March 7, 2021

IKEA plans ‘selling everything everywhere’; the rise of multi-channel selling

Dr Peter Mowforth

IKEA has just announced that it plans to start selling its products on websites other than on IKEA’s own ecommerce sites {ref}. Although they haven’t given details, let’s assume they are talking about selling on marketplaces such as Amazon, Tmall, Yatego, Wal-Mart, eBay or the hundreds of other marketplaces that each sell products to different market segments and groups around the world.It’s not just IKEA that’s doing it. Tesco has an outlet store on eBay here while upmarket brands like Waitrose are happy to sell to Amazon customers here. There is a clear inevitability to this shift in using multiple sales channels with obvious advantages for each party. The big brands and supermarkets can use the marketplaces to simply sell more products while each marketplace can ensure that their users don’t need to go anywhere else to get all the items they want.

The growth in marketplaces is faster than for the overall growth in ecommerce. The left hand graph shows the growth for Amazon {ref}, the right side shows the growth for Alibaba {ref}.In the US it’s claimed that 97% of retail consumers browse marketplaces prior to product purchase (whether buying from that marketplace or from another website) {ref}. Not surprisingly, nearly 40% of all retail now takes place via marketplaces {ref}. With statistics like these, anyone with their own website needs to make sure that, where it makes commercial sense to do so, their products are listed on multiple marketplaces.At INDEZ we strongly encourage clients to make best-use of marketplaces. For businesses that are new to ecommerce, selling products on eBay or Amazon can be a good way to start. This approach reduces risk and helps you to become familiar with putting together good product pages, take good product photographs as well as gaining an understanding around packaging, fulfilment and returns issues. The big advantage is that you can quickly establish if the products you want to sell are viable - i.e. they make profit for you.For mature businesses that already sell online within the UK, marketplaces can again be a relatively low risk mechanism for starting selling to other countries and regions. If you take this approach then you may need to find our beforehand which marketplaces to use. For example, if your objective is to sell your products in China, eBay and Amazon won’t work given their low penetration into the Chinese market. The bottom line is that you should use different marketplaces in different ways in different countries if you want to generate the most profit. On top of all this, you will need to recognise the rules and regulations used by different countries for different categories of products {e.g. ref} as well as the different tax rates {ref} and options for duty-free importing.As always with ecommerce, before jumping into using marketplaces you should first undertake extensive research. Better still, make sure you talk to people, organisations and businesses that have practical experience in having done this before and can show case-study examples of their work. As always, you will get the best advice from the day-to-day hands-on practitioners rather than from general business advisors or consultants.Because so much of ecommerce, particularly with channel businesses, is low-margin, very careful planning needs to be done around the costs. What often surprises us is how many ecommerce businesses have done little to optimise the Payment Service operations, tax or software systems that automate this all-important marketplace trade. Like most things in ecommerce, the route to business success is the never ending nips, tucks and tweaks that together constitute the aggregation of Marginal Gains {ref}.

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