Marketplaces Require More Management Than Your Own Store

Greetings, folks, and welcome to episode 33 of the Small Business show here at businessshow.co Today is Wednesday, September 23, 2015, and here in Durham, New Hampshire, I'm Dave Hamilton.

And in Lafayette, California, I'm Shannon Jean. Thanks for joining us today. How are you doing, Dave?

I am well. How are you today, Shannon?

I'm very well.

I'm still thinking a lot about Doug Sasserman and how happy he is about his choices to keep his business at the level that it is. It's pretty impressive.

Yeah, yeah, we were talking about that. If you haven't heard that show yet, go back to episode. It was 32 in just one week. Yeah, a week ago. And listen to Doug's take on things. I love that and envy it in some ways. You know, the ability not to chase every opportunity, or maybe I don't phrase like that, but the ability to value your time and be able to think and say, okay, well, if I did that, I'll have less of this.

Yeah, yeah. He factors his time and. And his quality of life into his business decisions.

Yeah, yeah, that's. Yeah, it's a commendable. A commendable trait, big time. Yeah, it is. And. And, you know, Doug's product reprice, it is great. And it's, you know, for Mark, for selling in marketplaces, if you have, you know, lots of inventory and you want to be competitive and not have to reprice everything all the time manually, which would take you forever. And it comes in. Well, you know, a couple weeks ago, I was at the ebay seller summit in San Jose where they're celebrating their 20th anniversary and their recent split from PayPal. And so today I thought it'd be a good time to talk about marketplaces and can kind of continue a little bit deeper on selling products and services on different marketplaces.

I like it. Yeah. Yeah. This is. This is the world you live in. I mean, I could tell when we were talking to Doug that, you know, there was like, there was three hours of questions you wanted to deliver to him.

Yeah, you know, I had the guy on the phone, you know, you might as well, hey, go down. That's right. You know, my take on marketplaces like Amazon and ebay is that, you know, you're going to pay for a customer no matter what. You're either marketing to them. You're. One way or another, you're paying Google, you know, AdWords and pay per Click to get them to your website, other marketing things, you know, and. Or you can focus on selling in marketplaces. Where, where they've, you know, these marketplaces like Amazon, ebay have put in tons of time, billions of dollars to drive traffic and to gain eyeballs. And you can share in that expertise that they have. And I would argue that they have far more expertise into getting those customers there and building that trust. Then, then I have, or, you know, most small businesses have, and I, and I've done it both ways. You know, spent a lot of time, you know, working with AdWords over the years, working with search engine stuff and trying to get people to your site and doing things. And then, you know, in the last, I'd say, few years, we've really focused on marketplaces and selling products and primarily our refurbished product line that we, you know, do with Tech Restore and not featuring them as so, so much on our own site. And it's, it's worked out really well.

That's interesting. So you, you really, you don't, you're. What's the right way to say this? The storefront for that stuff is not@techrestore.com Nope.

Up until just recently when we rolled out a new application and new website, it was not even really mentioned because the Tech Restore site was primarily for our repair business. And we enjoyed having people use the marketplace because it allows us to position ourselves a little differently. We sell under some different names on Amazon. We don't sell under Tech Restore at all. And we have a trading company that we sell through. And again, again, gives us a little more flexibility about our policies and maybe some of the types of customer service that we offer. And the customer's expectation is a little different too.

Well, that's. Yeah. Huh. That's brilliant. Because, you know, Tech Restore is a service business.

I mean, that's right.

That's what I know it as. So, you know, I know you do all these other things, but you're right, if you're selling products, you know, now that's razor thin margins. If the expectation is for you to provide the same level of service for those things as it is for, say, when I call you and need my iPhone screen repaired, you're in trouble. You're not going to stay alive.

That's right. It's a much different experience. And also the biggest benefit to me, and I would tell anyone about selling in these marketplaces is it allows you, it's like a giant sandbox. You can easily experiment with things without, you know, those kind of confines of your own brand, if you will. You can test, you know, test and test and test and, you know, over and over. And over till you find something that works. And, you know, even within different marketplaces, certain things work and, and certain things, you know, lots of things that don't work. Of course.

Yeah.

And so that's, you know, a huge benefit and something that's very quick to implement. I mean, we can roll out things. I mean, just yesterday we were had a product that we wanted to sell and we have an account and a channel up on ebay that doesn't have anything to do with Tech Restore, but we always sell is defective products and I would never sell those under my company because that's just not the experience that we're pitching. And so we're trying to keep the message, you know, focus. So having selling in marketplaces and we sell under a brand called Defective Dave and you know, that channel only sells broken stuff. And we've taken an opposite tact on customer service. We basically tell them, you know, customer service, we don't offer it and we're not likely to. And so we're able to kind of play with those different things. And especially when selling broken items to hobbyists or other businesses that want to repair them, you don't have to offer that level of service. But if I had the Tech Restore name on it, you know, the phone would be ringing, you know, and there'd be a much different expectation there.

Right?

Yeah, so that, so that, so that works out well. So the, you know, the testing part of it is fantastic. And I would encourage anybody to even, you know, if you're just thinking about getting business, if you want to sell a product, if you're thinking, oh, you know, I think it's a great opportunity, you know, you can instantly jump on ebay in particular, shares historical data. Amazon not so much. You can go up on Amazon and on, you know, buy.com or rakuten now they're called and overstock. And you can see what things are selling for and you can look and see what in their marketplaces, what things are priced at, I should say. Sure. But you're not sure if they're actually selling for that where ebay on an informal level, you can check, you know, sold items for the last 90 days and if you want to dig deeper, you can subscribe to their. They bought a company called Terapeak a while back and you can subscribe and get, you know, just reams and reams of data on what sells, how much it sells for, where it sells, who's selling it, which is very important. So, so that opportunity to look at what's working is is priceless for a, you know, somebody who, who thinks they can sell this widget for X or you know, wants to try out a. Try out the market.

Huh. That's, that's perfect. Yeah, it totally makes sense.

Yeah, yeah, yeah. So, so I think that's a huge benefit and you know, researching similar products or, or services. Like I said, we've, we've experimented with it, haven't done a lot of tends to be pretty price focused. And if I, if I had one complaint about most of these marketplaces is in some more than others is that price is really critical, very competitive. So you, you're not going to Doug's.

The Doug's whole business was that last week? Right. You know, is that, you know, think about helping people do that.

Yeah, yeah, think about that. You're, you're going to put a piece of software, you know, running that's managing your inventory to where someone lowers their price by X. You're going to chase it down, you know, and we've talked about it here about not getting into that, you know, that race to the bottom. But if you want to be competitive in those marketplaces, just that you have to be competitive. And you know, ebay a little bit different. They have a thing called best match.

Okay.

Which is, which is their default search. So if you go to ebay and search for a product, they come up in search results and up on the right hand corner, which you may not, may or may not notice the default sort, it'll say best match. And that's ebay's attempt at not always pushing the lowest price. They're trying to push the lower. They're the best experience. Which, which may not be the lowest price. If you have a seller that you know doesn't have a good reputation or it's gotten dinged or they don't ship on time or they've gotten, you know, gotten some negatives. Well, that item's going to be filtered out even if it's significantly cheaper than the item the, you know that, that someone else is selling for. So if you've got an item, you know, widget and you want to sell it for $100. Well, you may be competing against somebody selling for $70, but they may not come up in those search results when the customer uses the default, which is best match. That's ebay does it to really, it's a carrot. They want the best sellers to come up at the top of the search ranking and then, then they, then you compete with those sellers and that's a difference yeah, versus like on Amazon, if you go into the, you know, they're always going to list on price and not going to ding people down. They're going to expect their users, I guess, to look at the reputation of the seller.

Okay, but, but it's, they aren't making a judgment call on this unless it's some egregious thing and then they just remove them from the store. But otherwise, yes, it's on you.

Yeah, you get a. Amazon has a very short leash. And all of these sites now actually, because they're trying to build trust and they have limits on what you can do. So one of the comments is, if you're considering selling in a marketplace, you want to open an account as soon as possible. And even if you don't think you may have the right name, you can change that down the road. And we talked about this earlier, you can iterate. You want to get an account so you have some history. I opened that account in 2000. You know, I'm not gonna sell anything till 2016. Well, open the account today so they know who you are. Link your bank account so they know you're legitimate, even if it's a personal bank account. If you're just getting started, sell some things even if it's not what you're going to sell.

You know, it's almost like developing credit for yourself.

It's exactly that. And you know, ebay customers or these, you know, marketplace customers have a short memory. Nobody cares if two months for, you know, two months ago you were selling your, whatever, kids, old sports equipment or whatever. Now you're focused on selling whatever it is you're into and that's what you're going to be your business. But you have that feedback and you also want to be a buyer, so you want to start buying. And what I would suggest is find out who your competitors are and buy the product from them and experience what they're offering and what level of service that you may have to offer to match or hopefully to beat them. And all of that will build some history. So these places know where you are. I can tell you a little story. We wanted to launch a new channel, you know, five or six years ago and had a great supplier, excellent stuff, tied up a lot of money, a couple hundred thousand dollars to get this thing rolling and inventory went out. Opened up brand new channels on these marketplaces. Listed everything built, you know, worked with a bunch of software companies like, you know, like Reprice. It got everything listed and all the accounts were shut down within three to Five days. And this was a relatively sensitive channel. We were selling into a vertical where there was a lot. There's lots of opportunity for counterfeit products. Sure. And since neither of the marketplaces we were selling in had had us associated with those channels where they all freaked, you know, they freaked out that, hey, we don't do this. And even though we had other accounts that were selling large volumes and a lot of history, they just were like, well, you have no history with this category. So we don't. There's a tremendous amount of risk in letting a company just jump in from nowhere and start selling expensive items and racking up, you know, large sales and taking money with, with no history so that it's. It, you have to step back and build things up, slowly ramp things up. If you, you know, and you'll, you'll have to communicate with them. In this case, the only way we got opened back up is I actually had to send our reps at these, and I use that term loosely because they don't, you know, you may be talking to some customer service person, but I had to submit documentation to prove that I owned the product even to where it came from, which I never do because those are kind of your trade secrets in my business. But in this case, well, I really had no choice. We needed to move this product and it took me a few weeks to get the things all figured out before they would allow us to sell this product, this product line. And even then, they put limits on the accounts, on the amount of money you were able to manage. And most people who haven't done a lot of business in these marketplaces don't know that. So it's going to take some time. And you want to have that history so you can say, oh, you know what, I've been a seller since, you know, X and we've done. Look at my history. And they may say, oh yeah, okay, great. All those things go in the plus column.

Fascinating. It makes sense though. I mean, I, you know, they need to protect, in an overall sense, they need to protect their reputation because otherwise people say, oh no, you don't want to buy from them because all their sellers are, you know, just fly by night businesses.

Yeah, that's right. And, and they, they grapple with that. And that's why you'll see lots of, you know, people out in the net on the Internet complaining about these marketplaces as sellers. And they shut my account or they put these limits on my account, or they held my money for 30 days, which is a new thing that if you take PayPal or even Amazon, they can hold your funds. And that's a tough thing for a small business.

I noticed that a few years ago with my personal ebay account, and I used to sell quite a bit on there, but they had something. I had sold hundreds of thousands of dollars worth of stuff through ebay and never had a problem. I mean, it was all legit stuff, but the number of transactions was low. I guess it was. It was like less than 50 or something. Sure, sure. Because we used to. We used to do some trades for hardware with. With, you know, companies like Apple or whatever, right? And so, you know, it was like, all right, well, let's sell this stuff off and turn it into cash. And. And I. So I called him up like, you always used to send me my money. What. You know, what happened? Like, well, we have a new policy. I'm like, yeah, but haven't you heard of anything called grandfathering? I mean, you know, and they were like, yeah, you'll be fine. You need three more transactions, sir. And then, because I was close, you know, they're like, you know, three more sales, then we won't hold your money for 21 days. It's like, this is stupid, though, because this is like a $40 thing I sold on ebay. You know, you used to let me have all my money right away. They're like, yep, that's right. It used to be that way.

And, you know, it's. It's very challenging. And having. If you're on the outside looking in at some of these decisions that these marketplaces make, you can just really bang your head against the wall. And that's the other thing I would encourage you to do is get to know the people that are running the platform. And, you know, we do a ton of business with ebay. And. And, you know, I'm at all kinds of ebay events and have gotten to know a number of executives and connected on LinkedIn and done some different things with. With these folks and helped out when they need help. Matter of fact, they just feature tech restore in a. In a commercial, you know, for the seller summer summit. And, you know, I'll link it in the show notes today. But if you know that somebody. It's a much different experience when you have a problem and you could say, hey, what happened here? And they can look, oh, okay. And that's where exceptions are made. But if you're really on the outside, yeah, calling the customers the 800 number. You know, these guys are trying to make things work for millions of customers. I mean, there's 800 million items being sold on ebay right now. Think about managing that. You know, it's insane. It's insane. So they're trying to make decisions on it and that work for as many people as possible. And that may not be you.

It's not you. That's right.

Yeah, yeah, yeah, yeah. Getting connected is good.

I was talking to a friend about Google and their, Their search algorithms that they've changed many times over the years. And, and we have a mutual friend locally here who has a couple of businesses where he's providing information on the web. But a big part of his, you know, his traffic comes from search referrals and specifically Google. And a couple of years ago, when Google rolled out the first of their Panda updates, where they, they, you know, really were trying to clean up their search results, there was a baby with the bathwater approach there at Google. And this guy's business was. Was one really hard. And, and yeah, I mean, even if you know somebody, because I actually know some of the people at Google that are in charge of this stuff, but they'll tell you, look, you know, we, we know it has to be a baby with the bathwater approach. That's right. If it. We got to get rid of the, the junk listings that are there. And so if, you know, if it looks like a duck and smells like a duck, even though if we know it's a goose, we're going to categorize it as a duck and out it goes.

Yeah.

It's just we have to, you know.

That's right. And it, you know, knowing someone, maybe it, maybe it just lessens some of the frustration where you think, oh, they're. How could they do this? You know, that kind of thing. And you, at least you can get the story behind it and, and then make adjustments and maybe they can help you down the road. Kind of adjustment. That's right. Yeah. Down the road. And. And similar to, you know, to this. And it can be very frustrating dealing with marketplaces that don't understand your business and, you know, don't know why you're doing certain things. And maybe, you know, their needs or their goals are not in line with what yours are. So think about that. And, and, you know, especially like, like on ebay, when they rolled out best match a few years ago in the search results, I mean, there was such an uproar. It's very similar to this Google, you know, the Google dance, which is done, you know, every once in a while. Yeah. And is the same way people really freaked out. But you know, ebay is trying to protect the experience for the buyer and make it a, make it a good one.

So that they're using, they're using algorithm. And it's the same with Google. Right. I mean it kind of homogenizes down to this. They're using algorithms to best they can replicate the human experience. Right. So if, if one human had the ability to, to comprehend every listing in ebay and was searching for the terms you searched for, what would that person want to show you? Right. And it's impossible for a human to do that. But that's, that's the experience they're going for and that's what Google's going for when you search Google and Amazon's going for when you search Amazon because they know that you're going to come back if you have a good experience and step one of that is finding what you're looking for and not finding crap. So yeah, it makes sense for sure. It's just not, it just sucks when you realize, wow, I'm, you know, my, my future, at least in this marketplace is dictated by an algorithm.

But right there, that's right. And you know, ideally you would look somebody up and you talk to somebody and you'd say, hey, who do you recommend I buy from? Well, that's what they're trying to do at least on ebay, right?

Yeah.

Make a good, a good recommendation. And it brings up a good point is, you know, do you want to be solely reliant on one marketplace, you know, or even multiple for your, for your business? And you know, my, my advice would be no, you know, you need to be multi channel just like they are and using each channel for, to your advantage. I mean there's things that we would never sell on Amazon that don't do as well, that we do great with on, on ebay. And so you know, we, we try to focus on that and, and also keep in mind, just because you're selling in someone else's marketplace, the expectation for customer service, it's either as good or better than what you are offering your direct customers. Yeah. And you know, I mentioned our defective thing and we kind of do a play, an opposite play on that because it works on, it works well, you know, categories and channels that we sell in. I mean we jump through hoops for customers just like we do if they were interacting directly with us. You know, everything ships within one business day. We give long, you know, return times, long warranties, all these kinds of things. We answer the telephone quickly they're not, you're not going to make it or be successful in these marketplaces if you treat those customers like second class customers versus if they were your direct customer.

Yeah, you said something very interesting. You said, you know, treat have other avenues just like they do. Right. Or just like they are. And that's a really valuable thing if you have one place. If you have one customer. I don't categorize that as a business. Right, that's right. You know, that is an obscured employee, employer relationship.

Yeah. Maybe a great opportunity for you, but totally.

And right. Often is a good way to get started. Right. If you can have one big customer, especially if you're a consultant. I mean this is, this sort of, you know, goes beyond just the marketplace conversation. But if you have one place that is responsible for all of your income, you don't have a business. You have one great customer and they employ you, you know, and, and so, and listen, every business is going to have a linchpin, right. You know, Doug's is, is Amazon, but Amazon isn't his customer. His customer is his customers and he's got countless. Right. And, and so you, you know, if all your money is coming from one place, that's not good. You need to, unless it's a real, it's a thing where you are the only one providing that service or those products to the person that's paying you all that money. Right. If it's a one to one in both directions, great. But if it's one to many. No, it needs to be many to many. If they have many people doing what you do, you need many people doing what they do for you. And it really is, it doesn't make it easy, but it makes it safer.

Well, you know, it's one of the things that if you ever talk to a banker, anybody, they're going to ask you that, you know, oh, how many customers do you have and, or what's the diverse, you know, aspect of your customer base? And on the flip side, the same thing. How many suppliers do you have? You know, those are strength indicators for your business. If you only have one supplier, well, you're really beholden. That's a real weakness for your, for your business. And you mentioned something else. I think it's important to point out. It's, I don't know how you said it, but base comes down to who owns the customer is in the marketplace. Are you really selling to that customer? Is that your customer? Or is, is Amazon or you know, ebay or overstock, are they your customer? And you're providing a product that they're selling.

I have this conversation all the time with developers that make iOS apps, you know, because I ask them, who's your customer? And they're like, oh, I have all these customers. I'm like, great. So you're able to market directly to them? Well, no. Do you know who they are? No. Who do you get a check from? Apple. Anybody else? That's right, just Apple. You don't have a customer. Apple has customers. Now, there's ways to mitigate this. Right. You can, you can have a thing pop up in your app that says, sign up for our mailing list. You know, thank you for buying our app. Right. We'd like to let you know about updates or, you know, whatever. But this is now an opt in from someone that has already bought your app from Apple. Right. They aren't your customer until they've engaged you. And buying your app is not that. It's, it's really. And it's a scary. I mean, you can kind of, you know, when I have this conversation with some people, they don't like to hear it. Right. You know, they're like, well, what are you talking about?

You know, like, yeah, yeah, it's uncomfortable, but it's an important thing, an important distinction. And, you know, and I would argue that if you're selling on the two big marketplaces, Amazon and ebay.

Yep.

You're. You're much more likely to have a direct relationship with an eBay customer versus an Amazon customer.

That makes sense.

Yeah, yeah. Amazon is in far more control of the customer experience, for better or worse, than ebay is. And so you have a chance to distinguish yourself on ebay in many different ways. They give you a myriad of ways to do things to stand out or to fail, and you know where. And you can kind of have that more direct relationship with your customer. And there's some ways you can mitigate it. I mean, you know, we use the box to try to build a relationship with the customer. The box meaning, you know, when it comes in the door and the item is inside, from the second the courier delivers it, that's your opportunity to be selling to the customer, or maybe more importantly, to just be building a relationship because you want that customer to know who you are. Maybe you do. Okay, maybe you don't. But oftentimes if you're building your customer base, you want to know who they are. And if you're selling a product that you're also selling on your website or selling direct or however you want to get that customer direct to you. Maybe they don't need to go back through the marketplace to buy from you in the future where you're have to pay those fees and that kind of thing. So use the box wisely. When they open that thing up, use, you know, what is the experience they're going to have, what's in the box, what support materials in there? What is something they're going to remember? You have, you know, we put these little ninjas in every box. A couple of little ninjas. Plastic guys. Yeah. And we get more comments about those. I mean, it's just over and over and over and you know, it. They're not cheap and you know, we buy a lot of them, but it, the customers remember it and they put them on their desk and, and we get pictures of them and all those kind of things. So, you know, do something different. You know, we used to put suckers inside every box until we actually had a couple customers point out and say, what, are you calling me a sucker? Because I bought this product and it was in the realm of possibilities that I would have ever thought someone would think that. And I was like, oh man, how.

Do you even get there? I mean, I have the emails, Dave, I believe this. I'm just, I'm thinking like, me as the customer, like, what reasonable person. If they, if truly you felt like, wow, we really suckered this guy. Are you actually gonna tell him he's a sucker? I mean, yeah, like how, how do you get there? Oh, man.

Yeah. Well, I think it's. It could probably, and I can't put my finger on exactly the each time, but you know, especially selling like refurbished electronics, well, you're gonna have customers that have problems. Of course, they may be related to. They don't know how to use it, or it also could certainly be related to there's a problem with the, with the product. And I'm sure in a couple of instances that happened, it was a customer that had an issue and wasn't happy maybe with the way the options of, you know, and it's very tough when you're selling something across the country or around the world to try to tech support it and this kind of thing. I could see them looking at that. You know, again, I'm really stretching here, but we had a couple of, you know, within a couple of months and we're like, okay, we got to find something else.

You know, it's, you did the right thing. It just, it's one of those things. I always say this. No one ever chooses to act in a way that they believe is irrational.

No, it's a good point.

Right? I mean, maybe somebody does, but, but by and large, no one says, haha, today is the day, I'm going to be a maniac. You know. Yeah, but, but so, you know, when we see this, you're right. You kind of have to put yourself in their, their head and say, how in the world did you get here? And even if you can't answer the question, if enough people got there, you just change, it doesn't matter.

That's right. Oh yeah, yeah. It's not, it's not worth it. And you know, you're going to just deal with a small, hopefully a small percentage of people that, you know, just are that way and they don't, they don't think they're being irrational. No, no. You know, and the thing on the, you know, along the lines of, of your customer service and things, you want to, you need to put as much effort into managing your reputation on these marketplaces if you want to scale it. I mean, if you're just going to putz around a little bit and sell a few things, that's one thing. Or use it to sell whatever, you know, open box stuff, let's say, if you're selling a product, but if it is really a part of your business plan to scale up and be a substantial revenue generator, you need to be monitoring your reputation on those sites, on those marketplaces just like you do other places. Whether it's a review site like Yelp or reseller ratings that, you know, or Angie's List, whatever you use, you need to put as much effort, may sometimes even more on how, how you look like and what your reputation is in those marketplaces. Yeah, really, really important couple things here before we wrap up. You know, I think we've kind of talked a lot about different things. A lot of.

That was an astute summation, my friend. We've kind of talked a lot about different things. I like it.

Kind of talked about a lot of.

What do you do on your podcast? They kind of talk a lot about different things.

Stuff, you know, it's nothing. I like it. You know, a lot of advice that you, you get or people want is very specific on, oh, my channel is this, I mean the cat or my category is this. And every single one is different. Try to find who's the most successful in your channel and, and follow them and see what they do and like I mentioned earlier, buy something from them and, and see what they're good at and what they're not good at and maybe there's an opportunity if they're not good at things, if they don't ship on time, you can, you know, this or they don't offer free shipping and you can. Or different, you know, different things. And at the same time you want to, once you get going, if you're going to scale it, you really got, you need to look at automation, things like Doug's, you know, app to reprice it and listing things. If you're listing large volumes of things, there's all kinds of software out there that'll help you look better. We're in this huge transition to mobile on everywhere and just like everywhere else on these sites as well. And one of the big things that, you know, we used to build all kinds of really good HTML and great looking pages in ebay. And the big message from the seller summit is text only, no more HTML and listings. And matter of fact we're going to eventually lower you in the search rankings if you have HTML in your listings.

Yep.

Because it's not a good mobile experience. And you know, I don't know if I have this exactly right but it was somewhere, you know, 70 to 80% of transactions on, you know, these sites are now coming from mobile. So we've all got, all got to change and adapt, you know, so.

Yeah.

But if you have questions specifically related to your channel or anything, I'd be glad to give you some feedback based on our experience and you know, send an email to feedbackusinessshow co and we'd be glad to help.

Thanks Shannon. Thanks everybody for listening. It's been a fun one. Talking about.

Enjoy the rest of stuff. Yeah, talking about all kinds of stuff.

That's right. See you next week folks. Take it easy.

Take care.