The Niche Marketing Blog

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The Digital Marketplace “Wild West Days” Are Over

Gone are the days where the individual or smaller company could contact a few manufacturers, or wholesalers, negotiate for a variety of products, and make any reasonable money in digital marketplaces like Amazon (especially Amazon).

Over the past 4 years I have sold extensively in the digital marketplace arenas, with the bulk of that activity on Amazon. Over that time, I have been responsible for generating nearly $3.2 million dollars in sales. What I have seen over that time tells me that it is going to become ever more difficult for the smaller, general merchandise seller to successfully compete in these marketplaces.

There are a number of reasons for this. First, there hes been a huge influx of manufacturers and distributors who now list their items directly on sites like Amazon. When manufacturers go direct, the retailer can’t compete on price.

Second, marketplaces like Amazon have made it apparent that they would rather fulfill orders at their end, rather than have the seller do their own fulfillment. They have set up fulfillment centers in such a way that the independent sellers have a tough time competing against 2-day, 1-day, or in same cases, same day delivery times.

Third, with the influx of sellers mentioned above, there is a lot more downward pressure on pricing, leaving everyone with a race to the bottom, and ever smaller “average order volumes” (AOV). ¬†Of course, if you are big enough to survive on ever slimmer ¬†margins (think <10%), then you will likely survive. If not, then, well, you better have another strategy in hand.

So what does the smaller seller do to, not only compete, but also thrive, in the digital marketplace landscape? Narrow your focus! Forget the idea of selling general merchandise to the masses. Focus instead on finding niches where you can truly compete, and where there is truly a need that you can meet. In other words, get as close as you can to your customers and figure out who they are and what they really want – then provide it to them.

This means a lot more up front work on your part – market, competition and product research to name a few – but, in the end, you’ll stand a much great chance of surviving the ever changing terrain that is the digital marketplace.

I’ll explore some specific strategies for doing just that in upcoming posts.

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