Selling on Amazon and Google Boosts Merchants’ Margins

Jan 11, 2011 10:30 PM  By

Merchants who have been reluctant to sell on third-party ecommerce channels may have a reason to give it a try.

Ecommerce platform provider Mercent says its retail clients participating in Amazon.com’s “Selling on Amazon” third-party marketplace program and through Google Product Search increased in the fourth quarter by 46% and 28% respectively.

Mercent CEO Eric Best says investors last week at the Citi 2010 Annual Global Entertainment, Media, and Telecommunications Conference in Phoenix were bullish on both merchandising channels, and for different reasons.

They consider Amazon’s stronghold on ecommerce as a reason merchants need to align themselves as third-party sellers there, and they see Google’s web traffic and data as reasons merchants need to get on board there.

“Both channels are helping merchants drive retail volume,” Best says. “Amazon is known more as the largest online retailer, and merchants don’t think of Google as a selling platform, but they are the third-party sellers that matter most right now.”

Retailers need to understand that selling on Amazon does not necessarily mean they are conceding sales to the online giant. Instead of taking a “if you can’t beat them, join them,” they need to see it as Amazon sharing its wealth.

The online giant has “a sterling reputation with consumers,” Best says, “So retailers can align themselves with the best-known online brand,” Best says.

The cost to sell on Amazon’s marketplace is pay-per-performance, so there’s no listing fees like selling on eBay or cost-per-click fees associated with Google. Amazon can also handle a merchant’s order fulfillment, and its Checkout By Amazon shopping cart can be integrated on the merchant’s site, and this helps cut down cart abandonment, Best says.

Lingering concerns some merchants have is that they’d have to share their data with Amazon to be a third-party seller. But because of the traffic merchants can draw on Amazon, and the revenue they can generate, Best says the channel is getting harder for merchants to ignore.

“Let’s say Amazon did $15 billion in sales this past year. Domestic ecommerce sales totaled $150 billion, so Amazon has 10% of the market,” Best says. “If you’re a merchant and you’re looking at aggressive growth, it’s pretty clear that you’d want to share your data with Amazon in order to reach that final 10%.”

Google is taking a different approach, as it aligns itself for a combination of local shopping and the mobile commerce phenomenon.

Best says Google made up for its so-so Google Checkout for merchants with its Google Product Search, which exited its beta phase in the fall. Though Google Product Search doesn’t allow a consumer to buy a product online and pick it up in store, it does allow a customer to comparison shop for a product, find a local store that carries the product, what the price is, and lets the customer know if the item is in stock at its location of choice.

In addition to integrating with the merchant’s supply chain, Google Product Search uses geolocation mapping to select a nearby participating merchant.

Best says this function is even more important for merchants as consumers comparison shop from their mobile devices while they are out shopping in a store.

“Google is taking major steps by making itself a major conduit for retail stores, especially at a time when (Google-powered) Android-based phones have overtakes the iPhone as the top-selling mobile device,” Best says. “Rather than driving the consumer to purchase online, Google is taking a look at the other 92% of shoppers and figuring out how merchants can use them to advertise their physical inventory.”