfilled by your own warehouse and/or your drop shipping partners.
Response rates for package inserts vary, but those that are technology-enabled, with highly relevant messaging, a clear call-to-action and a meaningful incentive can produce consistent response rates of 10% or more. Regarding the incentive? Hint: it’s not a discount on a future purchase, which can get you in hot water with most marketplaces.
Using Mobile Product Registration with an Incentive
Product registration cards have been included in packaging forever — and in general, they’re not a highly effective or cost-efficient way to acquire data. Most customers are savvy enough to know that a simple purchase receipt is all that’s needed in order to make a warranty claim in the future. And while the internet has made it easier and cheaper to gather warranty registrations, it’s true that most consumers find that even typing in a URL is too much effort. You’ve got to shift your efforts to mobile.
Manage Towards Your Goals
To successfully manage a mobile-enabled package insert program, you’ll want to have a baseline for measurement, set goals, and iterate on the creative and messaging as you work towards your goals. Plan on replenishing your inserts on a cadence (90-120 days) that will enable you to make changes with minimal waste of unused media.
For many small-to-mid tier retailers and D2C brands, selling on Amazon, Walmart and other marketplaces is and will continue to be an inescapable reality. But if you find that your marketplace business has grown uncomfortably large, remember that with a strategy, a concerted effort, and the right technology partners like Mulberry, you can make consistent, predictable gains in your efforts to establish 1:1 relationships with your marketplace customers.
