Third-Party Reselling: The New Industry ‘Crack’
Well, I was in retail quite a long time and have learned a truth over the years that should surprise no one: Easy money in retail never stays easy for long. And there are always reasons for this. In this case, if the provider of the platform sees the limited value being added or replaceable parts of the chain, they will capture as much of the profit from those parts of the value chain as they can. Several of these marketplace providers have been criticized by The Street for lack of profitability, so that is an obvious direction to take. The actual brands in play may draw the same conclusions, as the businesses of many are challenged in the current environment. Even though retailers are providing the product, the customer’s relationship lives within the marketplace platform and their decisions are still driven by the strengths of products and brands.
It’s not a perfect analogy, but just like TVs weren’t a forever ATM machine, anyone who’s convinced that third-party reselling provides a risk-free foundation from which to build a retail brand is not seeing the big picture. It may seem like a stretch today, but when someone else is in control, you have to consider the risks. If retailers rely too much on someone else to build their sales, what’s left, when things change?
The simple solution I advocate is balance. As I said, my company deploys third-party reselling, and we view it as a healthy dimension to our business. It is smart to use the most powerful tools available – but it is even smarter to keep developing new tools at the same time! Push the envelope on how you are willing to go to market, and look for emerging trends to build on for the future.