This summer I attended a couple of different events for online sellers. One geared specifically for Amazon sellers and one specifically for eBay sellers.
In many ways the contrasts are stark; still others are more similar than you would think.
I was struck by one thing in particular. At a dinner I attended for eBay sellers, one merchant asked John Donahoe "Why isn't eBay spending more money advertising in the media." Johns answer was an interesting glimpse into marketing in the new era.
Mr. Donahoe first explained how untargeted media ads are expensive, untraceable and pretty much going the way of the dinosaur. Pretty soon, he said: "on TV you'll be seeing, well, beer ads and beer ads"
Instead, eBay is focusing their advertising budget on keeping existing customers shopping on the site. EBay's marketing budget is focused on customer incentives. They are offering rewards like the eBay Bucks programs -- where regular buyers are given discounts on future purchases.
EBay is rebating its sellers (fees) and rewarding them for good customer service. While you may consider it just reducing your fees, think of it as part of eBay's effort to market its product to you (the seller) and to your buyer. This is the carrot incentive to keeping your Detailed Sellers Ratings. And it has worked! The DSR scores have brought up customer service and reduced shipping and handling fees. And buyers love cheap or free shipping.
In John's words "to meet the Internet customers unreasonable demand for free shipping" has meant that for eBay sellers (and eBay itself) to compete we must offer free shipping.
This brings me to Amazon, and their advertising budget. During a seminar I attended about the Amazon Fulfillment Program (FBA) -- the speaker Tom Plaster talked about how; by using FBA, sellers are included in Amazon's free shipping program.
Then, Tom stopped and asked the crowd: "Have you ever wondered why you never see Amazon advertising?"
It gave us all pause -- it's true you don't see or hear Amazon ads in the media.
"That's because Amazon takes a large part of its advertising budget and spends it on offering free shipping to our customers." Mr. Plaster followed up.
Without a doubt, free shipping is what the online customer wants, and that's how we're going to succeed as sellers in this new venue. But there are other marketing factors at work here as well. These two companies both understand the principals of marketing, and how it works in the new Internet era.
Those basic principals are as effective as ever when marketing.
They are:
It's easier to sell to an existing customer (and less expensive) than it is to make a new one
Up-selling is an important way to sell to an existing customer (buy more than $25 get free shipping)
Give customers what they want -- on the Internet it's FREE shipping
Buyer discounts and loyalty rewards are a great way to keep those existing customers and start a word of mouth marketing campaign. (hey, I bought this cool second book because I got free shipping on Amazon -- you should read it too…) or (eBay fees are now less than pay-per-click advertising and I get a ton of exposure for my product, you should try it too)
As you set your prices and start considering how to market to your customers -- consider how these two giants are positioning themselves in their advertising. Is there ways you can roll the cost of shipping -- or a loyalty program into your marketing budget, so you can use that magic word, FREE?