Why ‘Frenemies’ Are Good for Business
Collaborative Commerce: How to leverage your competition to become more successful
By KAYTLAN MITCHELL EVANS | SENIOR EDITOR
When you hear the term “frenemies”, you probably think of a couple of petty teenagers who say things like “I love how that shirt helps hide the weight you gained” or “I think you’re so brave to wear those glasses, considering your face shape.”
But keep in mind the most useful purpose of a frenemy: competition. Frenemies push each other to be better, to outdo the other, and if they didn’t have each other for reference, they would be a little lost.
And this unique concept is not limited to personal relationships, either — businesses can also benefit from making a double-sided connection like this.
The concept of “collaborative commerce” encourages alliances between businesses, be they complementary (e.g., a manufacturer and vendor), or direct competitors. Taking advantage of your rivals, instead of simply combating them, can prove invaluable to your business.
With collaborative commerce, you can establish newfound partnerships to improve the quality of your business and even turn collaboration into an integral part of your business strategy.
By working with partners and even competitors, you can expand your product assortment, scale your business and better understand your customers.
“Get in, loser, we’re going shopping.”
When your e-commerce website graduates into a marketplace, a whole new world of possibilities opens up. Companies such as VTEX are your intel: helping set up your marketplace and make the connections you need to take your store to the next level.
Approaching competitors from a collaborative perspective means you no longer have to view them as a threat; instead, you can now capitalize on their success. A portion of their sales, about 10%-20%, will go straight into your company’s pocket, and you don’t even have to worry about shipping it.
Plus, you’ve now widened your customer base, gained access to loads of valuable data and created a powerful partnership.
“I’m sorry that people are so jealous of me, but I can’t help it that I’m popular.”
Once third-party (3P) vendors start selling on your marketplace, you’re able to enlarge your product offering in ways your customers are looking for. By aligning yourself with similar retailers, your marketplace will be more specialized, rather than Amazon’s vague “a lot of everything” approach.
While consumers will still consult Amazon when browsing at random, your site will attract customers looking for your niche assortment of products. A 2020 survey of e-commerce leaders revealed that 46% of sellers are willing to merge networks with other brands to compete with Amazon.
On average, retailers experience a 34% increase in site traffic after launching a marketplace with no additional marketing expenditures.
Your brand is still front-and-center but is cast as the gracious host for other up-and-coming brands. Almost 65% of consumers are willing to take a chance buying from a merchant they’ve never heard of if it’s on a marketplace.
Consumers have also established a clear demand for these types of marketplaces. Marketplaces can encompass a wide variety of products, give shoppers more options and ultimately save time. Being a one-stop-shop is in.
“That’s why her hair is so big—it’s full of secrets.”
The top online marketplaces sold over $2.67 trillion USD in 2020 alone, and grew over 29% from 2019 to 2020. According to a study conducted by McKinsey, shifting market dynamics and more value-added services are making marketplaces more lucrative.
An advantage to running a marketplace is all the additional consumer data you will reap. Not only will you be receiving a cut of your competitors’ profits, but you will get a better understanding of why they defeat you in certain areas.
Where before you only knew that your listing had a 3% conversion rate, you can now see that 25% of the customers who viewed your listing ended up buying Product X from another seller. What are they doing that you could replicate? Maybe you can beat their price, or enhance the product description.
Marketplaces open the door to a wealth of knowledge that you can use to continually improve, always pushing your business to be the best it can be. There’s a reason that they’re the future of retail!
“The limit does not exist!”
Operating a marketplace provides a level of scalability that is unmatched by any other business model.
You don’t have to concern yourself with supplementing your inventory and hiring more workers to run extra warehouses; instead, focus on solid website development and customer service — for both your customers and your vendors.
According to VTEX, you will begin seeing your growth accelerate not linearly, but exponentially, and you will have none other than your best frenemies to thank.