What Are The Downsides To Selling On Faire?
This is the 3rd article in our mini-series on Faire.com - the B2B wholesale marketplace for product based businesses.
Read the previous article here: How To Sell On Faire.com
Yes, Every Marketplace Has It's Downsides
Faire.com is a great marketplace with many of our clients having found success and new B2B partnerships through the platform. For a wholesale website, it manages to effectively split the difference between the B2B sellers and the buyers to create an experience that works for everybody.
The reality is every marketplace, whether B2C or B2B has its downsides, and it’s essential to recognise that this marketplace is no exception. There are things that need to be carefully considered from the outset, before you hop on and start trading.
Below are, in my view, the reasons why some brand owners may select not to use the marketplace to sell their product range... this is not to put you off from trying but simply to encourage you through a better decision making process and to form a rounded business case.
Let’s take a look.
Commission fees are a necessary evil for a lot of buying and selling marketplaces. Remember Faire are a business too - one who has invested vast sums into creating the technology and customer service required to make the marketplace happen - so it has to be funded somehow!
eBay and Amazon are good examples of marketplaces you will already be familiar with, that have heavy commission fees. Faire.com is just a B2B version of a marketplace that uses this same business model.
The commissions that you pay, especially on the first few orders, are high. This means that you must have profit margin in your product to make this platform work for you.
You may also need to be prepared to weather it a little bit in order to really start to see the savings come through when repeat and bulk orders arrive, because once you start getting repeat B2B retail buyers on the platform and start making regular sales, the commission fees do go down a bit.
Be prepared to manage a few tight margins or even losses incurred due to commission fees and the time it takes to get to grips with which products in your range really work on this platform.
The Communication Problem
As a brand, your relationship with your wholesale trading partners and retailers is probably very important to you. I know it was for me. The less than great thing about the Faire marketplace is that it technically owns the customer relationship you have.
For some brands this is a deal breaker.
Because Faire.com controls and regulates the communication with your trade customer, you don’t have as much control over the interactions with your trade customers as you would if you had a direct relationship. For example, similar to Amazon, it is unlikely you will get the email address for your trade customer from this marketplace.
Most brands are not stupid and will simply research their newly found trade customers and build a direct relationship with them outside of the platform, but for many clients we speak to this is annoying at first.
You are keen to create a partnership with your new found account, they are keen to partner with you. The marketplace that brought you together can, for some, once you get going, feel like it's in the way. Your relationships can be restricted, which isn’t good for a brand looking to expand its reach.
However, Faire will argue that communication can still flow nicely through their internal messaging system. Many brands know that this is not "quite" the same as owning the customer data fully.
It’s Not A One-Stop Solution
Unfortunately, for all the many benefits that this wholesale marketplace has, Faire is not a one-stop solution for product based business owners who are looking to promote their products without having to put a lot of investment into their own resources.
Growing a product business takes investment and multiple channels to drive sales. One platform simply can't solve all of your sales growth problems. It is simply one piece of the puzzle.
We recommend to our clients that selling on Faire.com should not be the only place that you promote your products by any means. Instead, product based business owners, still need to create a detailed sales plan and focus on having a broad range of channels and pursue major accounts. Faire is and will always be one part of a coherent strategy for selling your products online. Diversification is a good thing in any situation.
Your Major Retailers Probably Won't Like It
If you are a brand who has already won very credible, brand name major retailer accounts, in my view you will want to think twice before listing you products on Faire.com. For me this is probably the main reason I see our clients not going for it.
It is because these brands have already achieved a level of success and brand exposure through traditional sales account routes and have most likely secured these national or global accounts by offering exclusive deals on product lines.
These brand owners therefore don't want to jeopardise the quality of those important major account relationships and the deep reach of the physical store outlets that can be a footprint of hundreds of stores - just for the sake of experimenting with a new marketplace.
If you already have major accounts, I would recommend you either consider some of your non-exclusive product lines or if you have the cashflow and the business case stacks up, develop an independent store edition or colour-way of your product that can be freely sold online. This way when it comes up in conversation at your Buyers next Range Review session (which it will!), your major retailers can see that they still have a unique product in their stores and are not directly competing.
Make It Happen In Your Business
As a new and growing B2B wholesale platform, there are downsides to think about when it comes to using Faire but they are not insurmountable and shouldn't put you off from trying. These are not reasons to abandon the marketplace outright; they are simply things that you need to keep in mind.
You’re going to want to make carefully balanced decisions when it comes to getting results in your business, so weighing up the pro's and con's are important.
Faire.com is a good B2B marketplace, many of our clients see success with it and it does provide a lot of support, but like any strategic sales move, do the thinking first, before you take action.
- Make sure you can trade profitably on this marketplace before you start connecting with retailers. Do your numbers and make sure that each product you list, at the wholesale prices and quantities you are offering, can still make you a profit on each order.
- Reflect on your brand positioning and existing major account success so far. How would that major account / major retailer feel about your product lines being made available to thousands of small stores? Did you agree to be exclusive? Don't mess up a major strategic long term partnership for the sake of some greedy listings and quick wins with independents who may not re-order from you.
- If you would like help with your ecommerce business growth strategy and to discuss how you can grow your business faster than you are now, book your FREE discovery call with us today. We will talk you through how we accelerate our clients business growth and can create a step change in your online trading success.
Read The Next Article In This Mini-Series On Faire.com
Should I Sell On Faire.com? Wholesale Marketplace Review
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