Do you want to join a major online retailer?
Connecting to online platforms such as bol.com, Amazon, Zalando or Thuisbezorgd seems very easy for many entrepreneurs and therefore very interesting. But what does this do to the competitive position of your organization? And what are other challenges you can face?
Threat or opportunity?
The large online platforms saw profits grow enormously due to the corona crisis. We also saw an increase in demand from our customers for links with such platforms. Many organizations will think “if you can’t beat them join them”. In many cases this is certainly the case. However, we also see various challenges when entering into such a collaboration.
This creates an unhealthy incentive if an operator of a platform is also a provider. The market master, who determines his own rules of the game, then also becomes a market trader on this same market. A platform can then better position its “own products” by placing them higher in search results. Because the administrator of the platform has all user data, he can see exactly which products sell best. Amazon is already making use of this by making ‘private label’ products cheaper and more visible.
Yet it can also pay off for organizations to join a platform. Especially bol.com or Zalando are interesting sales channels where you can reach a large audience relatively easily. A big advantage of bol.com over Amazon is that it does not yet offer private label products. At the same time, all these parties are partly shops – with their own stock and warehouse – and partly market places for other providers. Without clear rules, the incentive continues to exist to favor one’s own goods.
Do you have a unique product? Or if you have the exclusive right to sell, an online platform is quickly interesting. After all, it does not matter to customers who offers or supplies a (commodity) product. It is often the price which is the decisive factor.
Product and price determine your succes
It is important to ask yourself a few questions when considering joining a platform. Is my product unique? Can we distinguish ourselves on the platform or in customer experience (after sales)? How often does an average customer buy your product or service? Is it a one-off or repetitive sale? What do we outsource and what do we do ourselves? How do we bind the customer to us.
In addition, it is important to bear in mind that such a platform also raises certain expectations. This includes the terms of delivery, service, returns and complaints handling. When it turns out to be a success, this can also bring new challenges. Ultimately, it is up to the organization to weigh the costs of commission and – sometimes – distribution of a platform against the greater reach of potential customers. When an organization does not invest in its own distribution and marketing channels, the platform takes over this customer contact and your organization becomes enormously dependent.
Ultimately, it is very important that abuse of power and monopoly formation is actively combated. That platforms have a dominant position does not have to be a problem, as long as smaller companies have access to the online market and have a fair chance against the big (er) players. Supervision and new laws and regulations can also contribute to a healthier and more balanced online climate.