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~ ChannelEngine ~

hybrid selling model when operating in marketplaces. With marketplaces will use their own algorithms to adjust prices
20 years of e-commerce experience, Jorrit has helped build once a PO has been fulfilled—often breaking Minimum
and reshape hundreds of platforms for some of the world’s Advertised Price agreements (MAP)—meaning there is a
leading retailers. constant risk of price erosion in the market and negative
brand perception.
The vendor model: Streamlining vs revenue risks
The vendor model essentially sees the business acting as You also lose significant control over your brand identity as
a wholesaler or direct supplier to the chosen marketplace. the marketplace decides on important factors like shipping
Brands that operate this way are commonly known as first- packaging, descriptions, and the majority of the on-site
party sellers (1P) and deal directly with the marketplace consumer experience.
rather than the consumer.
Take, for instance, this Burberry perfume. On the brand’s own
Marketplaces will send your business purchase orders based site, the photography is sharp, and the description is highly
on their own expected demand. Once the PO is fulfilled, the detailed, aligning with the identity you’d likely associate with
marketplace takes full control over the product, content, and a luxury brand. Meanwhile, the same product on Amazon is
pricing. almost unrecognisable in comparison. The brand name is in
capitals, the image and pricing are different, and there is no
Using the vendor model can be advantageous as it streamlines product description. In our search, the product was not even
much of brands’ sales and logistics process. Sales are often in stock on Amazon.
made in bulk directly to the marketplace, making it simpler
than fulfilling multiple orders from multiple buyers. Retailers facing stock and fulfilment issues will also be hit
with charges from the marketplace, and if the purchase orders
However, passing on much of this responsibility does pose suddenly dry up, your revenue takes a big hit until you find an
several risks for a business. alternative way of selling.

One of the most common complaints is pricing issues. Another big drawback is being unable to choose what you’d
Wholesale prices usually mean lower margins, and like to sell on the marketplace. That decision is left with the

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