More third party sellers are being roped in by US based retailer target bit in a much different manner as is being done by its larger rivals Walmart and Amazon.
Target is aggressively calling out to both national and speciality brands to sell their products on its website on an invite-only basis. The company is focusing on some specific industries where it envisions higher demand from shoppers such as sporting goods and toys segments. While these measures are being initiated by target, in the case of its bigger rivals Walmart.com and Amazon, the barriers to entry for third party sellers to sell on the websites of those companies are still much lower. Third party brands simply have to fill out an application requesting Walmart.com and Amazon to allow them to sell their products on those platforms.
According to analysts, Target has been forced to bring in this change because many bricks-and-mortar retailers are under pressure to increase the profitability of their e-commerce businesses. In general, compared to the physical stores, such companies find it more costly to acquire customers on the internet because of high shipping charges, returns and other expenses. Now, such retailers trying to reduce such costs by passing on some of those cost to third party sellers and hence are inviting more third parties to use their online platforms. For example, Target said that responsibility for shipping and other costs would have to be taken by its third-party sellers if they want to participate in the new initiative of the company called “Target +”.
“We see this as a long-term opportunity to drive profitable growth,” Target Chief Marketing Officer and Chief Digital Officer Rick Gomez said. “This is intended to be a very curated and select group of products and brands. … We are reaching out to the brands we want.”
Analysts also feel that Target could be able to stay away from some of the controversies that had been faced by Walmart and Amazon over controversial merchandise being offered on their websites by using the invite-only approach to include third party sellers. For example, last year, there was a huge controversy on the social media over a product being offered on Waqlmart by a third-party seller which was called “Impeach 45” in reference to United States President Donald Trump. Walmart was ultimately forced to drop that merchandise from its website. One of the reasons that companies like Walmart, Amazon and even eBay are often unable to monitor all the merchandise that are sold on the platforms because of their very large size.
According to Target, since the last few months, it has been associating with a few third party brands which include the sporting goods retailer Mizuno, educational toy maker Kaplan and the keyboard making firm Casio, so that it can test the strategy for allowing and including third party sellers to the company website. Home goods, electronics, musical instruments and outdoor gear are among the other sectors for which Target wants to include more third-party sellers on its website, the company added.
“We are selecting these categories based on guest research … what people are searching for [on Target.com],” Gomez said.
(Adapted from CNBC.com)