Increasing Power of E-Commerce Partnerships

We are living amid a digital commerce boom, where the e-commerce ecosystem is evolving by the hour. From UX/UI designers, and developers to product managers and digital marketing experts, everyone plays a pivotal role in creating personalized digital experiences for users. Revolutionizing the way businesses operate, offering several opportunities to expand, grow, and diversify. How? With collaborative efforts, by forming unique and exclusive partnerships with other leading players in the market.

Partnerships have become critical in driving growth and innovation in our modern business arrangements. Especially in the sprawling e-commerce sector, where collaborations help digital commerce platforms expand their reach, increase their customer base, and enhance their offerings.

Why are partnerships important for e-commerce businesses?

Partnerships are revolutionizing e-commerce businesses providing them with tools to create a thriving marketplace. One which offers convenience and accessibility to the user, as well as businesses alike. The power lies within the diverse opportunities that partnerships bring to the table. Let’s understand why this collective approach in e-commerce setups is gaining importance:

1. Expand reach

A simple answer to why partnerships are important is because of their multiple offering to both brands to expand their reach. Expansion across the user base, new markets, digital marketing efforts, and new sources of revenue.

2. Shared expertise

Partnerships are offering brands access to shared resources like domain-specific expertise. Partnering with another brand brings e-commerce brands access to untapped skills and knowledge, which can help them improve their product performance on digital platforms. It can aid in streamlining supply chain efforts and other logistical operations to stay ahead in the market.

3. Widen product base

Another key reason for partnerships critical tools for e-commerce brands is their ability to widen the brand’s product line. Brands can gain product expertise and knowledge from their partners and collectively sell the new range with shared risks. Driving sales and offering customers a new product range without heavy capital investments.

4. Build trust and credibility

Imagine an e-commerce start-up with an innovative product/ service partnering with a leading global e-commerce giant. This brings credibility to the start-up and a brand’s new innovative product line to the global e-commerce brand’s product mix. Building trust in the users for product authenticity and claims.

5. Access to evolving technology and tools

The rapid technology advancements need constant investment across assets – both human and product-related. Brands can save on these heavy capital investments by partnering with IT firms and start-ups to drive innovation in their business operations and product mix.

For instance:

In 2018, Marriott, a leading hospitality brand, partnered with Amazon to bring Amazon’s Alexa (a voice-activated Smart home device) into their five-star room services. Offering their guests to control the room settings like temperature, and light settings, gain local recommendations, etc.

Here are some of the most prominent types of e-commerce partnerships

1. Strategic Alliances

These are long-term collaborations and partnerships between two brands with a defined scope of work. These partnerships can include joint product design, product launches, marketing efforts, co-branded products, and others.

2. Supplier and Retailer Partnerships

In the e-commerce sector, retailers often form partnerships with suppliers ensuring a steady supply of products. These partnerships involve product order sheets to arrange specific order numbers, shipping arrangements, and at times exclusive distribution or selling rights.

3. Platform Integration

This means a partnership to integrate, say, a payment gateway or a shipping solution on the website. An e-commerce brand partners with other businesses offering them enhanced functionality on the website.

4. Marketplace Partnerships

Smaller e-commerce brands often partner with national and global giants like Flipkart, Amazon, Myntra, eBay, etc to expand their reach. Tapping into the larger brand’s existing base of customers.

5. Technology Partnerships

One of the most prominent partnerships today for e-commerce brands is with technology firms. Aiding them to leverage innovative solutions with software providers, AI start-ups, AR/VR immersive brands, etc. Enhancing the digital capabilities of e-commerce platforms.

Other types of partnerships are Joint Ventures, Subscription Box Partnerships, Cross-promotion, Channel Partnerships, etc.

The Shopify and TikTok Partnership Example

Let’s understand the dominant role of partnerships for e-commerce brands with a leading example of Shopify and TikTok. An e-commerce and social media network partnership to power social commerce for users and merchants.

The social media platform TikTok is known for its organic content discovery that later also included TikTok shopping to integrate social commerce within the platform. In 2021 TikTok and Shopify announced their partnership with Shopify becoming the first commerce platform on TikTok to bring organic product discovery and shopping to TikTok. It helped content creators and brands strengthen their relationships with users.

What was new?

This partnership introduced to the creators and merchants a TikTok for Business setup.

For Shopify

Their merchants can now create a TikTok for Business account and add a shopping tab on their TikTok profiles for users to directly shop from the social media network. Merchants for the first time were able to sync their product catalogues creating a mini storefront on TikTok that has its direct checkout.

The president of Shopify said “Creators are paving the way for a new kind of entrepreneurship where content, community, and commerce are key. By enabling new in-app shopping experiences and product discovery on TikTok for the first time, Shopify is powering the creator economy on one of the fastest-growing social and entertainment platforms in the world.”

For TikTok

The social media giant partnered with Shopify to introduce direct social commerce checkout. Allowing their users to browse, view, and shop within the application. While also offering entrepreneurs a new platform called TikTok shopping- a new way to increase sales with their content.

Blake Chandlee, President, of Global Business Solutions at TikTok mentions “TikTok is uniquely placed at the centre of content and commerce, and these new solutions make it even easier for businesses of all sizes to create engaging content that drives consumers directly to the digital point of purchase.” He adds “Our community has transformed shopping into an experience that’s rooted in discovery, connection, and entertainment, creating unparalleled opportunities for brands to capture consumers’ attention.”

What we can learn and understand from this example is how effective the partnership economy model is for e-commerce brands. Offering them a direct line of revenue and boosting sales with increased visibility.

With a partnership model, e-commerce brands can pool resources during recession periods and global changes to help them narrow costs and make effective use of shared resources. A diverse partnership strategy in the e-commerce sector can drive sales, survive recession phases, increase brand awareness, and improve customer retention for the business.

Looking to dive deeper into the diverse and fast-growing landscape of the e-commerce sector?

Join MBA ESG’s leading programme – MBA in E-commerce, Logistics and Supply Chain Management. This global MBA programme at MBA ESG, India, equips you with tools, skills, and insights into the international e-commerce sector. You’ll be honed as an expert in supplier relations, shipping and logistics management, procurement, network design management, performance metrics and drivers, and more.

Author: Admin