Learn how to make your business a strong contender in the marketplace with these expert tips and strategies. Start competing with marketplaces today!
entrepreneur Vik Dovnar explains why you shouldn’t place your business on a marketplace. His revealing articles about online platforms have become some of the most popular on vc.ru. In the book, Dovnar explains the advantages of an independent business and how you can compete with marketplaces. We are publishing the chapter “Aikido Method: How to Grow by Doing Everything the Other Way Around”.
The Pros of Marketplaces That Are Hard to Beat
Why have marketplaces become so popular? What are the advantages of their business model for the client? They are as follows:
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free and fast delivery;
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huge (many times larger than yours) catalog;
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return customers using the app;
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famous brand and huge traffic;
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discounts and prices (oh, these organizers of sudden sales!);
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clear process for returning goods.
Let’s look at this in detail.
Free shipping
Organizing and implementing free delivery is difficult for most representatives of small and medium businesses. The product is cheap – unprofitable. The product is expensive and large – too. Small-sized and expensive – yes, it is profitable, but such a product is difficult to sell. Therefore, 90% of online stores find it difficult to make free delivery.
Fast delivery
Marketplaces are logistics centers. Today, fast delivery of leading brands to warehouses often takes no more than two hours. I think that soon they will be able to deliver the most popular goods in 30 and 10 minutes. This is already happening with class A goods through dark stores. It is useless for small and medium businesses without their own ecosystem and dark stores to compete with marketplaces in the speed of product delivery.
Huge catalog
Marketplaces have huge catalogs where you can find everything under the sun. This means that the first site when searching for goods is Wildbberies or Ozon, and not your online store or even Yandex or Google. This has already happened in the US, where many consumers first look for a product on Amazon and, if they don’t find it, turn to other platforms or sites.
Returning customers
People are getting used to using marketplace apps. This is partly due to the ecosystem: taxi services, delivery of goods, food, information products. The app can send push notifications with special offers, which increases the number of customer interactions with the company, overall sales and the average check. People download apps to their phones that they will use constantly. For a regular online store, this is a fairy tale.
Well-known brand and huge brand traffic
Sber has unlimited resources, Wildberries is the undisputed leader, and Yandex.Market owns the most popular search engine in Russia. Who will you trust when buying electronics? The online store “Roga i Kopyta”, the company to whose card your salary is deposited (I’m talking about Sber), or one of the most famous platforms, which is advertised by stars Malikov and Gagarina (I’m talking about Ozon)?
IT giants have realized that the Internet is not a separate world for geeks, who are passionate about computers and gadgets, and young people. The Internet is a means of disseminating information. And if you work with clients online and offline, you can get the maximum effect.
Discounts and prices
Marketplaces are organized in such a way as to compete on price with partners. Plus sudden sales, the role of which is much discussed in the “Reception” section of the popular business magazine vc.ru.
For example, Wildberries actually manipulates sellers, forcing them to make maximum discounts during sales. Often they have to sell goods even below cost.
According to unconfirmed data received from customers, the niche marketplace Leroy Merlin has a rule: you cannot sell products on your site at the same prices as the giant. That is, at least a little, but it must be cheaper on the platform.
Just think: they oblige producers to sell goods more expensive than theirs. Otherwise, they will reduce the price for it indefinitely. And, of course, sanctions will follow.
Manufacturers agree to this because Leroy Merlin is a very large offline and online retailer in Russia with a turnover of over 400 billion rubles per year. Sellers are eager to get on marketplaces, despite the fact that this may jeopardize the development of their own sales channels, such as a website or store.
Clear return scheme
The key thing! Marketplaces provide SAFETY — something that has been missing in online trading for the last two decades. The giants promise safe returns and stake their name and brand as a guarantee. Problems with the product? The marketplace will solve them!
Special attention is paid to customer support. It is semi-automated: chat and voice assistant based on artificial intelligence technologies. Specialists will solve the issue if robots fail.
What do giants do when they get into trouble? They offer customers bonuses for their next purchase, free shipping or gifts. That is, in addition to solving your problem and providing service, they do a little “pleasantness” so that you are satisfied with your interaction with the company and have a positive experience.
So, marketplaces have become popular because they are very convenient for consumers to use.
Great for the consumer, but what does this mean for small businesses? Reduced revenue? Lack of independence and complete dependence on giants? Not necessarily. I offer a 100% working method.
Aikido Method
Aikido is a Japanese system of physical and spiritual practices combined with the philosophy of spiritual harmony, where the opponent’s strengths are used against him.
Let’s look at the world of food retail in 2009. Magnit, X5 Group, Auchan are raging on the market.
And then in Strogino a small tent “Izbenka” opens, which will become a chain of healthy food stores “VkusVill”.
Did the company make products? No. Did it have a well-known brand? No. Did it have a large number of stores? No. So why did they grow so quickly?
They applied the Aikido method, that is, they did everything the other way around.
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Total commitment to positioning. Healthy food products. No E24 or MSG – nothing that you can find in other stores.
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Not more, but less goods. Each position is a locomotive product. There are few products, but each of them is unique.
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Aggregation under its own brand is a total CTM system. VkusVill has done everything to make it impossible to find the same product from competitors.
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Cool loyalty system. Favorite product is 20% cheaper. For what? Yes, so that people come for something specific, but gradually try new products.
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No placement of CTM products in other networks.
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Return of any (!) product.
Look: every seemingly minus has been turned into a plus. I suggest doing the same with your online retail using the Aikido method.
You come to Auchan for everything at once because you know that there is a large selection. You come to VkusVill because you trust the quality of the goods. So the question is: are the assortment, low cost of goods, location of the store, brand awareness advantages?
I want you to look at marketplaces from the perspective of your business and question every advantage they have. And then turn it around in your favor, just like VkusVill did in the food retail market.
I offer options, but you will chart your own route.
Positioning + value
Don’t just be an online store – bring value to people. Identify your audience and work for them. If you sell tech, why not become a store for geeks, providing them with additional services? The main thing is that the math works out.
Why not, for example, start working on a subscription: a store of eco-friendly clothing, or sofas in crazy colors, or inexpensive shoes from England?
In general, you need to define a specific, narrower audience. Identify one direction and move only in it. You need to delve into your topic and become #1 in it (more on this in the following chapters).
In this case, free shipping, a well-known brand, discounts and marketplace prices are leveled out.
Every product is a locomotive
There is no point in competing with marketplaces in terms of product range. Let your audience see a small number of products, but each lot inspires them. A striking example is divan.ru. The company stands out both in its product range and the sophistication of its website. The product is not sold on marketplaces, which allows it to maintain a leading position in the sofa market.
You shouldn’t have many product categories – it’s better to specialize in something. A lighting store is unlikely to “take off”. But a specialized floor lamp store is likely to.
But what if you are not a manufacturer or even a vendor whose main task is to promote and distribute goods? There are options! To make it easy to buy on your site, make a very convenient, well-thought-out product sorting for your audience: filters, constructors. Marketplaces cannot deal with every product category due to their volumes. But you can! More content, texts, reviews, characteristics, expert articles for a small number of goods will give a huge profit.
These are the advantages of a limited assortment. You will be able to work on each of your cards, making it mega-selling, answer all the customer’s questions, show the product from its best side. As a result, it will be more convenient to buy from you.
Another very important point: it is easier to work with a small assortment, because it can be kept in stock. It is only important that the goods are circulating and that you have advantages in them.
Neutralizes: huge marketplace catalog.
Aggregation under your own brand
There are now many opportunities to sell products under your own brand (CTM) on platforms. What prevents you from doing this outside of them?
No way to sell a product under your own brand? Sell it together with services or other goods, i.e. boxes or bundled solutions.
Neutralizes: discounts and prices of giants.
Cool loyalty system
This is the most important thing. You need to do everything so that your product is not searched for on Wildberries or Ozon. This is possible if you offer accessible information about your company, discounts on the next purchase, a free service for regular customers, a gift for a certain number of purchases, and so on.
Can’t afford to create an app? Make a chatbot! It’s inexpensive, has a higher conversion rate, and makes interacting with your audience easier.
Neutralizes: discounts and prices, customer return through applications.
Do not post on marketplaces
Buyers should find your product only on your website or social network page with a link to your website. If you do place a product on a marketplace, reserve the product card as much as possible. Place only part of the assortment, and keep the locomotive product for yourself.