Third Party Companies – That is The Question.
A lot of things are going on lately in the online world, some of the most relevant ones are Amazon Prime Day, Instagram without likes, Facebook changing its ads format… They can be considered big occasions, right? Some of these events have been around for a couple of years already, others are being tested out now. However, all of them affect in one way or another not only users but merchants and business owners as well. It really influences the market, ecommerce stores and retail companies.
Because of that, some questions and thoughts about having parts of the business running on third party companies came to our minds and we decided to share them here with you.
Not All that Glitters is Gold
As we have mentioned above, some of these actions have been around for some years, like Amazon Prime day, and the incredible impact that it has in the online and offline market. We could even say it’s overwhelming.
A lot of companies and ecommerce have got into the Prime Day game. And we are not just talking about merchants that sell on the marketplace, but also about big brands like Target or Walmart that promote discount days of their own on the same occasion, in order to compete and to take advantage of the shopping frenzy Prime Days usually drives. Either, if you do FBA (Fulfillment by Amazon) where you store your products on their warehouses, or you sell on Amazon in any of its other modalities (Merch by Amazon, etc), the opportunity to sell it’s there, and everyone wants to grab it, no matter what. Somehow, you don’t even have much choice. Or do you?
According to CNBC, Amazon required many brands to increase their advertising spending on the site during the two-day Prime Day event, some by 100 percent. Merchants were warned about losing market share if they did not comply, and several brands used the uptick in advertising to promote exclusive offers or launch products.
And that got us to an unsettling question: is Amazon Prime Day that wonderful for merchants? What is the cost for a company owner? Of course, using a platform like Amazon to sell your products can be a great opportunity to build your brand, grow your business and earn money. And days like Prime Day are also a boot to your business, we don’t deny it, but what happens if you cannot comply to Amazon advertising policy for that particular event? Are you putting your brand at risk?
What about the “likes”
As the latest news goes, Instagram is testing to hide the likes in its app, in some countries for now. The company says this test it’s to make the network healthier and less competitive. Following the same thought about having to comply to third party’s decisions, we asked ourselves similar questions for brands that have an Instagram account. We are not saying it is a bad idea, and there are no results on that test yet to be able to make any statement on it.
But, in a social platform with such an impact on the online world as Instagram has, changes like this one are not only about the “likes”, there is much more behind it. Actually, a lot of people are already wondering if that decision is not really about making more brands and influencers spent more money on ads, as from now on, reach will apparently be more on focus and the best way to get more reach is to pay Instagram.
Therefore, if you have built your company using this platform, you will need to re-plan your marketing and advertising strategy, to adapt it to the new situation, right? What happens if you can’t follow this new change in the platform? What if you can’t afford to pay for more ads? How is that going to affect your brand?
The importance of Third Parties to eCommerce
Even though you might, at this point, be questioning yourself whether or not you should keep having part of your business “outsourced” to third party companies let us take a moment to give them their proper credit as well.
Using an eCommerce platform and payment solution for example, enables people without any IT background to start their own stores. Just by considering this, it is easy to see that the eCommerce market would never have reached its size and importance without the services provided by some of these companies, as most people would never have the chance to start without it. Not everyone knows how to set up all these very complicated technical parts of an online store. And many of those are essential parts that all business MUST have.
So no, you don’t have (and maybe even shouldn’t) stop relying on third party companies in your business trajectory! In fact, these companies are the easiest way to set up an online store without having to become an expert in every single component of the organization, which would be a huge impediment, not to say impossible in some cases.
The point is: third party services are great allies to eCommerce. But it is very important to build your business in a way that they will always help you, and that your it will not be terminally affected when some their policies or goals change. How? By researching and comparing beforehand, to figure out which ones are the best for your needs, for example. Also, make sure you do not put all the eggs in one basket, especially with critical points of the business such as sales and advertising.
That means that you can take the best of a marketplace, while still building other sales channels. Or you can use social media to advertise your products, but also work hard in making your own website strong enough to have a good position on search engines, so you can also count on some organic traffic and those are just some examples.
Is Third Party a Risk?
There are other similar cases for these practises out there, however we have chosen mainly these two because there are big corporations behind those decisions – Amazon and Instagram. And that makes a difference. Or at least, we think so, because of their power in the market. Does this mean that you cannot trust third party companies? Of course not.
Building your business using third party tools or companies means trusting and relying on others the same way you would like them to trust you, your brand and your product, and this is essential nowadays. Could you imagine how the market would work without it? It would be chaotic.
The main idea we would like to bring here is that as business owner you need to trust others but for the most part, you need to rely on yourself first. It is ok to use third party tools to build up you ecommerce, or to make your brand stronger but at the same time it is very important that you keep a specific level of independency, hence you can always decide what path you think it’s best to follow for your business. In doing so, you will follow (or comply) to other people’s decisions only if you want to, if you feel like choosing the same direction.