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Online Partnerships with Competitors: Good or Bad Idea?

Online sellers give us their opinions, share their experiences.

There was an interesting thread on our favorite forum for ecommerce merchants, Facebook’s The Ecommerce Group, a while back.

Seller and consultant Nathan Huppatz asked whether other sellers ever work with competitors.

Huppatz was thinking in terms of sellers helping each other when one runs out of inventory, or perhaps going in with one another on orders to lower the cost per unit.

“eBay and Amazon have become so mainstream and cut-throat that I really don’t think I could, or would, trust a competitor”

We have to admit, when he posed the question our knee-jerk reaction was, “No, are you kidding?”

That sure seems counterintuitive. But after interviewing other sellers, we have to agree it may be a good idea, sometimes. Of course, not everyone agrees with that.

Platforms are too competitive

One of the best-connected sellers we know—who also happens to teach eBay courses to budding sellers—was pretty adamantly opposed to the idea.

“No, I don’t think I would work with a competitor,” she tells us. “It’s really a trust issue for me, and normally I am very trusting, but eBay and Amazon have become so mainstream and cut-throat that I really don’t think I could, or would, trust a competitor.”

That concern about the level of competition among sellers, whether they’re selling on eBay or Amazon, was a common theme among those we interviewed who were opposed to building online partnerships with competitors.

Andy Mowery sells on eBay as debnroo, as well as on Amazon and his own website.

He brought up something we had not thought of: the possibility of collusion.

“I’ve been using the word ‘coopetition’ for about eight years now,” he said. “The danger, however, is when that morphs into collusion. Therefore, the safe path is not to coordinate with competitors because it could be judged as manipulation of market prices.

“A couple of them have [gone] in with me on ordering large quantities, so we could both benefit from the price break that we would not otherwise get”

“Cross-fulfillment of orders is safe as long as it is limited to service,” Mowery continues. “When you start saying, ‘I’ll move my price up $5, and you do the same, and we’ll make more money,’ then you are creating a liability.”

When competitors work together

John Gilmore’s attitude was typical of those who do sometimes work with competitors. He sells on eBay as myauctionsource.

His broad experience as an ecommerce merchant and as someone with experience selling in a traditional store meant he could bring a unique perspective to the question.

“I’ve made friends over the years with several competitors, both for ecommerce and for our B&M,” he said. “A couple of them have [gone] in with me on ordering large quantities, so we could both benefit from the price break that we would not otherwise get.

“I had a furniture store and started an eBay consignment store but quickly switched to selling gift items and toys, which I then started also selling in my B&M,” he continues. “I’ve sold everything from small pocket trinkets up to refrigerators and sofas online. When I had my B&M, I was friendly with all the local competitors. If one of us ran out of something, we would call the other to see if they had it and would either sell at cost, or just have them replace [the item] when the next shipment came in.

“Whenever I see an opportunity to work with someone that will be a win-win for both parties, I never hesitate to do so”

“It worked out really good and saved all of us from having to deal with irate customers over inventory or parts issues many times,” he says.

Seller Melanie Maybe works with a competitor who is also a close friend.

“We are going into business together in a new venture next year,” she says. “We help each other out on backorders and even try to split the stock we carry amongst our suppliers.”

That doesn’t mean Maybe has found every competitor agreeable to working together. “Only one competitor is hostile. I am cool with that. Everyone needs a nemesis,” she notes.

Skip McGrath is another seller who finds it beneficial to work with competitors.

“I work with my competitors all the time,” he reports. “Based on my experience, most other self-employed business people respect each other because we all know how hard we work, and how tough the business environment can be. So whenever I see an opportunity to work with someone that will be a win-win for both parties, I never hesitate to do so. ”

McGrath provided an example.

Jim Cockrum and I both sell training products aimed at the same audience, but our products are different, so we often recommend each other’s products to our readers,” he tells us. “It has worked out so well for us over the years that we have actually cooperated on developing products that we can sell to both of our readers together.”

“Just because they compete with me does not mean I am going to abandon the platform and lose the thousands of dollars worth of sales I see each year”

McGrath adds that sellers can even work with competitors to cross-promote each other’s products.

“Over the years, I have cut deals with my competitors, whereby I recommend their products one month and they do the same for me the following month,” he continues.

What about Amazon?

Amazon brings up an interesting quandary. While overall welcoming to its third-party sellers, it is undoubtedly also a competitor.

“I sell on Amazon, but often find myself competing with them to win the buy box for the same product,” McGrath says. “In fact, a sales rep for one of my leading wholesale suppliers is also the sales rep for Amazon, so we often find ourselves competing with each other.

“So Amazon is both a partner and a competitor,” he adds. “Just because they compete with me does not mean I am going to abandon the platform and lose the thousands of dollars worth of sales I see each year.”

After speaking with other sellers and reading what respondents had to say on the Facebook forum, we went back to Huppatz to see what he was thinking.

“We haven’t approached any of our competitors yet to see if we could get a ‘trade’ account,” he says. “But I think we will when we rebrand and relaunch our website. If not for the actual products we could get to help fulfill orders, we would want them to know who we are.”

About the author

Brad & Debra Schepp
Brad and Debra Schepp are the authors of 20 books, including eBay PowerSeller Secrets and The Official Alibaba.com Success Guide: Insider Tips and Strategies for Sourcing Products from the World's Largest B2B Marketplace. Their most recent book is How to Find a Job on LinkedIn, Facebook, Twitter and Google+. Brad is also a literary agent for Waterside Productions. For further information, visit the couple's website, bradanddeb.com. Opinions expressed here may not be shared by The Online Seller and/or its principals.



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