This just happened to me yesterday and I feel the NEED to share it with you.
It was during one of my routine but never the same eCommerce coaching calls that I was explaining to a valuable client the difference between becoming an “Online Seller” or becoming an “Online Merchant”. They are new to the field of eCommerce and so this can be a pivotal moment and extremely valuable lesson to get them down their desired path early in their eCommerce business.
Over the past 16 years I’ve always used the term online seller and online merchant interchangeably as if they are one and the same however I’d always feel this pit in my stomach knowing they are not. They are far from the same.
Before I explain the difference, which are you? Do you believe you’re an online merchant or an online seller?
::::: ANSWER BEFORE YOU READ :::::
Hear Brandon explain in more detail with the following podcast.
Podcast: Play in new window | Download | Embed
I’m not here to claim one is good and the other is bad. They’re both good in their own way. However it’s very important you know which one you are so you can be the best at what you do without distracting yourself by attempting to be the other. I feel the swarm of “experts” out there don’t totally understand the difference between these two eCommerce business models and therefore leading sellers (or merchants) down the wrong path at times. Unfortunately, I found myself in this same situation occasionally as I tried to help someone wanting to be an online seller try to become an online merchant and the message was just not being received clearly.
Let me break it down for you
Many online retailers begin their adventures by finding things around the house to sell online. They wet their feet and test the waters with this thing called eCommerce. Later they expand into sourcing at local garage sales and thrift stores to dial it up another notch. Once they hear the term “Arbitrage” they become fixated on finding the next deal either online or at local retail stores. Buy low, move the product to another market and sell high. It doesn’t get any simpler than that. While the overall process remains the same, it’s an evolution of finding bigger and better deals over time.
I started my eCommerce business this way in 1998 as many of the largest online merchants on the planet started this same way. It’s the traditional entry point into eCommerce. Learn how to sell things first. I even grew it to the point where I’d buy $250,000 (full truckloads) of liquidation consumer electronic products with the intent to flip it on eBay for a profit.
Many sellers eventually experience greater success than they ever imagined. It’s like finding money sitting on the shelf for you to take. This encourages them to dive deeper and deeper until they discover they created a full-time job of finding products and to grow this business will require their continued effort of finding new products tomorrow. Every day is spent searching, sourcing, packing and shipping as they find more and more products with the “spread” that’s within their acceptable range pulling the trigger with their own cash and time on the line.
As of today and into the future I’ll always call this business model ONLINE SELLING. People engaged in this type of business are Online Sellers in my book. During my coaching calls I call this the “Copy/Paste” business model. You copy from one place and paste it in another place. It’s purely about numbers and moving product fast and furiously.
One valuable lesson I learned in 2000 was that this model has limitations. One of the biggest limitation is the ability to scale and increase your profits per hour. Basically the money you’ll keep based on the hours you put in. The traditional workplace calls this your hourly pay. Yes, the thing you’re trying to escape as being an entrepreneur.
As more and more online sellers joined eBay in the millions learning how to attend trade shows, find suppliers and copy the product from a wholesale website to paste it into the eBay market it was soon evident this business model offers very limited defensive options. The momentum you built-up within your business can be duplicated and taken from you in micro-seconds within the online selling world. Knowing this and learning first hand how conquered market share can evaporate overnight encouraged me to explore how to build a more defend-able eCommerce business.
Finally, I had the opportunity to incorporate the marketing skills I learned while getting my MBA into my very own real live and breathing business. How can I build a more defend-able eCommerce business that benefits long-term from my business building efforts? I love marketing so this was exciting times!
Here’s your introduction to becoming an ONLINE MERCHANT. Becoming an online merchant is more than buying and selling. It’s more than product, place and price. It includes all 4 of the Marketing P’s that I learned in Retail Marketing class: Product, Price, Placement and Promotion with promotion being the most important. Today, some marketing experts call it the 5 P’s including: People. I’m fine with that. It was called the 4 P’s when I was in college but I feel people are a big part of it too.
Being an online merchant is about merchandising. It’s about building a brand that creates and captures value. It’s about offering a unique value proposition. It’s about having a defend-able position where your new competition that woke up this morning wishing to become an online seller can’t steal from you by lunch time. It’s the stuff typically BIG BRANDS know and leverage everyday while allowing the little guys to stay satisfied with the remaining crumbs left behind.
I’ve learned first hand the value and benefits of shifting from being an online seller to becoming an online merchant. I didn’t realize it until yesterday (somewhat upset it took me this long), but helping other sellers put on their marketing hat to take this quantum leap is my specialty. This is what I do day in and day out as an eCommerce coach helping online sellers improve their business, increase their profits and building long-term leverage by developing a brand that’s desirable and valuable. I help them develop a unique value proposition that’s hard to duplicate and learn to enjoy a sustainable and more defend-able eCommerce business they can become super proud of.
Which is it? Are you an online seller or online merchant? Either is fine. Knowing which you are and being the best you can be at it is most important. They require different skill sets to succeed and they require different investment of your time and mental power each day.
ONLINE SELLER: The copy/paste model of finding arbitrage opportunity and exploiting them. Sourcing and moving products efficiently and effectively are the key ingredients to success. Output is mostly determined by your time and money input.
ONLINE MERCHANT: The marketing enabled seller that focuses on being unique and building long-term brand value. The keys to success are understanding supply and demand and exploiting pockets of opportunity that exist when you become unique in the market. Output is mostly determined by creativity and ingenuity.
If you’re ready to take the leap from being an online seller into becoming an online merchant hire an eCommerce coach to get you there. This is my specialty and your opportunity to exploit to your advantage what took me years to learn and leverage.
Cheers to selling smarter!
PS: IF YOU GOT THIS FAR, LIKE OR SHARE PLEASE!
Is there a ceiling (or limit) to the size of business a single entrepreneur can build either as an online seller or online merchant?
What are the limitations?