Downsides of New Ecommerce Models | Rena Tom / retail strategy ...

Posted by Rena Tom ? Wednesday, December 12, 2012 ? 3 Comments?

It?s the peak of the holiday shopping period, and online retailers are having a great year. While it can be a huge boon for makers and sellers, there is often a downside to watch out for, especially in the wake of rapid innovation in the ecommerce space. It seems that everybody is out to invent a new ?platform? to make more sales. There are many, many benefits for buyers but at the expense of the folks you are buying from.

I am always on the side of the independent maker and retailer because it?s just so easy for them to get burned. These small business owners are spending a lot of time and money creating content ? not just the products themselves, but also the product descriptions, marketing copy, product photography, et cetera. Many applications are popping up that pull all of this data (or help their members pull this data) with great ease, and remix it into personal, curated catalogs or pages. Yes, Pinterest does this, and a slew of imitators. The latest sites, though, are going one step further, and trying to let members purchase what they like ? and this is where it gets interesting.

Some sites, like Svpply, seem to act as catalog only and funnel sales back to the original website. I?m not entirely sure what will happen now that they?ve been acquired by eBay, but they had developed a retailer-specific dashboard to help them better serve their customers. As such, we can call that a retailer-friendly approach. They?re presumably making money from the retailers by letting them access this data, but buyers would still ultimately go to the retailer website for the purchasing experience, and the retailer could collect, retain, and control their own information this way.

Next we come to The Fancy and Luvocracy, two newer sites with somewhat similar models which I am having a much harder time with?and it seems it?s not just me. I?m hearing from disgruntled sellers already, so I wanted to investigate.?Basically, a representative from those sites purchases the product from the retailer for you, the customer, then has it sent to you.?It appears that these companies are trying to employ something like a drop-ship model to get products to buyers ? but without asking the retailers if they want to enter that relationship.

Each site has a slightly different take to how they handle sales, but ultimately they are pushing a customer-friendly approach, which unfortunately places new burdens on the retailers. Not asking retailers if they want to participate is just insane. What is truly upsetting is that I feel they are representing that an approved relationship exists! If you look at Luvocracy?s Terms of Service, for example, the wording makes it sound (to me, at least) like the retailer is aware of, and wants to be on, their site. In actuality, I don?t believe the retailer knows anything until the first order is placed and emailed. Check out their phrasing, below, as they pass off responsibility.

8. MEMBER-RETAILER RELATIONSHIP. If you have any questions or concerns regarding the products that you have ordered through the Web Site, please contact the applicable retailer. Luvocracy has no obligation to respond to you regarding any requests regarding the use, operation, or features of any product you order through the Web Site. Note that the retailers on the Web Site are independent from Luvocracy and will be legally responsible individually and separately to you in respect of the items purchased.

9. DISCLAIMERS.

(a) NO WARRANTIES INDEMNIFICATION. (i) As retailers, and not Luvocracy, offer the products for sale, we do not give any warranty or guarantee of any kind that product descriptions or any other content of the Web Site is accurate, complete, reliable or error-free. Product guarantees will be provided to you by each individual retailer in respect of their products. We are not responsible for the products you ask us to purchase on your behalf from third-party retailers, manufacturers or suppliers using our Web Site.

Now for something different. The Fancy will let a retailer ?claim? the sales relationship, but actually anybody on the website can claim it, and benefit from the sale, even if they are not the retailer! This is from an Etsy seller, quoted in the Etsy Forums:

On The Fancy Anyone can ?fancy? and item on etsy (or any website for that matter), which then in this case links directly to your store item in etsy ? great marketing for your Etsy shop. If someone clicks ?I want to sell it? ? It doesn?t matter if they are the actual merchant/artist or not ? they have claimed this item as something they are going to have drop shipped (FM claimed my item and when people bought it off of TheFancy he/she would buy it off Etsy and have me ship to their address). The item no longer links to your shop ? instead it only sells directly off of TheFancy.

In this case, ?FM? is quite possibly The Fancy themselves; when you are on their site and add a product to cart, you can then add a note to ?FancyMerchant?. Coincidence with the initials? There?s a much longer story here from another Etsy seller, worth reading in its entirety. People are definitely getting pissed off:

I felt angry when i saw my items was being sold on some other website, because i want to keep my item exclusively being sold on my own place. There are a lot of people from all over the world asking me for wholesale / resell my item and i refuse them all. My item are all unique, i make every iPhone case with my both hands and i felt really bad if someone tries to sell them for some other purpose. Sending ?rouge? (sp) etsy user buying my items and resell it on thefancy? No!

For me, this evasiveness is the biggest problem, but there are many others. In traditional retail, a product vendor and a retailer would get together and negotiate the terms of their relationship. This can be a tedious process and certainly can be streamlined, but it is also what can make the product selection, customer service, and overall experience so great for the customer.?Retail under the new model becomes purely transactional and mechanical, even though they are often touting the fact that you can find goods from smaller brands, which is what makes it special.

You could argue that sales are sales, no matter where they come from, and ultimately that?s the goal. Well, yes and no. Attribution is so important, and these sites do not always link to the original website, or even list the seller name. Also, the seller does not receive the data about the customer. That means it?s nigh impossible to develop an ongoing relationship which is so necessary to create that feeling of connectedness to the brand. That relationship is half the reason for coming back, telling your friends, and making more sales. It also reduces the seller, basically, to a fulfillment house ? one that gets mad when they get asked about out of stock items or rush deliveries from a website they did not agree to be in a relationship with in the first place.

I would love for these companies to clarify what they are doing in the comments, if this is not fundamentally correct. The sites are invite only and do not have much information about or for the retailers at all.?What do you think about this? Should we acquiesce to these new retail models in hopes of greater sales and visibility, or demand that they respect the original intent of the content creators?

Source: http://renatom.net/2012/12/12/downsides-of-new-ecommerce-models/?utm_source=rss&utm_medium=rss&utm_campaign=downsides-of-new-ecommerce-models

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