Third-Party Aggregators: Friend or Foe?

Third-Party Aggregators: Friend or Foe?

Let’s dive into the world of third-party aggregators – you know, those sneaky helpers that you might have bumped into already. One of the biggest examples in the food delivery game are UberEats, DoorDash, and Grubhub, taking up 24%, 59%, and 13% of the U.S. market respectively.

Aggregators are basically your shopping buddies. Retailers can use these platforms – for example, Flipp and RetailMeNot – to display their products on a digital platform for eager customers to choose and shop. In some cases, this makes the shopping experience more efficient for your customers. They scroll, they compare, and they buy – easy peasy.

But here’s the catch: While you may be using a fancy platform to showcase your newest items, third-party aggregators come with their own challenges to navigate. How do you stand out in a digital crowd? Are you giving up too much control over your brand and how customers interact with you?

Is it time to say goodbye to third-party aggregators?

When deciding if you should use it or ditch it, here are 4 common challenges to consider:

1. Increased competition.

Third-party marketplaces will often host numerous retailers like yours that sell a similar range of products, and you’ll be categorized similarly for customers to easily search for and shop. This can lead to intense competition with other brands that you otherwise wouldn’t be placed side by side. This can also become more challenging for individual retailers to stand out and attract new customers in an increasingly crowded environment.

2. Lack of shopper data and visibility.

By choosing a third-party platform, they will be the first point of contact with your customer, giving them access to valuable customer data that may not always be fully shared back with you. You simply can’t gather the all-important data that you need because aggregators will be using it to grow their own brand instead of yours. This lack of data access and visibility can and will severely hinder your ability to understand your customers, make data-driven decisions, and drive further brand loyalty efforts.

Interested in learning more about the value of data for retailers? We dove into this topic in our last blog.

3. Lack of personalization and control.

Although third-party platforms may provide location-based or seasonal deals to customers, they don’t go one step further to offer personalized promotions and deals based on your shoppers’ preferences and past history. Is it back-to-school season? Are your customers shopping for specific occasions? Aggregators will not be able to predict this behavior and tailor their offerings, hence limiting the brand equity that you can build with each purchase.

On top of that, miscommunications that inevitably happen will, more often than not, be associated with the retail business rather than the platform itself. For example, if orders cannot be shipped to a specific location, or if the customer has a lousy experience with the aggregator’s customer service. If you host your products on your own website and app, you have much more control over the holistic shopping experience, your brand reliability and reputation, and maintaining customer satisfaction over time.

4. Reduced customer retention.

Using these platforms can significantly reduce customer loyalty to retailers because consumers become drawn to the aggregator itself and the offers or ads that are promoted on the platform. Customers will not necessarily make repeat purchases or join any loyalty programs that you offer because they often interact with you minimally.

Long-term viability with an aggregator also isn’t a given. You will be charged significant fees for these services, and there’s no guarantee that this will continue to be profitable for you over time. Take third-party food delivery aggregators, for example, who charge an average of 15-35% in commissions, delivery costs, and sometimes even advertising expenses. Combined with the rising cost of food and labor, restaurants operate with razor-thin margins to remain profitable.

Ultimately, it’s true that third-party aggregators do offer retailers a digital way of advertising their products to a wider audience. However, it certainly comes with a new set of challenges, so retail businesses need to consider building on multiple digital channels to create a viable, long-term marketing strategy.

If you’re interested in learning more, get in touch with us or request a demo

Leave a Reply