EC Beginners' Guide: What are the criteria for deciding between D2C EC and EC Marketplace?
Jan 26

EC Beginners' Guide: What are the criteria for deciding between D2C EC and EC Marketplace?

Jan 26

For companies thinking of starting a new e-commerce business, deciding which channel to start with is one of the issues they need to consider. They may be wondering whether to start with a mall such as Rakuten or Amazon, or whether to start with their own e-commerce site, and what criteria to use to make their decision. In this article, we would like to discuss the selection of sales channels, which is an important point in e-commerce strategy.

❚ What are the criteria for selecting a channel?

Selecting sales channels for your e-commerce strategy is a very important point. The sales channels we are talking about here can be broadly divided into two categories: your own e-commerce site and online shopping malls. The first thing you need to do is consider which of these two you should start with. The criteria for selecting a channel are your company's business type, the attributes of the products you sell, and their level of recognition. The following sections describe the theory behind selecting channels for each of these categories. First, let's make sure you understand this information before selecting a channel.

❚ Selecting your company's business type and sales channel

Simply put, the classification of your company's business type indicates which business type - manufacturer or retailer - will be your company's main business type. The sales channel selection policy differs depending on the business type. *In this case, we have excluded wholesale business for the sake of simplicity. Wholesale business people should use this as a reference point for the manufacturer's decision criteria.

■ For manufacturers

For manufacturers, the mainstream approach to selecting sales channels is to first develop their own EC site, and then to open a store on a mall and generate sales. Also, when considering branding, the best approach is to open an official EC site and then open a store on a mall (such as Amazon or Rakuten). Recently, many manufacturers are selling on Amazon and Rakuten. In particular, there are many manufacturers that have signed vendor contracts with Amazon. Of course, they are also selling on Rakuten and Yahoo! Shopping. To be honest, 10 years ago, it was often the case that manufacturers were not allowed to open stores on shopping malls. However, I think that this is because of the development and expansion of the EC market and the change in consumer behavior that manufacturers are now taking the option of opening stores on shopping malls. In this way, if you are a manufacturer, you should think about your EC channel strategy in the following way: first, set up your own official EC site, and then open stores on EC malls such as Amazon, Rakuten, and Yahoo! Shopping.

■When selling model number products in the retail industry

 In the case of retail, if the products you sell are model-numbered products (meaning products that have a JAN code and are searchable goods for which it is easy to compare specifications), it is best to definitely open a store on an EC mall. And it is best to choose not to launch your own EC site. This is because the sales price of model-numbered products has a huge impact on sales. Therefore, taking your products to the EC field, where customers compare prices, is the first step to increasing sales. And EC malls are a very good environment for price comparison. On EC malls, it is possible to compare prices by sorting search results in order of price, or to compare rankings. On the other hand, with your own EC site, customers will come to your site from search engines such as Google and Yahoo! As a result, it becomes difficult to compare. *If you are advertising on search engines, the price and other factors will be used for comparison. However, the comparison will not be between your own sites, but with products listed on sites such as Amazon and Rakuten, so the result will be the same as a comparison on a mall. As such, if you are a company in the retail industry selling products with model numbers, we recommend opening a store on a mall.

■If you are a retailer selling non-model number products

 I think that there aren't many companies that sell non-modeled products in the retail industry. However, if you do, I recommend opening a store on an EC mall in this pattern. Because they are non-modeled products, there are many cases where customers won't find them through a search. In that case, advertising on the EC mall, etc., will be useful. For consumers who make purchases based on their search results, it is also possible to acquire them through your own EC site. However, consumers who have not yet decided what they want to buy (the goods they are looking for) decide what they want to buy by surfing EC sites (in a sense, they are window shopping in a real store). There is a certain number of consumers who make purchases in this way, and EC malls are unique in that they can target these consumers. Of course, it is also possible to target customers through your own EC site, but this is often not cost-effective. For this reason, I think that companies that are thinking of selling non-standard products through EC in the retail industry should first consider opening a store in an EC mall.

 

❚ Summary of channel selection in EC strategy

In this article, we have examined channel strategies for selling products according to the type of business and product characteristics (standardized products/non-standardized products). However, there are various other factors to consider in addition to those examined here when deciding which EC channels to open a store on. For example, the state of the back office, whether or not there are people with EC experience within the company, financial strength, product inventory, and market trends are all criteria to consider. And, even within a mall, the question of whether it is better to start with Amazon, Rakuten, Yahoo! or another EC mall will also depend entirely on the capabilities of the company opening a store. We recommend that you make a decision based on a comprehensive assessment of various factors when starting an EC business. Crescent (our company) also provides advice and consulting services for opening a store. Please feel free to contact us when starting an EC business.

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