We need to say this up front: Cobblestone Trade only does exclusive retail deals. That means that what you are about to read could easily be interpreted as a very biased sales copy to try to you to partner with us.
As it turns out, yes we are biased about this topic, but on the other hand, we firmly believe that exclusive online deals are the best alternative for both the brand owner and the retailer. Read on to understand why…
In our twenty years of online retail experience, we have been on pretty much every side of this issue. We have been brand owners, we have been authorized distributors of brands and we have been liquidators. We know the landscape and we know that as a brand owner, you have basically three options:
- Do your own ecommerce exclusively (in house).
- Sign on many online retailers.
- Work with one ecommerce partner (such as us).
These really are the only options though there are obviously variations of each. But before we compare them, let’s talk about the five factors we really need to consider for comparative purposes.
- Gross margin
- Online coverage (Are your products available/visible in the key online channels (Google, Amazon, etc)?)
- Expertise (Do you need retailers or an exclusive partner at all? Do you know how to market online? Do you have fulfillment systems in place?)
- Price control (Are you preserving your own margin as well as the margins of your offline retailers?)
- Brand control (Is your brand being cheapened by knockoffs and counterfeits? Are your retailers doing a great job of presenting your products, providing service, and fulfilling orders?)
Now that we have three retail options and five factors, let’s throw them into a handy chart and fill in the blanks.
Let’s talk about that middle option first since it is clear that we are not a fan. It is natural for a company to think that the more retailers they can on board, the better. Offline, that is usually true. Online however, as this chart demonstrates clearly, that is a recipe for disaster.
There are specific reasons for why online retail strategy needs to be very different from offline retail. We won’t go into all of them here but we will tell you what will happen if you do the multiple-retailer plan and are not careful:
- You will end up alienating your offline retailers as your online retailers engage in pricing wars that cheapen your brand.
- You will lose control of distribution when some retailers start selling to other retailers that you have no ability to police. Eventually, that diverted product will weaken your brand further when it shows up on Ebay.
- You will end up with retailers knocking off your product and selling theirs against yours (at a lower price).
We are not suggesting that a multiple retailer solution never works. It can work but you have to be extremely selective about what retailers you partner with and you need to have ironclad contracts and agreements that you can enforce when things go wrong. In a best case scenario, you are going to still have to work hard to stay on top of your retailers.
Here is another article we wrote about how a typical online retailer thinks and why you need to be careful.
Now that we have firebombed the middle option, let’s talk about the differences between doing your ecommerce in house and doing an exclusive deal with someone like us.
I hope we can agree on something up front. Just like building your product is not easy, ecommerce is not easy either. There is an enormous amount of information you have to know about fulfillment, online advertising, website development, marketing, legal issues, customer service, and more. Doing ecommerce well is not cheap and it requires expertise.
While there are great systems to help with different aspects of the process, actually getting those systems working together is anything but easy. For example, we work with an inventory system, a CMS (customer management system), a shopping system, and a bulk email system. All those systems have to communicate with each other and they also have to sync with the websites generating orders. It would be nice to think that all happens by magic but it does not. It is hard work to cobble all of those things together. When you see ShipStation advertised on TV, know that it is a great system (which we use) but also know that it is only one small cog in a big wheel.
Outside of the systems, you have to market effectively, forecast sales accurately, handle customer service appropriately, and fulfill orders efficiently. These are not easy things either and they require manpower and expertise.
If you have the manpower and expertise to run your own ecommerce shop well, you probably should. You will have a clear advantage in gross margin if you do. However, if you need a partner to take all that off your plate and let you focus on your core business, that is our expertise.
Every client is different and we will work with you to meet your specific needs. However, in a nutshell, here are the two ways we typically work:
- An exclusive deal with you as your ecommerce partner. While we use standalone websites, we also get you maximum exposure on Amazon if desired and any other shopping portals such as Walmart and Ebay. As you exclusive partner, we actively police diverted product issues for you, shutting down rogue and unauthorized online distributors.
- Step into your ecommerce at any point you wish and handle marketing, fulfillment, advertising, brand/price control, and other issues for you.
In summary, what we offer is a great middle ground between the Wild West of internet retail gone amuck and the frustration of having to take on all the time-intensive aspects of ecommerce yourself. For most brand owners, using a partner like Cobblestone Trade gives you the best of both worlds: a maximum online presence with full brand/price controls while allowing you to do what you do best.