Arlen: Welcome to the eCommerce marketing podcast. Everyone, I am your host Arlen Robinson, and today we actually have a returning guest, Jeff Cohen. Jeff is a devoted husband, doting father of three, and passionate St. Louis Cardinals baseball fan. When he’s not working on his honey-do list, chauffeuring his kids to various activities, cheering on the Cards, and trying to prevent the onset of dad-bod, he’s putting his decade-plus of eCommerce experience to work as VP of Marketing at Seller Labs. Jeff is a globally renowned expert who educates and motivates eCommerce sellers on cutting-edge ways to improve their businesses, grow their sales, and drive profits. Seller Lab works with thousands of eCommerce brands who sell on Amazon or their own store.
Jeff: appreciate having me back. It’s been a little while and look forward to sharing some good information to help people grow their business. Yeah,
Arlen: that, that’ll be great. And I’m super excited to talk to you again. Your first appearance was awesome and it definitely went a long way.
I know on my end and I know in our listeners in, but you know, today we’re going to shift gears a little bit and talk about a subject that I know is probably at least in some aspect of eCommerce business owners minds, which is direct to consumer sales versus Mark selling on a marketplace. And how does a brand choose which direction to go?
So that’s the hot topic today. And before we get into all of that. For those listeners that did it here, the first episode that you were on, why don’t you tell us a little bit more about your background and specifically how you got into what you’re doing today?
Jeff: Yeah, so, uh, to give you kind of the quick version of it, I started back in eCommerce in 2005.
My first website I created was called textbooks.com I was in the textbook space for a number of years, which led me to starting to buy and sell books from USP S auction. Worked with Brandon Checketts, the founder of seller labs, to move from building a wholesale. Reseller business of the textbooks to a software business.
Today, seller labs has two components of our business. We have our Amazon marketplace business, which is working with tens of thousands of sellers on the Amazon marketplace to help them with advertising, communication, performance management, and research. And we have a second business called X cart, which is on the eCommerce side of the business, helping to build out both marketplaces and a direct to consumer branded websites.
So I have a kind of a unique, interesting perspective over the last 1516 years of my life working on both sides, direct to consumer and on the marketplace side. And seller labs kind of has a mix of customers who, who we work with in both of those arenas.
Arlen: Okay. Great. Well that’s awesome. Thanks for sharing that Jeff.
Um, and then definitely looks like you’ve got a diverse set of experience and, um, you know, you’re, you’re definitely all in when it comes to e-commerce and, um, yeah, I appreciate you coming on. But you know, before we dive deep into the advantages and disadvantages of selling direct to consumer versus selling via marketplace, why don’t you just give us kind of like a thousand foot overview of both options.
Jeff: Yeah. So I think, uh, if you take it from the highest level, direct to consumer, also known under the acronym D to C is when you are transacting directly between the brand and the consumer, you’ve probably seen this. If I pull some great D to C brands, Warby Parker, Casper. And if you’re looking at, you know, multilevel marketing, where people are coming directly to buy from
Jeff: versus a marketplace, which is a marketplace is a website that has potentially direct to consumer products as well as products from other people.
So think of the easiest way to [email protected] is a marketplace. But really anywhere that somebody else has traffic and your product is for sale. So even if you go down to a level of like anthropology.com has a marketplace built into their website. So sometimes the marketplace is very visible when you’re looking at something like an Amazon and sometimes a marketplace.
It’s not as visible when you’re looking at something like an anthropology or a J crew that may carry some additional brands that they wouldn’t carry in their physical store.
Arlen: Right, exactly. But thank you for that explanation. In that overview, one thing that I want to also add, because I’ve seen lately, this is really an explosion of these marketplaces and places that you would never imagined.
You know, from my point of view, you know, being the, the cofounder of OSI affiliated software where I guess a Testament to the fact where we, we do direct to consumer, where you can sign up for our software directly on our site. And we also participate in a lot of marketplaces such as our relationships that we have with a lot of these shopping cart companies such as Shopify, big commerce, where we’re featured in their app store.
And that’s, that’s kind of the trend these days where you’ll have a company. That’s providing core set of products or services. They want to just focus on that and then rather than them, rather than them actually going in and adding on tools themselves, creating additional functionality, they just say, Oh, well, we’ll leave that up to these other app developers and just create a marketplace and then that should satisfy the needs of our customers.
It’s a, it’s really a trend that I think a lot of businesses to become successful because they don’t, they don’t have to worry about maintaining all of these other solutions that aren’t really their core. Areas and, um, it really works well.
Jeff: Yeah. I mean, if you go back to the beginning of time, you know, like all the way back in like the 1990s, the creation of eCommerce software was, was really designed around, uh, full blown platforms that did everything.
And you’re right, Shopify is really the, the brand that, that has really helped push it. For everybody to understand what an app and an app store does. And it’s really changed. A lot of the terminology has changed to moving to having a platform, right? So they, they, they talk about it as a platform. Now, Shopify, we can get into the nuances of this.
Shopify is, is a little bit more of a closed platform, meaning that you as a developer cannot change any of the code yourself or you as a. As a consumer of the platform, can’t change any of the code yourself. And then there are other platforms like cart or where it’s an open source platform that if you want the app store, you can do the app store.
But if the app store doesn’t have what you want, you can actually go and create your own apps. So there’s even spectrums along the way that push you from one side to the other.
Arlen: And, uh, yeah, that’s, that’s so true. It’s really diverse these days. And so with looking at these different options, you know, for those listeners, which I would have assumed that the majority of our listeners are probably leaning more heavily on the D to C side, the direct consumer side only.
But they may be considering these other options because like we said, there’s really been an explosion of these marketplaces. What would you see the advantages of selling. Via the marketplace, and you know, if you’re looking to go that route, how do you even begin?
Jeff: Yeah, so I think that the biggest advantage is audience.
And so it’s a matter of when you’re looking at a marketplace, it’s a matter of you taking advantage of their audience. That’s really what you’re paying a seller fee. For, you’re cutting out some of the pieces like promotion that you may have to do in developing your own website. The marketplace also has trust, and so a consumer may already be buying from that particular marketplace, and therefore.
We’ll be more willing to try. Your product is something that’s not known because of the value that the marketplace has. So think of a Wayfair, think of overstock, think of Amazon. All of these are marketplaces that are promoting themselves. For the problem that they’re solving and your getting the advantage of the traffic that they’re driving.
And that’s ultimately what you’re trying to do is capitalize and borrow on the effort of that consumer trust for the marketplace to grow your own brand. All right. I think we were talking about the disadvantages in a little bit, but you know, the, the real advantage of a marketplace is speed to market.
So if you look at something like Amazon, think about how quickly I can take a product and get to market and get it up for sale. I can ship it into FBA. I can have them taken care of fulfillment for me. There’s a lot of the business that I don’t have to build out. That I would need if I was doing a direct to consumer model.
Arlen: Right, right. Exactly. Now, let’s say we’re looking at just a brand that’s selling consumer products per se. Well, what kind of keep it focused on that for now, and they’re selling direct to consumer, but they’re considering going the Amazon route, or you know, some of these other marketplaces that are out there, but you know, they’ve heard about it.
They’ve probably seen other examples. Maybe they have other business colleagues that are doing it. But you know, they don’t know where they really were to really begin with it. What, I mean, what do they really need to think of first? What do they have to have in place in order to, you know, be able to set it up where they can sell on these marketplaces?
Jeff: I’m always a walk before you run kind of guy. So what I would do is I would do the research into what marketplaces have an audience that’s similar to yours. So where are your consumer shopping? Ultimately when you start thinking of expanding marketplaces, it’s easy to say, Oh, I want to go beyond Amazon, but if I’m selling like furniture.
Wayfair might be a better place for me to go. Then Amazon, if I’m selling glasses, I might want to look at a marketplace where people are shopping for glasses. So you have to kind of look at what your product is and where people are consuming that product. You can do, as I say to my kids, have you tried Googling it?
Right? Good. Go to Google and say, where do I buy XYZ? And see what’s talked about and see what influencers are. Promoting and where they’re promoting it. And that’s a really good indication of you trying to figure out like what marketplace would be the right marketplace. Now you need to, you need to look at other things.
When you’re looking at a marketplace, you need to understand their fee structure and you need to understand their, their shipping rules and requirements. Because the biggest and you you have to think about is that when you move into a marketplace, you’re playing in somebody else’s sandbox, right? So understand where the traffic.
Is coming from and whether that will help drive your sales and what are the rules of that marketplace to understand how they work within your own business and whether they’re things you want to be doing.
Arlen: Right, right. Definitely. And that that really makes a lot of sense. Because especially these days, you don’t really have to do a guessing game because the data is really all out there.
It’s really not too hard to kind of figure out by doing your own research, like you said, to just just Google it basically, and you can find out where the your audience is going, where they purchasing things, and you know, make an educated decision. You don’t have to. To do a guessing game for that.
Jeff: You know what we always tell our team is you’ll never have a hundred percent of the data to make a perfect decision.
So use whatever data you have to make the best decision possible. And I think that’s the most critical thing is like, do your research, see what you can understand, you know? See what you can understand. Make some. Educated guesses and decisions about the direction you want to go, and then start testing.
And ultimately that’s what you have to do is you have to start testing.
Arlen: Yeah, that’s, that’s so true. You know, with respect to the marketplaces and people that are, are, are solely on that channel, or there may be, there’s listeners out there that haven’t gone either route. They have a, maybe they’ve developed a.
A product, they’re looking to sell it and there they don’t know which direction to go, but maybe they’re leaning towards the marketplace arena. Uh, you know, of course you mentioned there’s some obvious advantages with going with a marketplace like Amazon because you don’t have to deal with the whole fulfillment, the shipping and all of that, and you don’t have to have a site, you know, everything is all there.
It’s kind of really a readymade eCommerce platform for you to, to sell your products and get it out to the customers. So there’s a lot. That’s really just all built in there for you.
Jeff: Exactly. Right. And
Arlen: aside from, you know, those obvious things, what are some other advantages that you’ve seen with people selling strictly on the marketplaces?
Jeff: I think that when you sell strictly on a marketplace and you’re not building a direct to consumer. Side of your business, you can just focus on different parts of your business, right? So you don’t have to worry about the logistics and you don’t have to worry. You can worry about sourcing products and you can worry about optimizing your pages, and you do have to worry about advertising, but you’re not worried about like multichannel advertising, right?
You’re just worried about advertising within the channel. Two or three years ago, it was a lot more simple to say, Oh, marketplace, you only have to do X, Y, and Z. Today, you actually need quite a few skills, whether you’re on a direct consumer or a marketplace for the selling of your product. And that’s where you really just have to look at, you know.
Energy and effort and reward. And so that’s the way I always look at things is I, where am I going to put my effort to get the greatest reward? And if you start to, if you believe that having somebody else. Process transactions for you and manage customers for you and manage the return process for you.
And all of the things that a marketplace can do for you allows you to be freed up to do other things that makes your business better than great. If those are things that you believe are your super powers and that you think that’s what you do better than others, then you know, don’t give that part of it up and focus your business somewhere else.
And so each marketplace is different. And there is hundreds or thousands of marketplaces out there. There’s a few big ones that we all know, but there’s thousands of marketplaces out there, and you should find the one that best meets your customer needs because you want to go to where your consumers are shopping, and that’s how you pick up market share.
Arlen: Yeah, for sure. For sure. Yeah, and I appreciate that breakdown, and that’s really the way you really have to look at it. What are those things that you want to. Turn over the keys to, and you know, there was something that could be more, you can be more successful if you turn over the, you know, certain aspects to the marketplace.
So I totally agreed, but you know, just like anything, there’s no positive positive with anything that you go into. There’s also a downside to certain things. So let’s start with the marketplaces. What would you say would be some distinct disadvantages to just selling on a marketplace? Only.
Jeff: Yeah. I think that the biggest disadvantage of selling on a marketplace only is that you.
You don’t have an interaction or connection with the customer, right? The customer is owned by the marketplace, and I think that is probably one of the biggest disadvantages for direct text. If you have direct to consumer and you’re looking at moving to marketplace, that is the one that is the biggest one that will throw you for a loop if you weren’t aware of it and don’t know.
And it’s something we’ve seen forever on the Amazon side. The Amazon sellers want access to it, but Amazon wants to block access to that connection and they remind you over and over again that they are the owner of the customer. It is their customer. It is not yours. So I think, you know, that’s one big disadvantage of the marketplace.
Um. The other big disadvantage of the marketplace potentially could be fees. And so you just have to kind of understand what those fees are. And then the third one is that, I mentioned this as something in part of your research, but the third related to the marketplace is the Mark. You are dependent on the marketplace.
And so look at like the current situation with. The shutdowns related to the virus. Amazon has restricted inbound inventory. They’ve slowed outbound shipments, and so your brand is kind of dependent on them. For when they open those things back up. Now I totally understand that these are like themes beyond our control or beyond veins that we plan for, but anyone that sells within a marketplace environment will tell you that the marketplace will continue to throw curve balls towards your business that will require you to evolve over time.
So. You need to be prepared for how you will continue to evolve your business to be successful in that marketplace. You know, as those things change over time.
Arlen: I like that analogy that these third party marketplaces are going to continue to throw curve balls because that, that indeed is what happens. You
Arlen: constantly evolving and, um, I, um, I can test it.
I find it the fact that we’ve had a lot of. Relationships with third party vendors where we were selling through. And you know, it seems like overnight something changes, you know, that you didn’t expect and you have to pivot. And that’s really, that’s really your only option.
Jeff: Yeah. And ultimately, listen, pivoting and businesses is, is a critical skill set to learn, no matter what you’re doing.
Right. It’s just that you don’t have control on the marketplace. You don’t have control over, you know, the policies that drive those pivots. But there’s a disadvantage on the other side as well, which is that on the direct to consumer side, you’ve got to build your own audience. And so while you don’t have competition and you don’t have seller fees, you have to actually look at things like cost per customer acquisition, lifetime value of a customer, average revenue per transaction.
Those are all measurements within the marketplace side that you don’t really have to calculate or you calculate them in a different way. So, you know, the disadvantage is of the direct to consumer is that you’re responsible for like the advantage. You’re, you own the whole chain, the disadvantage, you own the whole chain.
Right? Right, right. So. It’s one of those things that, that you have to look at, kind of like what are you good at and where are you at in your business today, and what do you need to do to take your business to the next level? That tells you whether these are advantages or disadvantages. And so you look at a brand, I use the brand Casper earlier.
Casper’s a really good example. Casper direct to consumer. Now they sell on Amazon. I drove by mattress plus, and I’m sure in every city you have a different name for your mattress store. Casper now sells in those stores. So they started out as an, you know, Warby Parker. Same thing. Started out as just Warby Parker.
Now you know, you can buy it. Now they’ve got physical store locations. So I think that it’s easy to say you’re going one route or the other, but I think ultimately to get your brand, to get your business to the size you want to get it to, you have to answer the question, where are my consumers and how do I put my products in front of them?
Arlen: That makes sense. And I appreciate you using that example of Casper because they’re a huge brand that I know many people have heard of that, or sell mattresses. I know, of course, for a long time they were just, you know, direct to consumer and that, that was kind of their claim to fame where they could send you a mattress and a small box where it expands out.
You could try it out for, you know, I think several months or so and you know, see how you like it. If you didn’t like it, you could
Jeff: return it. Let’s say you’re a direct to consumer model. Let’s say, let’s say your Casper and you’re a couple of years back before they they, and cause there’s probably people listening to this going, I’m a director consumer.
I want to stay direct to consumer. I don’t want to do marketplace. At the very least, my recommendation is understand how your brand is represented in those marketplaces. So you just said to yourself, wait a minute, Jeff, but I just told you I’m not in the marketplace. Well, you’re not in the marketplace, but somebody might be representing your brand in the marketplace because there are very entrepreneurial people out there that are finding top brands and representing them when they’re not representing themselves.
So I have a friend of mine who represents a large underwear brand on Amazon. And the way he got their business was he went and showed them. They were a direct to consumer brand, and you went and showed them how their brand was being represented. On Amazon that was contradictory to the way they represent their own brand.
I see. And so if you ignore, if you’re all birds, right, or something like that, and you ignore the marketplace channel, then all of a sudden your product gets represented inside that marketplace. Through somebody that’s doing a process called arbitrage. Right? And so when you’re talking about advantages and disadvantages, the disadvantage of not going to the marketplace is that somebody else might represent you there.
So you have to kind of understand how your brand is being represented in different locations and understanding what in how you want your brand represented.
Arlen: Yeah, very good point. And I think you kind of need to add that step really to the, the whole research phase of it before you’re thinking about going on a marketplace or deciding not to, you got to check the marketplaces, at least some of the main primary ones.
And find out is your brand there, like you said, is it being represented, somebody else selling? How is it being represented? And you know, do you want to. Come in there and kind of clear the air to make sure you have the proper representation that needs to be high on the list. For sure. Yeah. Well that’s, that’s great.
One of the things that I’ve seen over the years, of course, you had mentioned Casper and there’s a lot of these other brands that are coming out there, um, that are doing really well on across both platforms. What are some other examples of other consumer products, aside from Casper that you’ve seen that have really done a great job to really get there?
And are really represent themselves well across both platforms.
Jeff: Yeah. I think you’re starting to kind of, you’re starting to kind of see some brands bridge that gap. I think there’s a company called BarkBox. I don’t know if you’re familiar with them. They sell like rough, durable dog toys. They’ve done a really good job of it.
There’s a few bike companies that have done a good job. I’m trying to think of all the names off the top of my head. I think that when it comes down to it. You know, Bob bus is a great example of, of a brand that, that started out direct to consumer that is now represented across multiple brands. And when it comes down to it, it’s the brands that are telling their story in the same way across both mediums.
And like, that’s where I would define somebody as being good or somebody is being bad. Maybe not bad, but needing more work. And you know, that’s the challenge is, is how do you, you know, really get your brand story to come across where your shoppers are shopping. And I think that there’s just as many brands that have moved the other way, right?
So there’s a great brand out there called death wish coffee that started out as a. Amazon marketplace seller, who is now a marketplace and direct to consumer and physical store anchor is another really great example of somebody who’s kind of grown the other way. There’s lots of brands that are starting out growing or being built out of the e-commerce marketplace system who are then going on to become great standalone brands.
Arlen: Well, that’s awesome. And I appreciate you sharing that and mentioning those other brands cause it’s always good to. To get some concrete examples of, of different brands that we can all go back and take a look at and see what they’re doing on their own sites and on Amazon and, you know, see what things that we can see, what golden nuggets, nuggets, so to speak, that we can pick up from them.
So that’s, uh, that is great. And, uh, yeah. Lastly, one of the things I want to just kind of get, get out there before we wrap things up is I know what the brands that are. Selling on both platforms or even considering it. I know there’s definitely some, some, some things in house that needs to be placed, but you know, to kind of narrow down to just kind of one, I guess the essential thing, um, that you would want to say that a brand needs to have to be able to be successful selling on both platforms as far as like a tool or resource is involved, what would that be?
What do you think that is? Kind of a must have tool or resource if you want to sell it. Effectively on both types of platforms.
Jeff: Yeah. I mean, the salesmen on me says that it’s buying our software. Right? But I think that, I think that the truth is that it’s probably before a tool, it’s understanding the strategy and the plan.
So that you can identify and you can figure, you can identify and you can plan for the growth of your business. And I think that what I see a lot of times is that people enter the arena trying to get. In with a, with a inexpensive pop-up software that gets them kind of going, and then they hit a roadblock because they get to a point where they’re no longer dictating how their business operations work.
Their software is dictating how their business operations work. And so at some point in your business, you have to decide that it’s time for you to make the investment to grow your business versus dictating the growth of your business based on the past investments that you’ve made. And so I don’t think it’s necessarily like what’s the one software, cause there’s plenty of people who have grown multimillion dollar businesses with Shopify.
And there’s plenty of people who have built multimillion dollar businesses with X cart. And there’s people that have done it on Amazon. But at some point, every one of those, the ones that are the death wish coffees of the world, the ones that are taking their business to the next level are making investments in their business and investing in the future and in the strategy they believe will drive them to additional success.
And the more flexibility. If I’m looking at a software, the more flexibility that my software has to solve my problems for today, tomorrow and into the future, the better opportunity I have. No, that my investment that I’m making is not one that I’m going to have to reinvest in later. And we see a lot of people come to us because they hit that roadblock and they’re tired of working in a software that’s dictating their business operations versus defining business operations that work for their business and then having software work.
For them. We see that as a pretty critical function for, for how you grow your business. Uh, you know, to large sizes.
Arlen: I appreciate you sharing that and that makes, that makes a lot of sense. And I, I’ve, I’ve dealt with businesses that, you know, have fallen victim of, of having to try to adjust their whole, um, you know, methodology and the way they do business based on the platforms that they’re on, which is.
Really a kind of a, no, no, because that’s not, you know, if you want to be able to call the shots, it’s not really the route you should go. Um, but a lot of businesses do it because, you know, just to be honest, when you get in, when you get knee deep in these solutions. It’s, uh, you know, it can be a pain to, to pivot and then start over or shift to another solution.
So I can feel the pain of a business owners that, you know, try to just, they just kind of deal with the issues and just keep going.
Arlen: Well Jeff, that’s awesome and I appreciate you coming back on the eCommerce marketing podcast and sharing this, this great advice, um, as far as direct to consumer sales versus selling on a marketplace.
Cause it’s definitely a hot topic these days. And, uh, I know it’s going to go a long way with our listeners, but before I let you go, I wanna pick your brain again. Um, and I think I may have asked you this in the first episode. Maybe you got another answer for us, but just to switch gears so we can find out a little bit more about you wanting to let us know what.
Your, your fun fact is these days that our audience may be interested to know about you?
Jeff: Yeah, I’d say right now it’s, uh, I like doing a lot of taste testing, scotch whiskeys, bourbons lens. Just been kind of refining the palette. You know, being home a little bit more is allowing me to, to, to stop and, and.
Smell the roses. And I think that, you know, I think that. I haven’t had, you know, normally I would say catching a baseball game is, but with no sports on, uh, having to find other things to do. Either that or, you know, getting on the bike and going for a bike ride. Just getting, you know, getting fresh air is, uh, always a good hobby and way to.
Clear the mind and create some space. And I try to do that once, you know, at least once a day where I really just try to create some, some mind space to, to free myself up for, you know, the other stuff I’m trying to do in my life.
Arlen: Right, right. Yeah. That’s good to know. Thank you for sharing that. I appreciate it.
And just a quick, uh, kind of caveat to that for your, for the listeners that may be listening to this podcast. A few years into the future. This will probably go live sometime May, 2020 we are in the midst of a global pandemic right about now, where the, pretty much the entire world is shut down business-wise.
A lot of it because of a virus called the Corona virus Cove in 19 so if you listen to this, wondering why we’re all in the house and why,
Jeff: just like the time capsule right.
Arlen: Exactly. Exactly. So, uh, just Google it. Google a pandemic 2020, and you’ll be able to find out, uh, what was going on. But yeah, we’re pretty much locked in for now and hopefully we’re going get get through this in the next couple months.
But that’s why Jeff is at home and enjoying his sipping of his, uh, scotch in his bourbons. So that’s where we’re at. But yeah, thanks for sharing that, Jeff. And before we let you go, if any of our listeners want to pick your brain anymore about. You know, direct to consumer sales mode, marketplace selling, or just anything about e-commerce, what is the best way for them to get in contact with you?
Jeff: Yeah. Best way to reach me is on LinkedIn, Jeffrey Cohen. You can also just do a LinkedIn search for Jeff Cohen with the word Amazon. I usually come up on the top and you know, happy to talk Amazon e-commerce in general. I do a lot of LinkedIn conversations. I think one of the things that. I’d share with your audience is that people are, would be surprised how often guests make that.
Recommendation, but then how few people actually take us up on the offer. So you know, if you’ve listened to the podcast this far and it’s a, and it’s provided you any type of insight, reach out, say hi, tell me, let me know. I know. Let Arland know. It’s helpful for us to know and have feedback that this was something meaningful for you.
And maybe it’s a topic we can go into even a deeper sense later.
Arlen: Great, Well thank you Jeff, for offering that. We appreciate that and I hope our listeners reach out and get in touch with you and pick your brain on how to take things to the next level. And thank you again for joining us today on the eCommerce marketing podcast.
VP of Marketing at Seller Labs