How does partner sales, or a marketplace, work and what benefits will it bring you?

Sales through Partners, or Marketplace

Partner sales is a business model where a manufacturer offers its goods through a partner, usually a large and established online store. The partner acts as a distributor and includes products from various suppliers in their offering. They charge a margin for facilitating the sale.

Partner sales are often referred to as a marketplace. A large online store functions as a virtual marketplace where small manufacturers and traders offer their products.

B2B2C Business Model

Sales through a partner combine B2B and B2C business models, and are sometimes referred to as B2B2C (business-to-business-to-customer):

• the seller wants to acquire new customers by utilizing the already established customer network of the intermediary,
• the intermediary connects the seller with the customer and earns a commission from the sales,
• The customer has access to more products and relies on the trusted seller.
  
  

Large online stores like Amazon.com or Czech sites Alza.cz and Mall.cz are commonly cited as examples of partner sales. They operate as online marketplaces where various sellers offer their products. Similarly, sellers can also sell their goods in physical stores of a partner or through a distributor.

Advantages of Partner Sales

Partner sales offer benefits to the seller. Thanks to the intermediary:

• the seller benefits from the trust and stable background of a large, established retailer,
• the seller doesn’t have to worry about managing the online store or customer service, as the retailer handles order processing, customer communication, and complaints,
• the seller can more easily reach customers who would not normally come across their products.
• the seller’s products are promoted through the retailer’s established channels.
• the seller also promotes their brand, as products are typically marked as partner sales with a link to the supplier on the e-shop.
  
  

Other parties involved in partner sales also benefit. The retailer doesn’t have to handle product storage or logistics, as the supplier manages the delivery based on contractual terms. The intermediary offers a diverse range of products to customers and builds trust with clients by selecting quality products from suppliers.

The customer benefits from the established e-shop they trust. They can easily access a wide range of products in one place, compare, and choose from various options.

Things to Watch Out for in Partner Sales

Sales through partners also come with potential disadvantages that need to be considered in advance. These include:

• commissions from sales, usually between 15% and 40% (depending on the agreement with the online store), and any additional fees for offering products as per the contract,
• meeting the conditions for inclusion in the offering and for subsequent cooperation – for example, delivering products to customers within the specified time frame,
• invoice payment terms, usually within 30 days of the sale, so the manufacturer will receive payment later than if they were selling directly and must account for this in their cash flow.
  
  

The manufacturer's sales representative should also anticipate potential increases in demand, which means increasing stock levels, the number of employees, or expanding production.

For partner sales to be profitable, the seller must set a sufficiently high price for the products to cover the commission for the intermediary, but not too high to deter customers.

Partner sales can serve as a supplement to the seller's own e-shop or store. Alternatively, if the manufacturer wants to scale up sales significantly and can afford to pay high distribution commissions to deliver goods to customers.

Example: Partner Sales at Alza

Alza is the largest e-commerce site in the Czech Republic offering partner sales – its platform for this is called Alza Trade. The beginning of the collaboration works as follows:

New suppliers register online for the Alza Trade service. The requirement for registration is that the supplier must be a VAT payer registered in the Czech Republic. Then, they connect to Alza through supported platforms (such as Shoptet or Helios) or via API.

The supplier fills in all the necessary settings on Alza Trade, from stock management and shipping to document exchange methods. After Alza approves the settings, the supplier uploads their products to the platform using listing sheets. Once approved, Alza publishes the products on the e-shop, and customers can purchase them.

The e-shop supports sales through personalized performance marketing, and by agreement, banner advertising spaces can also be used. Alza charges a sales margin, which varies depending on the category of the product being sold.

As a large Czech e-shop, Alza has this process highly digitized. If you are interested in partner sales with smaller e-shops or chains, the start of the collaboration will be more administratively demanding.

Define how you approach potential partner sellers in your business process. You can learn more about setting this up in the SalesDriver hub for business managers.