What are e-concessions?
E-concessions are the online evolution of concessions, a business model of which brands sell through a retailer while retaining more control over pricing, marketing, product catalog, designing a section of the brick-and-mortar store, and hiring associates. Brands favor this model as they have more control than with traditional wholesale. How has this been adopted for eCommerce? Beyond weighing in on the eCommerce storefront, photography, and copy, brands are responsible for fulfilling and shipping online orders. With both concessions and e-concessions, brands keep a majority of each sale while paying out a small commission to the retailer.
Brands also favor the amount of control they have over their product listings. In traditional marketplace models much of that control is sacrificed and the marketplace platform has the final say on how items are listed. However, as retailers open their own marketplaces, this shifts the definitions and how we should view the term “marketplace.”
Prior to the Covid-19 pandemic, a brick-and-mortar retailer (and their affiliated eCommerce site) had much of the power to dictate quantity, pricing, and visual display of a brand’s inventory. In the luxury space the concessions model was catching on, especially in Europe and Asia. Today, with the effects of Covid-19, brands traditionally have greater control of business relationships because retailers are seeking innovative ways to drive an increase in foot traffic. With an emphasis on innovative partnerships, concessions, and therefore e-concessions, are gaining traction outside of the luxury vertical. Through expanded partnerships supported by a commissions-based model, retailers are becoming their own marketplace and effectively competing with traditional marketplace platforms, like Amazon and eBay. In this sense, the lines between marketplaces and e-concessions are becoming blurred.
Benefits for Brands
- New sales avenue
- More control of D2C business
Benefits for Retailers
- No inventory risks
- Expanded assortment + increased revenue
- Attract new audience
- Faster launch
Earlier in 2021, Nordstrom stated “It plans to grow its partner and shared revenue streams from 5% of the business to 30%, and concessions will be the primary method of doing so.” So, how can brands take advantage of the growth retailers are seeking? It is worth noting that e-concessions are very similar to a drop ship model: a retailer displays a brand partner’s selected inventory, and the brand partner then fulfills, and ships orders directly to the customer. However, while an e-concessions model is very clear that the brand holds the control over merchandising, drop shipping relationships can vary across each retailer and brand agreement.
Logicbroker offers brands and retailers the opportunity to participate in both models. Key considerations for drop shipping and e-concessions are as follows:
|||Drop Ship||E-Concession Marketplace|
|Vendor / Seller Agreements||Agreement Management optional through Logicbroker||Agreement Management including Terms & Conditions required through Logicbroker portal|
|Product Feeds||Retailer to use Logicbroker’s API or SFTP to access brand’s CSV-formatted, compliant product feed||Retailer to use Logicbroker’s API to directly populate PIM or Website Presentation Layer|
|Workflow, Visibility, Reporting||Dedicated path (pipe) to monitor drop ship vendor activity, separate reporting, invoice flow and reconciliation||Dedicated path (pipe) to monitor and keep separate e-concession marketplace seller activity and reporting|
|Packing Slip||Brands or vendors ship merchandise with retailer-branded packing slip||Brands or sellers ship merchandise with their own packing slips – no validation is performed or required|
|Vendor Communication Options||Logicbroker Portal, API, AS2, SFTP/FTP, VAN||Logicbroker Portal, API|
|Vendor / Seller Onboarding Process||Testing required to ensure retailer’s brand requirements are validated and compliant per vendor||No brand / seller testing performed*|
Logicbroker has built a strong network of both eCommerce retailers and brands across multiple verticals including luxury, baby care, health and wellness, wine and spirits, apparel, and grocery, to name a few. Through our Connected Commerce Network®, our in-house merchandising team can help facilitate introductions to help retailers expand their assortment with the right brand partners. Interested in learning more? Contact us today.