Amazon Business or Private B2B eCommerce?
We’ve been in the SAP eCommerce business a long time. We’ve seen public B2B marketplaces come and go. We’ve always advised our clients to keep an eye on public marketplaces—but we’ve emphasized the importance of building your own private marketplace alongside that watchfulness.
As Amazon Business increases its footprint in the commoditized B2B marketplace, it’s worth revisiting the question of selling via public marketplaces vs. establishing your own private web shop (or doing both). In this article, we’ll survey the benefits and drawbacks of each model and equip you to choose the right mix of channels for your company.
First off, an important question:
Does your product give you power, or does the market have power over you?
This is the most fundamental question to ask as you determine your eCommerce channel mix. While there’s no black and white answer here, it’s useful to chart your answer along a continuum. At one end of the spectrum, a product is so specialized that you can sell it 100% on your own terms (hypothetically, at least!). At the other end, a product is so commoditized that your only chance to compete is to offer the best pricing and availability in a marketplace where your customers already shop.
At a high level, your place on this continuum determines what kind of eCommerce will perform best for you. A specialized, non-commoditized product allows you to sell on your own terms. But the less specialized your product (i.e. the more commoditized it is), the less power you have to control pricing and force customers to use the channel of your choice.
Of course, if your business is highly diversified, you may have different product lines that fall at different places along this continuum. If that’s your company, then diversified digital channels may be the best option.
What about gray area products?
Some industries and products will land squarely in the middle of the specialized-vs.-commoditized spectrum. These products could perform well on Amazon, but they could also perform well on a private eCommerce site owned by your company.
In this case, how do you create the best possible mix of digital channels? The key is to keep asking questions. For each product line or market that you sell in, start by asking yourself what kind of control you want over your eCommerce destiny.
Do you want to control your brand and gather customer data?
Public marketplaces like Amazon Business offer you convenience as a seller. They take care of infrastructure and put your product in front of customers. Sounds like a great deal! While those aspects are certainly benefits, they come with tradeoffs, too. When you sell on a public B2B marketplace, you lose certain powers.
- You lose branding power for your company. The customer experiences the public marketplace’s brand. You may get a small byline as the supplier, but everything about the user experience points back to the B2B marketplace as the facilitator of business, not you.
- You lose control of margin. It’s a simple fact. Sellers on Amazon pay anywhere from 8%-45% commission on sales. Over the long haul, that adds up.
- You lose visibility into customer data. When you launch your own B2B web shop, you can implement a whole host of analytics and business intelligence tools to track customer behavior and preferences. This is especially useful when you integrate your eCommerce store to SAP.
What you gain with a manufacturer-branded web shop
We’re seeing it more and more—professional B2B buyers are bringing their B2C expectations to work. Amazon drives this with their innovative platform and immersive, personalized approach to eCommerce. Selling on Amazon may feel like the easiest way to meet those B2C-inspired expectations. But is it worth losing everything we outlined above?
The good news is, you don’t have to lose all those benefits. You can provide a best-of-breed eCommerce store that’s inspired by B2C. You can leverage Amazon alongside your company-owned web shop. Even better, you can integrate your eCommerce store to SAP on Day 1 so your data lives in one place—SAP. You can even take your Amazon sales data back to SAP through Corevist web services. (More on that below!)
The things which you give up to Amazon and other public marketplaces are the exact things you gain with an eCommerce store owned and controlled by your company. Of course, you also take on the cost of the infrastructure—but solutions like Corevist make that infrastructure highly affordable with flat pricing and no per-order commission.
What do you gain with your own eCommerce store?
- You gain branding power. The customer buys from you, trusts you, and comes back to you.
- You gain control of margin. Because you own the sales channel, you can implement efficiencies and economies of scale to make more money per sale.
- You gain visibility into customer data. With a platform like Corevist coupled to Magento, you can use Google Analytics, Pendo, Full Story, and others to gain actionable business intelligence into customer behavior. Your Marketing Department is empowered to run promotions and email campaigns based on this data.
In a word, you gain the ability to run a powerful, scalable eCommerce store that’s inspired by the best of B2C eCommerce.
Getting the most out of your SAP eCommerce solution
If you’ve decided that a company-owned web shop is part of your digital channel mix, then you need to maximize the value you get from it. You need to ask intelligent questions. As you’re evaluating an SAP-integrated eCommerce solution, either alongside Amazon or in place of it, ask yourself the following:
- Will the store allow you to merchandise? Can you implement cross-selling and promotions to increase order value?
- Will the store allow you to collect analytics data on your customers’ behavior? Can you gain deep, data-driven insight into what your customers want?
- Will the store allow you to leverage SAP data for personalized catalogs that are related to a customer’s major products?
Finding the right mix (and posting sales to SAP)
For many companies, especially those selling in diverse markets, an Amazon presence and a manufacturer-branded web shop are pieces of a healthy digital whole. The key is to find the channel that most suits a particular market and establish yourself in that channel—and integrate all digital sales channels to SAP ERP. That way, your ERP is the system of record. You avoid data duplication and heavy batch sync requirements between platforms.
For example, you may decide that a commoditized product line should sell through a public marketplace like Amazon, while a specialized product line can succeed in your company-owned eCommerce store. Can you get sales data from both channels back into SAP?
Yes—absolutely! Corevist integrates eCommerce to SAP via web services, regardless of channel. We can post eCommerce data to SAP in real time from your own web store, in batch from Amazon, or both. The result is an ERP system that houses all your eCommerce data, regardless of what channel it was sold through.
Moving forward: Case study
Even commoditized products can succeed in a company-owned eCommerce store. How? When you strategically use eCommerce to protect your pricing. Read the case study below to learn how one Corevist client used a hierarchy of user privileges to protect their pricing in a high-turnover job market. The solution met the business needs of our client’s customers while still protecting our client’s pricing information.