Customer data - who owns what in the online marketplace.

Posted by James Dunford Wood 8 Jul 13

I recently attended the EU Catalyst 2013 event in London, put together by Channel Advisor. This is a hot area right now - how to make the most of marketplaces such as eBay, Play.com and Amazon - and to prove it Channel Advisor's recent IPO led to a swift 40% uplift in the share price. There are some exciting tech start-ups in this area, including the much younger, much leaner, StitchLabs, and everyone seems to be launching a marketplace these days - check out Shopify and Asos.

Screen Shot 2013 06 05 at 16.43.12

 

The logo of EU Catalyst 2013 in London, which Chris Poad of Amazon suggested looked like what his daughter had been ill with the previous weekend...

Some of the retailers I met at Catalyst did virtually all their selling on these marketplaces. While they account for somewhere between 30% and 40% of all online retail sales in the UK and US (and by marketplace I don't mean Amazon retail or eBay's auction business), this percentage is growing. In China it's above 95%.

The scary thing though, is the answer to the question 'who owns the customer?'. It's all about the customer data. There was a great Q+A session moderated by the entertaining Mr Ian Jindal of Internet Retailer with Chris Poad, Director of Seller Services at Amazon. The sharpest question came from a guy who wanted to know how sellers in the marketplace were going to be protected from big bad Amazon cherry picking 'what sold best' and then undercutting the sellers with lower prices.

There were two parts to Chris Poad's answer, one reasonable, one misleading. The reasonable argument was that it was not in Amazon's interest to upset its sellers - they were the lifeblood of the business after all. Mmm. (I'm thinking here of the many sellers who have been thrown off Amazon for trying to re-market to their own customers). The misleading bit was when he said "hey, this is healthy competition, no one can be against that can they?" Yes, but competition is only healthy if there is a level playing field, and in this case Amazon owns the ecosystem, so can favour whatever products, channels or sellers it chooses. And second, it owns the customer data - all of it. All the marketplace sellers get is the name and address, along with an encrypted email address. All the really interesting customer data - customer likes, wants and buys - is retained and exploited by Amazon.

Sure, it's Amazon's customer, but only up to a point. The final sale, in the marketplace, is done by the seller, and the more branded the brand, the more this is the case.

Talking to retailers, they all bend the rules as far as they can - by posting promotions and incentives to go direct when they ship the parcels - though if you are on the FBA (fulfilled by Amazon) programme, this is not possible. But as an analytics guy, for me Amazon represents a big black hole for my retailers, a death star, where very little emerges. I suppose you could turn this on its head and say that if you were selling via Selfridges, offline, you would be none the wiser about who your customers were. Still, the difference is that Amazon is growing its business on the back of all this data.

Can these black holes remain black holes forever? I spoke to Tanya Lawler, VP of UK Trading at eBay, who told me she was working to help open up more of eBay's data and insights to their sellers, and they are certainly much more open than Amazon. And Play.com (now Rakuten Play.com) who not so long ago pivoted from retailer to marketplace, even provide a data API for their sellers, and say they allow tracking code. 

So - interesting times. The big questions - how much more of a market share will market places get? Will data open up? And who, in the end, will do the best job of serving, and owning, the customer?

Artboard 10 B-1.png