Why Merchants Should Think Twice About Selling Exclusively

January 29, 2015 at 6:52 pm Leave a comment

If you’re a content creator looking for a site to sell your products on, you’ll quickly see that some sites seem to offer better deals if you list your product exclusively with them. You might be tempted by a 10% to 15% increase in commission if you sell exclusively, or conversely, a 10% to 15% reduction in commission if you list your product as non-exclusive. Obviously getting a larger commission and making more money should be your goal whenever you sell products, but is it really a good idea to sell exclusively at one site only?

I understand that not everyone sells exclusively with a site to make more money and that a lot of people do it for the “prestige” of saying they’re an exclusive merchant with site “R” or “D” or whatever. There’s nothing wrong with this, since people sell their products for all kinds of reasons. If you’re more concerned with “prestige” then you may not even be concerned about what kind of commission you’re offered.

For starters, you’re putting all your eggs in one basket. Sure, the site might give you a good deal right now to sign you up, but what happens down the road, when your product is buried under all the other products on their site?
And what happens when your product is moved into a clearance or warehouse section and the price is dropped because it’s not selling?

Note: I’m not saying your product isn’t selling because there’s anything wrong with it, but selling on big sites means you’re competing with numerous other merchants as well as top sellers, who may get a lot more promotion than you.

So now you have a product that isn’t selling and not making you any money, but you’re locked into an exclusive agreement with the marketplace site. Now what?
Will the site let you out of the agreement? Do you have to wait 90 days or 6 months after you uploaded the product? Or does your product have to stay exclusive forever… Or until the website finds it’s not making them any money either, so they delete it?

Of course, now that the site has deleted your product, you can upload it to other sites. Unfortunately by now, the market for your product has probably died down. After all, you probably agreed to the exclusive arrangement knowing the website would bring you a lot of customers and sales… which it did, until it didn’t.
But now you’re stuck and don’t have any other revenue streams coming in from other marketplace websites.

Here’s an example of my own: I uploaded one of my products to a big site and put it in their “buyer’s club”. The product was given a discounted price and it sold amazingly well: 100 copies in the first week, 85 in the second week, and about that level for the rest of the month.
Sales slowed down the second month, and by the third month, sales were down to about 1 a week.
However, again, because this is an exclusive product, I’m getting no other income from other sites. Could I renegotiate out of the exclusive agreement and take my product out of the “buyer’s club”? Probably. But would I risk other issues in the future because I asked them to remove my product?

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Entry filed under: Digital Goods, Vendor Advice. Tags: , , , , , , , .

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