The introduction of “Marketplaces”, like Amazon, eBay, Alibaba, Shopify, Etc has brought massive pressure against the retail ecosystem we’ve all known until recently.
These disruptors, using platforms known as Marketplaces are striving for dominance in the traditional retail ecosystem. They work like this: Independent online retail stores (mostly SMEs) upload their products to the likes of Amazon and eBay who then display the goods to shoppers to view and purchase. If the product is sold then, Amazon or eBay charge a percentage of the sale price in the region of 6% to 12%.
Typically, profit margins left for the independent retailers are extremely low from the outset but now, they have little or no choice but to become Affiliates for these global monopolists. These are the new, “Pirates” on the ocean of Retail!
The only other choice an independent store owner till now, is to rely on Google and Social Media to source shoppers. This not only costs them the loss of their “independence” but to be effective, runs their marketing budget into many thousands of dollars each year if they want to seriously compete. And that is just for the small players! The major brands spend many hundreds of thousands playing this game! The small guy has, low to no chance!
Independent online stores also fear that Amazon, eBay and Alibaba may copy their product after it proves to be a good seller and then sell the re-branded imitation version in competition to them at a lower price. Most SMEs cannot compete against this practice and following the many stresses associated, are forced out of business.
The question facing every online store till now has been, do they remain independent and use Google and Social Media or do they become Affiliates to the likes of Amazon, eBay and Alibaba at the cost of giving away a large chunk of their profit and independence whilst they hope like hell they don’t get their products copied! ?
