Let’s start by making sure we all know what we are talking about. First, “B2C” means Business-to-Consumer -- startups that sell products to consumers as end users. We can contrast B2C with B2B, which is businesses selling to other businesses. Each type – B2C and B2B – have different selling processes. So today, we are going to focus on B2C and the challenges they might experience selling through e-commerce sites.
So far, so good. But, what’s a “Walled Garden?” It is just what it sounds like. It comes from olden days when rich people had beautiful, luscious gardens that they locked behind a wall so that others could not see in. We use the term to describe the big tech giants. Here’s a more specific definition from mediarithmics_what is: “A Walled Garden is a closed ecosystem in which all the operations are controlled by the ecosystem operator.” Think Google, Facebook, Amazon to start. They’ve created a really interesting marketplace in which they make the rules and they have all of the data. Together, these three companies control 70% of the all the digital ad spend. But today, we are not talking about ads. We are talking about actually selling your products.
Today, major e-commerce retailers also have substantial market power. The top-10 retailers in the U.S. control about 40% of all e-commerce sales. That means that your own website will naturally be competing with one of your channel partners, an e-commerce retailer that is a distribution channel from you to consumer end users. And let’s admit that it is too hard to attract all of your consumer buyers to your own website. So you are going to have to figure out how to successfully sell your products into the e-commerce retailers. Just check out the daily traffic volume to the top-10 e-commerce retailers:
This becomes a marketing challenge for startups. There are several questions you have to figure out:
Where are your customers shopping? Are they shopping at all of these major retailers or only a few? If it’s only 1 or 2 sites, that might be good news because it means you can focus. But if they are shopping everywhere, you might want to be active on all of these sites. That’s going to be a lot of work for you.
How are they using each of these walled gardens? This is key. Each walled garden has a different set of rules: how many images you can have, the dimensions of the images, how to name and format files, the number of keywords, the number of categories, etc. These differences come from way their software is structured. But it also is a result of how their customers use their software and behave in their stores. You need to get data about how people search and make product choices. Last spring, one of our MBA teams did a project for a manufacturer that sold through 3 of these e-commerce retailers. We found very different patterns in how branded and unbranded products configured their product listings. The brands were well-known and could share information the way they wanted. But the unbranded products could only be found through searching. So, they needed a lot more keywords and keywords about specific features to show they were a relevant choice.
How do you optimize your offerings within each walled garden? They each have different search algorithms. You have to learn how each works. And here is the catch – they do not share many details about how their algorithms work. So it takes experimentation and/or finding someone who has figured it out to tell you. The same is true for Google – everyone is guessing what is important in their algorithm. Some prioritize categories and keywords. Others prioritize reviews. And some focus on images and videos. Conversion rates factor in somewhere. So you want people to pick you when you appear in their search. Your goal is to show up in the top 2 of any keyword important to you. Like any search engine, click-throughs fall off dramatically after that:
How do you optimize across all of these walled gardens? Now, here’s the real challenge. Because they are each different, it is hard to optimize across all of them at once. Experienced marketers working in multiple walled gardens suggest that 70% of your keywords might be consistent across gardens. But there likely is a lot of variation in the 30% that are different.
The reality is that if you want to build a strong B2C startup, you will need to master these e-commerce retailers. Once you are a seller, you will have some data to analyze. There are tools you can buy to help you figure it out. There are consultants that can help you as well. Not sure where to start? Email us and we’ll give you a hand up. The most important thing to remember is that each walled garden is different.
Oh, and we believe you can figure them out. But you will have to work at it. Check out the book You Are A Badass. It is the #1 listing on the keyword “entrepreneurs color too.” It is ranked at #76 among all books on Amazon. That means it is selling between 300 - 500 copies every day. And that book is 6 years old. They have definitely figured it out. You can too.