Why should you avoid third-party intermediaries?
Many people started selling online during the pandemic when markets were shut down during lockdown. The lockdown came with a silver lining as many small businesses were affected due to the pandemic. However, the ability to sell your products and services online gave these entrepreneurs a ray of hope. There are many mediums on the internet through which you can reach your target audience. You can do it through your website, a marketplace, third-party distributor, online retailer, or through your own social media channels. You can opt to go for third-party mediators to sell your products with a commission charged for the service. However, if you can eliminate that layer and sell your products or services yourself, you can save on that percentage and increase your revenue.
Third-party intermediaries create distance between seller and consumer
There are multiple reasons which lead to the conclusion of avoiding and eliminating third-party intermediaries from the sales cycle. Let’s see why you should choose to sell directly rather than in a marketplace and the best ways of selling products online.
Online selling through intermediaries’ marketplace creates an unbeatable distance between the seller and the actual consumer. The seller never can get to know the real customer and how he can satisfy the person who is consuming his product. In today’s competitive world, data is the key. Data is generated through monitoring and recording the consumer’s marks on your website. Whoever owns the most data can make a significant difference in product manufacturing and, ultimately, sales. You are losing out on building your own customer data warehouse by including a third-party into your channel. These intermediaries develop your customer’s database and know more about the person using your product than yourself. If you sell your product or service through your own channel, you can better understand your customer’s needs and demands, buying habits, feedback, and preferences.
Third-party intermediaries increase your cost of production
Third-party intermediaries charge at least 10-20% as commission for displaying the vendor’s products on their platforms. Be it Amazon, Ali Express, eBay, or any other medium-size vendor, commission charges against the traffic the parent company’s platform generates. This increases your actual cost of production of the product or the service, which means it is not the best way of selling products online. The bigger the platform, the larger the commission would be. Therefore, finding a customer through your own selling point is smart to increase your revenue by selling the same number of units. There are multiple ways through which you can reach out to your customers in the digital world today. You can choose to play the same game as big giants and up your game to sell your products.
Hard to establish brand loyalty with third-party distributors
Brand loyalty is the key to success for many known global brands. Be it a beverage brand like Coca-Cola or a consumer product like Nike, brand loyalty has made multinational brands with unbeatable customer support worldwide. Brand loyalty helps companies build a consumer base that is extremely difficult to churn, even when given superior benefits from competitors. It is not the best way to sell products online for a small to medium scale business with third-party distributors to build brand loyalty. These third-party marketplaces display several vendors with product specification and price comparisons. Customer is filled with enormous information and fancy pictures that lead to lower brand identification and ultimately, brand loyalty. You must attract the customer on your own personal channel to build brand loyalty among your consumers.
Marketplace automation can kill your product’s integrity
Third-party distributors have a robust marketplace automation system embedded in their channels. This translates into more detailed price comparisons against product specifications. Consumers are exposed to different kinds of information that are provided by the vendors. Your product can easily get lost in the stream of identical products with the same pricing strategy. Sometimes, the fancy wording used by other vendors can challenge your product’s integrity and authenticity. Therefore, putting your products on the display of someone else’s store takes away the fundamental right to describe your product in your own words and communicate with your customers. Third-party marketplaces are not the best way of selling products online for this specific reason as well. It is a significant tradeoff that can be easily avoided by attracting traffic to your own online store.
Establishing your own terms of agreement with third-party distributors
Another critical, difficult decision is to finalize terms of selling with third-party distributors. Usually, these marketplaces have developed a predefined agreement to be signed with every vendor. There is little to no room for any producer to establish his own terms of selling deals with these distributors. When deciding on selling products online, it is a critical decision to be made with the intermediaries. Not having your own terms can make you disconnect with your customer and cost you a great deal of loss of a customer. Third-party agreements do not favor vendors in any circumstances. They always prefer to prioritize customers. They build databases through the pool of customers that visit their store daily. Therefore, the vendors lose all control over their products when they sign third-party distributor agreements.
There is no harm denying that third-party inclusion in your business model increases your chances of units sold and revenue increase in the short-term. However, it comes with a significant tradeoff. Numerous entrepreneurs have established online channels and built an empire. It took them time, but none of these brands were created overnight. It took years of consistency, perseverance, and dedication. Build your brand on your own terms. If you are producing a product that you have a thorough belief in or a service worth the customer’s attention, you must take the route of selling products online through your own channel. It is the best way of selling products online compared to involving third-party distributors.