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Discussing the impact that marketplaces have on brand.

When a brand is not the brand.

When is a brand is not the brand? With the rise of marketplaces and partnerships, sometimes the brand that you’re seeing is not the brand that it is… 

More and more, brands are turning their websites and the way they come to retail into marketplaces: Walmart, Best Buy, and even Hudson’s Bay.  What’s happening is that a lot of times, we’re seeing these huge brands, but actually purchasing from smaller brands without actually realizing it.  That might affect crucial aspects of the buying process like returns, shipping, and even the prices. Is this a good or a bad thing? And is this affecting their reputation negatively?

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Recorded on November 15, 2021.

Transcript

Brad Breininger: 0:00
Hi, everyone, and welcome to this week’s everything is brand. This week we want to talk about when the brand is not the brand. So with the rise of marketplaces and partnerships, sometimes the brand that you’re seeing is not always the brand that it is. Let’s discuss. All right. So probably the most famous marketplace in the world is the Amazon marketplace. But more and more other brands are turning their websites and the way that they kind of come to retail into marketplaces as well. So what’s happening is that a lot of times we’re seeing the main brand, whether it’s, you know, Best Buy, or the Bay or Amazon. And that’s the brand we’re expecting to be interacting with. But because it’s a marketplace, there’s a whole bunch of other brands that are involved here. And that might affect things like returns or shipping or anything like that. What do you guys think when the brand is not the brand? Is this causing issues? Do you think that this is a good thing or a bad thing?

Gabi Gomes: 1:10
So let’s bring up the example. The example that was on the news recently was this grandmother who purchased this singing cactus for her grandson, and the singing cactus off of Walmart. By the way, the singing cactus was deemed as a stem gift, whatever, three languages, grandma gets it, and one of the languages is Polish, she’s polish. And she finds out that the singing cactus is actually spewing out not so nice language appropriate for a child. What she didn’t realize when she purchased it was that she actually purchased it off of a Walmart reseller marketplace. Right. And she thought she was purchasing it off of Walmart. So she was up in arms. How could Walmart be selling something like this? So I think there’s a couple of issues here. One is, people really don’t know, consumers really don’t know that Walmart, Best Buy, the Bay. Some of these other retailers have now converted themselves to marketplaces, Amazon always started off as a marketplace. They introduced their branded stuff into that marketplace after the fact. But they always started off as a marketplace, same as eBay, same as Etsy, same as a lot of other marketplaces. However, Best Buy started off as its own retailer, the Bay started off as its own retailer and Walmart started off as a retailer. So is there an issue there in terms of perception, with the brand that when you purchase off of those retailers, you’re thinking you’re getting something from Walmart, when in fact, you’re not, you’re actually getting it from a third party reseller off of the same site?

Brad Breininger: 2:51
Yeah. And I think there’s an expectation with an eBay or an Etsy, where you know, that you’re buying from individual sellers. It’s almost like people know that. But when you’re buying from Walmart or the bay, you almost want all of the brand features that go with those brands to be applicable. And often they’re not. And it does show up in these marketplaces where it says you’re buying from a marketplace seller. But are they strong enough? Are they apparent enough?

Gabi Gomes: 3:21
I don’t think so. I was just shopping for my son the other day. And because I knew that these online sites were marketplaces I literally had to go finding – where’s the button to turn on only merchandise from Walmart, only merchandise for Best Buy. It’s not easy, it’s off on the right. And you constantly have to check it off, you’re constantly have to be looking out for it is what I’m trying to say. It’s not that easy.

Marko Zonta: 3:49
So Gabi, clearly, you know a lot about this. So just to understand this better. Can you explain what the difference is? In terms of why is the marketplace option, a worse solution to the actual retailer? Like what is the difference?

Gabi Gomes: 4:04
I don’t think it’s the worst option. I think all the more retailers in these ecommerce places, the better it is for everybody. However, I think for the ones that started off as retailers, traditional retailers, switching over to a marketplace, there was no communication like I don’t remember Walmart coming out and saying and doing some big PR blitz saying that they’re now becoming a marketplace. And we’ll be having our Walmart products plus we’ll be having products from all these other places. I think these things were done for business purposes for revenue purposes and kind of slid a little bit over. Same thing with Best Buy.

Marko Zonta: 4:41
Because you could argue that really their store is a marketplace. So they’re – it’s no different in the digital world. They expanded that to a much much broader market, I guess. So does their brand not stand behind what they’re offering in the marketplace?

Brad Breininger: 4:56
It’s accountability. It comes down to accountability and I think that the issue is not can Walmart offer all of these different products from these different sellers? I mean, they do that right now in their stores, like you’re saying, the difference in the digital world is that really, what they’re providing more than anything is a link. But they’re not taking on the responsibility and backing up these marketplace, sellers, with the brand elements, that they’re backing up all of their other products and services. And that’s the issue. So when you run into a problem, what they say is, well, that was our marketplace seller, and you need to go directly to them, you don’t have all the power of the Walmart brand, or the Bay brand behind these products.

Jeremy Linskill: 5:40
There’s no quality control, right? At the end of the day, they’re not looking over these products and checking them and making sure they’re just putting them on their website, and making you responsible for dealing with them.

Christian Rosenthal | ZYNC: 5:50
And furthermore, the risk is higher, right? Because you can be buying from third party seller, well known brands, maybe but there’s no guarantee that you aren’t buying a clone or a fake product, right? And if you get one of those, you can’t go back to Walmart, you can go back to Best Buy, you have to go back to the seller.

Brad Breininger: 6:15
Yeah. And you know, it’s interesting, because there’s situations that really where you run into this kind of thing. One of the things I’ve noticed in the market for like a fan. And I noticed that there was a Dyson looking fan on Amazon. And it’s not Dyson, but it looks almost exactly the same – manufactured in China. It’s for sale all across Amazon. And it’s funny, because when I see it on Amazon, I almost have this expectation when I see it’s manufactured in China, and I go, okay, is this Dyson or is it not? I mean, it looks like a Dyson. It sounds like a Dyson, but it’s not a Dyson. And when I’m on Amazon, I’m almost looking for that – when I’m on Walmart or the Bay I almost expect like, why would you not have a Dyson like, I think it goes back to what we titled this is when is the brand not the brand? Well, you know what there are so many brand elements tied to Walmart and the Bay and Best Buy, that you just don’t have on an Etsy or even on an Amazon, because we’ve been, I guess, taught to look at these brands in a certain way. And now the brands are kind of abandoning some of the brand values that they’ve created. And like you said earlier, Gabi, we’re just not sure about that. It’s not that we’re not prepared. We just don’t know.

Marko Zonta: 7:38
is this change driven by the consumer at the end of the day, is people looking for the best price and everything that goes with that, really driving this new approach to shopping, because all of those products that are backed by the brand is costing that brand between the returns and processing everything else. So are they actually really solving a business problem on their end? When consumers are basically saying, Well, we’re okay to go to Amazon and those places because we’re willing to take the risk. But at the same time, they actually expect the brand to back it up.

Gabi Gomes: 8:17
I don’t think it was consumer driven at all, I think it was the fact that Amazon is becoming larger and larger and larger. And these other retailers, traditional retailers need some way to compete with Amazon.

Marko Zonta: 8:32
But I would argue that that is very largely driven by the consumer. The consumer is shopping at Amazon.

Brad Breininger: 8:39
They’re responding to a marketplace. You’re right, Marko, they’re responding to the marketplace, which is driven by consumers, but they’re responding in a way to drive the revenue without adjusting the brand to encompass. The Amazon brand encompasses a marketplace. The Walmart brand does not encompass a marketplace in the minds of consumers. And I think that that’s the issue here is that it is perfectly fine for Walmart to make a business decision to expand themselves to a marketplace to compete with Amazon. But when are you going to let consumers know that this is the direction that you’re taking? Are they trying to have one foot in a traditional retail brand and one foot in a marketplace brand and kind of straddled both, to the point where consumers are going I don’t really understand your brand anymore.

Gabi Gomes: 9:27
I was just going to add at what cost to the brand. Walmart has spent years if not decades, building up their brand and building up the trust with consumers. Lowest price, that’s where you get all your needs from it’s put a lot of stake into this for this marketplace to come in. And is it worth the risk? I don’t know. That’s a lot of brand trust that they’ve developed over the years to open up the marketplace. Either. They got to do a better job of vetting those other third party vendors that are coming into that site, which again, massive right? Amazon was built on this, can Walmart come up to that level? So quickly? I don’t know that they can’t, right. And at the same time, there’s that reputation?

Brad Breininger: 10:13
Well, there’s two levels of risk that we’re really addressing here. Level. One is that they can’t compete, and they go out of business. So there’s the business risk. And the second level, is the brand risk. And are they sharing? I mean, it’s perfectly fine for them to make that business decision, whatever direction they want to go. But you know, again, going back to what we’ve titled this, when is the brand not the brand? If it is a marketplace seller, and you’re buying it from Walmart, you think it’s Walmart, I would say, you know, the large majority of consumers will think that they are buying from Walmart. Now, is it Walmart’s job to make them think differently? Or to put the truth in front of their eyes? Not necessarily, because they do say marketplace seller and they do put some of those things in there. But again, perception is everything. And are they harming their brand long term by not just being upfront – more upfront about it? Or can they expand the brand to include more of this marketplace and just be straightforward about it right and, and make it a lot more obvious so that people understand precisely what they’re getting to?

Sasha Codrington: 11:24
Yeah, I think of how I shop in terms of the brand promises. So if I’m shopping at the Bay, they have an unbelievably lenient return policy, if you’re a member, you can take I think, 90 days. And that’s just something that you have in mind, if I’m shopping at the Bay versus Amazon, I’m going to have a different understanding of what the returns look like, what kind of promise I’m getting. So I think from a brand perspective, it’s to a lot of companies benefits to be upfront about what’s a marketplace product so that customers aren’t getting confused, because I’m going into let’s say, the Bay or Walmart established places with that understanding of what I’m buying what it looks like, if it doesn’t work out, I need to return it. If I’m on Amazon, or Etsy, I’m shopping with a completely different mindset of there being more risk. I’m thinking, Oh, if I get this and it doesn’t work, I probably can’t return it. There’s more challenges there. So I think for brands, they have to be careful. And it’s to their benefit, I would think to be a little bit more upfront so that any issues that come up with these marketplace products don’t fall back on them and their brand.

Gabi Gomes: 12:25
I’d like to know the business behind the marketplace. Because to your point Sasha, how much are they profiting off of these products, Walmart, BestBuy, whatever the Bay off of the marketplace, sellers, how much profit is in there, because the amount of employee power that goes into Oh, you can’t return this, you know, somebody’s standing in line, you can’t return us. It’s a marketplace, bah, bah, bah, bah, bah, all of that is time wasted. Right. All of that is resource wasted. All of that is cost. Is it really, I’d love to see the economics of this to really see if it’s viable. If it’s really make sense for those retailers to have it.

Brad Breininger: 13:04
Well, here’s the issue. If it didn’t make economic sense, you wouldn’t have retailers like Best Buy and Walmart doing it. I mean, that’s the bottom line, there must be some economic benefit. That kind of brings them in this situation. But I think that there’s multiple things going on here. Now that shopping happens mostly in the digital realm. A lot of it has to do with SEO and search, right? If you’re not putting these marketplace, sellers on your website, you’re not getting the same search results. So I think that there’s a whole digital search component to this entire thing that has to be considered. The other piece of it is that Amazon is a juggernaut. And all of these organizations are kind of running after Amazon and they’re really looking for options. What can we do to kind of alleviate some of this Amazon juggernaut that we’re dealing with. And, you know, to your point, Sasha, the Bay has a particular brand wrapped around it, which is, you know, leniency on returns, you can take it into store or you can return it online, you know that there’s a certain level of quality that you’re getting with the Bay. If you subscribe to the Bay credit cards, you get special coupon codes and things like that. I mean, I know for me personally, I was trying to buy something on the Bay and I tried to use a coupon code that they’d sent me in the mail. And the reality was that I couldn’t use it on half the products that I was putting into my cart because they were marketplace seller products and so the coupon codes don’t work I can’t return it the same way it creates this overly annoying shopping experience for the consumer so that some of what I’m buying is the Bay brand and some of it isn’t? What exactly is happening here I’m not I’m just not sure.

Gabi Gomes: 14:47
So I’m wondering is what’s happening basically a almost decentralized ecommerce where brands aren’t going to matter. Can you imagine like the gap all of a sudden I’m having you know, the George line from Walmart in their ecommerce store like are we literally just decentralizing everything where it’s just going to be a wash, and brand isn’t going to matter? In this marketplace, it’s just basically lowest price or whatever else it is the item that you’re looking for, is that what we think is going to happen in the future?

Jeremy Linskill: 15:21
I think brands going to matter, I think what that’s going to do is actually drive me to their actual websites, as opposed to going to places like Best Buy, like, personally, that’s what I’m doing now. Like, I can’t deal with this whole figuring out what’s marketplace and what’s not. So I turn away from it, I go somewhere else, I think that that’s what’s going to happen for me is I’m going to be more loyal to the individual brands and less loyal to the best buys and the Walmarts, and things like that. But yeah, I’m interested to see where it ends up. Because it’s frustrating.

Gabi Gomes: 15:51
So you want your Sony TV, you’re not going to go to Amazon, you’re not going to go to Best Buy, you’re not going to go anywhere else, you’re going to go to sony.com to get your TV?

Jeremy Linskill: 15:59
Almost, because I least then I can deal with the returns and all the all the other stuff like I mean, that’s a big part of it, for me is the security of knowing when I buy something, if I don’t like it or have a problem with it, I can deal with somebody directly. It really angers me when I buy something from someone there and they go sorry, I can’t help you anymore. You bought it from me. But it’s your problem now. That’s the ultimate thing that I don’t like, promote

Brad Breininger: 16:22
You bring up a really good point. And that is that a lot of times products were distributed by retailers, that was kind of the old model. Like if you think about years ago, if you wanted to buy a Sony TV, like you’re talking about, there was no Sony website where you could go buy it, there was no Sony store. I mean, that’s changed. Now there is a Sony store, there is a Samsung store. But previously, these were just distributors. And if you look at the way that kind of works in a lot of situations, a lot of times you had these department stores that were just again a marketplace for these different products and you couldn’t buy the products directly. A really good example of that are the car companies, right? Like you had the dealerships you had to go to a dealership to buy that car company. Well, the dealerships were not owned by the car companies, they were owned independently. So it’s almost like the middle person is being taken out of the equation a little bit. If you look at Tesla, you buy a Tesla from Tesla. That’s how it works. But that’s not how the automobile companies have worked up until now.

Jeremy Linskill: 17:25
Well, the digital game has changed. Everybody can have a website, right? And everybody’s comfortable with buying through websites. Now you don’t need that retail space anymore. You don’t need to pay those exorbitant amounts of money to have those spaces, you just have to host your website, set up your E commerce and off you go. Everybody can do that. You’re talking about car companies are doing it. The television production, like look at Netflix, we don’t have those Global TV or all of those other things, hosting everybody else’s shows everybody has their own individual one as well. It’s just, it’s the nature of digital, I think is everyone can take ownership of their own

Brad Breininger: 17:57
To Gabi’s point brand is becoming even more intellectual property. important, actually. Because if you’re not building your brand and creating a brand identity in the marketplace, you can’t rely on these distributor brands to push your brand forward. Right.

Jeremy Linskill: 18:14
Yeah, I think that there’s another challenge here, too, though. And the internet is becoming so diluted with content, it’s proving very challenging to get to those actual websites. We had an example here at home where we just recently booked a hotel, and I booked it, and then my wife needed to call the hotel or call and book something as well. And she just googled it. And she was on her phone, and she just clicked the top link and not realizing that it ended up being a third party website that she booked everything through, only to discover at a later date and have to rebook because there were a lot of things that weren’t featured and all this other stuff. She ended up having to rebook that. And it became this huge pain because she clicked on the wrong link on the website, the link that was at the top of the page, right, you Googled Holiday Inn, and that was the one that came up. Well, that was owned by third party website. And off, she went down the wrong, you know. So there is those challenges as well with the with the web in terms of deciphering all of that content, and figuring out who that website you actually end up on because you’re also getting those websites that look like everybody else’s.

Marko Zonta: 19:15
But to that point, with searches online now, like, it’s pretty much guaranteed that the actual link that you need is not at the top anymore, right? It’s like a few levels down because everybody who is paying for something is higher up.

Gabi Gomes: 19:30
Which leads me to believe that one of the advantages of being in a marketplace or whatnot, is the availability to spread your product even further out. Right, because Sony isn’t getting to the top link, but you’ve got Best Buy and everybody else getting there instead, well join those marketplaces. So you can be in the conversation at least

Brad Breininger: 19:52
Yeah, I mean, the key as has always been the case is that you need to be an educated consumer. I mean, no matter what you’re consuming Whether it’s products or services or you know, hotel rooms, you need to be educated on what you’re doing. And to your point, Marco, a lot of savvy people will know to scroll down and go to the actual website. But a lot of consumers just don’t know that right?

Jeremy Linskill: 20:15
Shouldn’t things be getting easier, like in this world? Like, shouldn’t things be getting easier? Not easier to you? I feel like it’s getting more difficult, like the massive frustration is like, we’re supposed to be becoming more efficient with all these access points online and things like that. But it’s not it’s actually becoming more challenging for people.

Gabi Gomes: 20:35
It’s a minefield, yeah, yeah. It’s a minefield.

Jeremy Linskill: 20:37
Absolutely. Yeah.

Brad Breininger: 20:39
It’s interesting, because I was recently in a situation where I was looking for a fan, think I mentioned that earlier. But I was looking for the fan. And I searched it, and I ended up in the Bay,

Gabi Gomes: 20:48
I just want to know why you’re looking for a fan. When it’s like minus one outside like, we’re not in the summertime.

Brad Breininger: 20:54
It’s a heater fan. It’s both, it’s that hot cool thing, right?

Gabi Gomes: 20:58
Ok, I got it got it. Sorry,

Brad Breininger: 21:00
Regardless of whether I need it or not, that’s what I was looking for. But I was looking for this fan and I went to the Bay marketplace, I went to the Walmart marketplace, and I went to the Best Buy marketplace. It was actually the cheapest on the Best Buy marketplace. But then when I went to check out, the delivery fees were exorbitant. So I was like, Okay, let me check on the Bay. So I went to the Bay. So the delivery fees were less, so the overall price was lower. But then I looked at the manufacturer, I thought, Okay, wait a second, let me just Google the manufacturer here. So I googled the manufacturer, I went to their website, the shipping fees were the lowest the price was the lowest, and I was buying direct. So I thought, okay, if there’s a problem, why wouldn’t I just buy direct, because we’ve all been in that situation where you buy your hotel room through Expedia, and you have nothing but problems, right. Whereas if you go directly to the hotel, you get chocolate strawberries in your room when you show up. So marketplaces have their advantages, but they have their disadvantages as well. And it just goes back to this idea of consumers just knowing what they’re buying, but it’s difficult. When the brand isn’t the brand. It is so difficult as a consumer to understand. Okay, who am I buying from? Where am I getting this from? I mean, we all understand the business reasons why a Walmart or Best Buy would want to expand their online shopping into a marketplace. There are a lot of good business reasons, both from a revenue perspective, from a distribution perspective, there are a lot of good business reasons. But there is so much associated with those brands already with the Walmart brand with the bay brand that you don’t have associated with an Etsy or an Amazon. So there are two directions that have to happen here. The brand has to understand their role and what their brand stands for. And on the consumer side, they need to understand exactly what they’re getting into and just be good consumers of the brand that they’re working with and the products that they’re buying. So that’s this edition of everything is brand. Stay tuned next week for a new topic and a new discussion. And remember, everything is brand.

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