In times of instability, master your online store

The reflection that moves this article is not gratuitous or random: it is motivated by what is happening in the world around us today. At this point, we do not need to tell you about the impact that the terrible war in Ukraine is having on eCommerce, retail and, obviously, its social impact.

As you know, from Oleoshop we have raised more than once the possibility of supplementing the income of your online store by selling your products on some marketplaces, including Amazon. If this is something you usually do, this post will be of special interest to you. 

 

Right now, there are many and varied alarming economic indicators. But in today's post we will refer to a recent announcement from Amazon: price increases are coming for its sellers... and they are not small, believe us.

This huge marketplace is a great thermometer of what is happening in the world of e-commerce (at least in the West).

 

At the beginning of 2022, Amazon informed its FBA sellers - those who use the company's logistics services, warehouses and deliveries - that their rates were being increased by 5%.

Surely that did not  make them very happy, but with the problems we are having getting containers by sea and prices going up by the hour, the only way to safeguard Amazon's margin is to pass those extra costs on to its customers.

 

The scenario has gotten considerably worse with the invasion of Ukraine and sanctions on Russia. Basically, we are adding an energy crisis to a logistics and economic crisis with inflation skyrocketing. Much of the fuel that supplies the world is blocked, the price of gas and diesel to move fleets is rising, the electricity consumed by warehouses is getting more and more expensive....

 

What was Amazon's response? To increase its rates by another 5%. This increase is, in principle, temporary. In any case, the only thing that is 100% certain is that Amazon sellers are paying 10% more for the same thing since January 2022.

All this brings us to the title of this post: in times of instability... those who do not master their own online store will always have a worse time. Only if you depend on yourself - to the greatest extent possible - will you have enough decision-making power to manage a crisis according to what is strategically best for you.

 

We have nothing against marketplaces, that goes without saying. As we said, we have spoken many times in this blog about their virtues, but always as a complementary channel to your own store. They have their pros and cons. However, they currently represent a certain risk we should not ignore and that end up giving us the reason to always recommend it as a complementary strategy.

 

 If your sales volume depends too much on Amazon or any other marketplace, increases in fees like that 10% go directly against your margin or, on the contrary, you will have no choice but to pass it on to your customers to gat the same numbers at the end of the month.  

 

The main difference is that, in an environment controlled by you, you will not be so dependent on third parties, while in one of these platforms you are almost certainly competing with other vendors offering the same thing in the same environment.

 

This sets out a complex scenario: if you want to remain competitive, you are going to have to engage in a price war. The downside is that there will always be a rival willing to "pull and push" prices higher to achieve a higher volume of sales, even going straight to losses.

On the other hand, the fact that you have a product well positioned on Amazon (to continue with the example) does not mean that all your products are like that. This, which seems obvious, actually means that you will not be able to apply actions that will increase your average ticket with the same effectiveness. However, on your own online store you can always look for cross-selling strategies, upselling, playing with shipping costs...

 

All these solutions can be developed if you are the owner of the platform and, by extension, leads, contacts and customer data in general are also your own asset. This ends up being also positive for working on recurrence. A loyal customer is even more valuable when there is a general uncertainty like the one we are going through.

 

All things considered in this article, we encourage you to start mastering your online store now. We have given a few hints of what you can do, but next week we will review in detail everything that your own eCommerce offers you and that you will not find in marketplaces like Amazon.