Vancouver, BC, NOV 2020 – It’s a fact that eCommerce success requires a strong marketplace strategy. Sustainable growth depends on the expanded reach and revenue accessible through marketplaces. Nearly 40% of online sellers have adjusted their marketplace strategy in response to COVID-19. These are not ground-breaking revelations, and you are not surprised. To bore you further with things you already know, it is commonly assumed that there are two main choices for manufacturers to sell on marketplaces: (1) a first-party (1P) seller strategy or (2) partnership with a third-party (3P) seller.
That’s the traditional starting point, and there are strong arguments for both. A 1P marketplace strategy offers manufacturers direct access to consumers and, if done right, should lead to more margin. Without guidance or experience, it’s a move that can take years of research and development, investment, and resources. It’s a sprint into the unknown. Hidden costs can cripple a business before they even get started. Trademarking, brand registration, competitive analysis, marketing optimization, inventory management, damages, and returns are just a few of what Sean Smith, senior director of strategic partnerships at Cymax Group, calls the “one-percenters that can quickly dissolve margins.” All things that demand skilled, dedicated resources to do well, and in addition to already thin margins and the sometimes complicated channel specifications and commissions.
A 3P removes the hefty investment in expensive plug-ins, outsourced tech, or in-house hires to manage it all. That includes – but isn’t limited to – catalog management, pricing optimization, digital marketing, resolutions, customer service, and fulfillment. The list goes on and on. 3P strategy benefits are clear to the more than 100 vendors who launched with Cymax Group in 2020. Through its marketplace enablement platform, Channel Gate, and exclusive access to two boutique marketplaces, Home Square and Cymax Business, these vendors have grown by over 700% collectively since January. “It’s a year of unprecedented disruption in eCommerce,” says Smith. “So many manufacturers and distributors have accelerated their marketplace strategy. We’ve launched brands in under two weeks, and that extra selling time has made a significant impact on their business. We save our vendor partners time and money with zero upfront fees. The partnership is structured so that we have a stake in the game – we’re invested.”
The Partnership Play
Cymax Group can drive growth for new players seeking quick go-to-market and scalability. As a top-rated seller on key marketplaces, they offer unparalleled access, guidance, and insight to partners. Lilola Home launched in 2018 as a trading company and soon transitioned to a drop-ship model with a global network of factories and warehouses. They knew they needed a partner with the experience to guide product development, marketplace management, and shipping strategy. “Cymax Group is an amazing partner for Lilola Home,” says CEO John Chen. “They are transparent – sharing data we can all learn from, and the platforms enable us to expand our consumer market with very competitive freight.” Shipping is a critical extension of your brand that can devour up to 30% of your margin if you don’t engage a partner like Freight Club (the shipping platform is a subsidiary of Cymax Group), that offers competitive rates for members, regardless of size. “Cymax Group is one of our strongest partners on our mission to make furniture affordable and accessible to everyone across the country,” Chen says. Lilola has experienced 60% month over month growth since onboarding in January. The future of this partnership looks promising.
The Smart Tech for eCommerce Success
For established vendors, it’s the technology and intelligence that make Cymax Group a valuable partner. Meridian Furniture, one of the largest suppliers of fine home furnishings in the industry, is a leader in factory optimization and manufacturing technology. One can imagine the care and precision with which they select strategic partners. “Meridian Furniture focuses on partners that understand the importance of advanced technology and development,” says Yair Cabessa, head of IT and eCommerce development at Meridian. The partnership, which boasts an average monthly sales increase of 39%, is based on a mutual commitment to innovation and service that drives value and revenue. “The tools are polished, useful, transparent, and routinely updated with new capabilities. For Meridian Furniture, working with a partner like Cymax Group every day is as promising as it is rewarding.” The Channel Gate portal, which has processed more than $2 billion in sales, offers a single point of access to multiple marketplaces via simple application programming interface (API). Vendors can add products quickly, build bundle listings in response to real-time, product-level intel; and, stay competitive through precision-pricing algorithms unique to every channel and based on decades of data and consumer insights. The seller intelligence data share for partner vendors delivers in-depth insights on SKU-level performance by channel, damages, contribution, and more.
The Twist: A Hybrid Model for Marketplace Mastery
Another area of growth, Smith highlights, is with vendors seeking to mitigate the risks, costs, and potential loss of control associated with a 1P marketplace strategy. He says the key is in a unique hybrid model that lets “partner vendors leverage our strengths where and when needed. We find them incremental revenue from our proprietary sites, in addition to other channels in our network where they are not direct. We’re an extension of their team across the product lifecycle.” For example, if a new product needs initial traction at launch or a marketplace pulls focus from a SKU, Cymax Group can calibrate at the product level to achieve a partner’s business goals. “Precision-pricing algorithms deliver exactly what our partners need in volume and margin. We’ve been working with some of the largest furniture brands for over sixteen years. That’s many lessons learned and a lot of data gathered – it gives us a detailed understanding of consumer behavior.”
The takeaway is clear – you don’t need to choose. The future of eCommerce will likely revolve around collaboration – core partnerships built on reciprocity. New-to-market vendors look to incumbents for the tech and the intelligence required to scale. Marketplaces will continue to diversify in response to increased reach globally as consumer habits evolve.
Cymax Group is the only end-to-end eCommerce enablement solution with experience building boutique marketplaces, strategic partnerships, and industry-leading technology that empowers manufacturers and retailers with everything they need to take their products to marketplace with Channel Gate and deliver on their brand promise with the Freight Club shipping platform.
All in service of making online retail easier for sellers and customers. The Cymax Group network is built on collective growth, somewhat revolutionary in the space, and built into the culture. It’s a “rising tide lifts all boats” mentality that means every win, every discovery, and every step forward is rolled out to the entire ecosystem. An accessible solution that lets partner vendors leverage the technology and bench strength of an experienced team offering foundational support. From design to delivery.
For more information, contact Sean Alexander Smith, Senior Director of Strategic Partnerships.
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About Channel Gate
Channel Gate empowers retailers to stay one step ahead of the competition with cutting edge technology built on years of eCommerce excellence. Channel Gate’s platform simplifies multi-channel eCommerce, allowing manufacturers to leverage a single inventory and product feed to sell across many channels. Channel Gate is a proud member of the Cymax Group family of brands.
About Freight Club
Freight Club is a marketplace logistics platform that offers manufacturers and retailers an easy way to ship freight at highly competitive pricing. Launched in 2015, Freight Club is a 5-star B2B freight service trusted by hundreds of manufacturers, wholesalers, distributors, and other businesses shipping freight in the US, Canada, and US-Canada cross-border. Freight Club is a proud member of the Cymax Group family of brands.
About Cymax Group
Cymax Group is an eCommerce technology leader focused on building a better end-to-end experience for eCommerce companies and their clients. The Cymax Group of brands offers unparalleled knowledge of the complete eCommerce experience gained through 17 years of building platforms that connect manufacturers, retailers, and consumers.