- Third-party sales are becoming an increasingly important facet of the e-commerce business.
- Ivan Ong, owner of KeaBabies, earned $20 million in sales in 2020.
- He shared his experiences selling on platforms, including Amazon, Walmart, Target, and Kroger.
- See more stories on Insider’s business page.
There’s millions of dollars to be made as a third-party seller on online marketplaces run by Amazon, Walmart, and Target.
Just ask Ivan Ong, whose international KeaBabies business offers maternity and baby-care products and generated around $20 million in sales last year. KeaBabies’ products are also featured on third-party marketplaces like Kroger and Macy’s.
The brand, founded by Ong and his wife Jane Neo in Singapore in 2016, additionally utilizes Shopify, wholesaling website Faire, along with plenty of advertisements on Google, Facebook, Instagram, Youtube, to drive sales from its own website. Ong credited the company’s multi-pronged customer acquisition strategy to wanting to be present wherever customers are.
“E-commerce really exploded,” Ong said. “Our business doubled last year because COVID accelerated everything. We’re expanding very aggressively. So this year we are aiming for $30 to $35 million in terms of our annual sales.”
Amazon, where KeaBabies first began selling products in October 2017. is far and away the company’s biggest revenue driving platform. With a full suite of services through Fulfillment by Amazon, offering warehousing and delivery, the e-commerce giant simply has the lowest barriers to entry, Ong said.
In 2020, Amazon saw $386 billion – or 54% of its total net sales – come from third-party sellers. And larger merchants have sold their brands for an average of $5 million in 2021, as equity firms begin consolidating corners of the market. Research firm Finbold also found that the online-retail giant is adding 3,700 new sellers daily in 2021.
Every marketplace has its pros and cons
While Amazon represents KeaBabies most important marketplace, KeaBabies has also sold items on Walmart Marketplace for about two years.
Ong said that though total sales on Walmart make up about 5% of the total business the company pulls in on Amazon, the retailer does offer fewer “headaches” because there are currently less competitors on the site, and less instances of saboteurs using “black-hatting” techniques.
Meanwhile, Target is comparatively “very selective about who they partner with” compared to most sites. That exclusivity is a plus, according to Ong, because it allows brands to grow without a ton of competition.
“There’s a different strategy for Target,” he said. “For us to get in, it was about a year of getting our brand in front of the brand acquisition onboarding team, and then presenting our brand and pitching about why we should be on Target. It has been quite a chase.”
Meanwhile, Kroger proved to be an entirely different story, thanks to the brand’s recent push to expand its baby category that was seeing growth during the pandemic. The Kroger team ended up contacting KeaBabies directly, to onboard them onto their site.
“It was a pretty easy process for Kroger because they are trying to open up to more brands,” Ong said, adding that the company’s onboarding process was easy-to-navigate.
As third-party sales continues to grow, more brands will have to contend with attracting an array of retail partners and developing those relationships. But despite the challenges, Ong said the strategy more than pays off in the end.
“Our customers are modern moms looking to buy affordable but quality stuff for their babies,” he said. “Being on all these platforms lets you really access customers.”