Diversifying Your Ecommerce Business Beyond Amazon

This is old news; ecommerce has evolved to become the predominant and preferred shopping method to the traditional brick-and-mortar retail for many (if not most) industries. Ecommerce has seen astronomical growth (starting before but sped up by the pandemic), generated huge revenues, and disrupted multiple markets. It has changed the way we shop, from a B2B, B2C, and DTC perspective.

For consumers, it is nearly impossible to resist the convenience, discounts, and wide array of products that ecommerce provides—especially through services like Amazon Prime with its standard-setting shipping policies and broad array of products, including grocery delivery since acquiring Whole Foods in 2017.

But not all is a cakewalk for online retailers. Competition grows tougher with every passing day, and diversification of your ecommerce business model across various marketplaces has become essential for long-term sustainability and positioning your brand ahead of a growing pool of third-party sellers.

While this may be easier said than done, it doesn’t need to be overwhelming. Read on for tips and steps to help guide you through planning your ecommerce diversification strategy.

What is diversification in ecommerce?

Diversification in ecommerce refers to the strategy of expanding a business’s product or service offerings to reduce risk and increase growth opportunities. By diversifying, ecommerce businesses can tap into new markets, cater to a broader audience, and mitigate the impact of market fluctuations. This can involve adding new product categories, entering different geographic regions, or adopting omnichannel selling through multiple sales channels such as online marketplaces, social media, and physical stores. Effective diversification helps ecommerce businesses stay competitive, enhance customer satisfaction, and achieve long-term stability.

Diversification Channels to Explore

The first (and most obvious) step in building your business strategy for diversification is to take stock of and evaluate the various partnerships and sales channels available to your business. Below are some of the most beneficial to build your brand’s competitive advantage in the marketplace:

Independent Web Stores

Independent web stores are ecommerce websites owned and operated by individual brands, allowing them full control over their online presence, branding, merchandising, and customer experience. These online stores help with ecommerce diversification by providing a dedicated platform for direct sales, reducing dependency on third-party marketplaces, and enabling personalized marketing strategies to build stronger customer relationships.

The advantage of having your own online store is that you have control of your branding, user experience, and website design. You can add videos where you want, the photos you want, and even Easter eggs throughout your site to make things fun.

However, the downside to an independent web store is that when something goes wrong, it’s all down to you to fix it. You won’t have the experienced teams behind Walmart  or Amazon Web Services (AWS) scrambling to fix the issue, and if your development team isn’t on top of things, you could lose days of revenue just getting a problem fixed. If you’re starting your own online store, research your ecommerce software carefully to find a reliable solution (and avoid these headaches).

Here are a few ecommerce platform technology companies you can look into:

• WordPress: A comprehensive website builder, with multiple theme designs and plugin options for shopping carts (i.e., WooCommerce)
• BigCommerce: One of the leading commerce providers, they offer a scalable platform great for managing backend complexities
• Shopify: An ecommerce platform rich with features and tools that allows you to build your own store within their platform

Ecommerce Marketplaces

Online marketplaces are excellent ways to reach your audience because they are often consumers’ go-to starting point for new product research. They capture large audiences who are all looking to shop a wide array of product types.

Seller competition on these platforms mean prices are often the lowest around the web, which draws huge audiences. While this is a benefit to the platform, it can also be a detriment to ecommerce merchants. If you can’t match the prices of your competitors, it’ll be that much more obvious when your potential customers do a side-by-side comparison.

Take note of behavioral shopping patterns to shape your choices here. Many marketplace shoppers take their time to find the best deal, and they usually research the brands before making a purchase. However, when they do purchase, marketplace shoppers tend to spend more online.

Here are a few online marketplaces you can diversify on:

• eBay: The runner-up to Amazon when it comes to online shopping
• Walmart Marketplace: The international retail giant’s online shopping marketplace
• Alibaba: Dominates the Asian market and connects buyers with manufacturers, suppliers, and exporters
• Etsy: For creative, handmade goods with a focus on unique items that cannot be purchased in bulk (e.g., handmade jewelry)
• NewEgg: Specializes in consumer electronics such as computers and hardware parts
• Net-a-Porter: For clothing, fashion, and designer goods
• Rakuten: A Japanese company known for being the largest rewards publisher in ecommerce

Large Retail Shops

Finally, a physical, brick-and-mortar store isn’t necessarily part of the ecommerce umbrella, but if you want to diversify, it remains an option. Ecommerce sellers can explore a booth in a mall to see how their items sell there, but it involves a different set of logistics, rent, and other considerations. Niche retail brands—like Urban Outfitters, REI, and others—as well as big box retailers—like Target, Best Buy, etcetera—also sell other brands’ products both in-stores and online, similar to ecommerce marketplaces.

Diversify Your Ecommerce Business & Maximize ROI in 6 Steps

Once you’ve decided which sales channels make sense for your ecommerce diversification strategy, follow these six steps to put your planning into practice:

Step 1: Determine Your Target Market

To fully optimize your ecommerce business, you have to know how your customers want to shop (and how they want to see your products advertised). Do this by getting to know your clients and testing constantly to optimize every step of the buyer’s journey.

Selling on Amazon means you can tap into their huge customer base to catch your buyers (thanks to Jeff Bezos for that). However, when you're branching out on your own website, lesser used marketplaces, or even social media, you need to refine your ideal customer profile so you can plan how to invest your advertising budget and who to target with your voice, tone, and conversion copy.

First, build a demographic profile and with behavioral patterns (also known as psychographics). Of course, you won’t perfect your target demographic in the first try. This is where the pilot testing (below) comes in. If you see that the people attracted to your website are not the ones in your determined target market, then you can adjust. Determining your target market is all about trial and error and will likely change over time.

Step 2: Do a Pilot Test

Run a simulation or a pilot test to find out if your website and marketplace listings work well and if customers respond positively. This includes testing for bugs, A/B testing your content, making sure your navigation makes sense, and more. Get your analytics tools ready to measure customer response so you can optimize everything, right down to the color of your CTA button.

Step 3: Focus on Your Customer Experience

Amazon does a great job orchestrating the buyer experience, from suggested items to easily accessible reviews. Their marketplace is built to provide the best user experience possible for their customers because it's what drives sales (and what helped them grow from an online bookstore operating out of a Seattle garage to the world’s largest online retailer).

When you build out your digital presence, focus on a seamless customer experience. Use your checkout counter to upsell with relevant items, ensure the purchasing process is easy and convenient, give customers plenty of payment options, and minimize the number of forms they need to fill out. These are just a few of the things you can do to boost your customer experience; the rest comes down to your creativity and testing.

Step 4: Offer Rewards & Discounts

Customer loyalty programs go a long way for retention, and offering programs like order tracking, rewards points & tiers, and more incentivize shoppers to return to your store over marketplaces. You can also get more creative with your discounts in your own platform. For example, you could give an extra 10% discount to first time shoppers for use on their next purchase, increasing repeat business.

Step 5: Use Social Media

With the rise of both social commerce and mobile commerce (also called m-commerce), social media platforms have become another form of online marketplaces. They are also a great way to increase traffic to your own ecommerce website and boost brand recognition. Let’s be real: marketing your Amazon listing on Facebook or Instagram doesn’t entice buyers; shoppers are likely to ignore it as "just another ad" that lacks personalization and/or unique branding. Instead, use social media as its own sales channel and marketing platform, not to boost your performance on ecommerce marketplaces.

Step 6: Don't Forget SEO

Finally, don't forget search engine optimization (SEO). Ideally, you’ll want to drive searchers to your own website—for example, via content marketing like a company blog that will help draw in the right audience, convert searchers into buyers, and building up your brand—but you’ll also want to optimize your product listings on marketplaces as well. Diversifying your sales channels via marketplaces won’t be all that effective if your products are among the last listed.

How Extensiv Empowers Diversification

The diversification process is a difficult one for a company to go through alone. Luckily, Extensiv’s solutions for brands provide tools to help you along the way.

Extensiv Order Management is the central hub for your team to manage your entire ecommerce business. Explore new sales channels, evolve your fulfillment strategies, maximize market share and ensure your products are always in stock. Get a clear picture of your business, whether selling across multiple channels, fulfilling from your own private warehouse, or working with a third-party logistics (3PL) provider.

Additionally, Extensiv Integration Manager connects all your order sources and destinations, streamlining the flow of information so you can see and control everything happening across your entire business. With Extensiv, you can manage multiple sales channels and complex omnichannel fulfillment with ease, unparalleled visibility, and insights from powerful data analytics.

Interested in learning more about how Extensiv can help you prepare your ecommerce brand for omnichannel success? Request a demo today!