Two strategies: quick money or a long-term business
After almost three years working as a technology partner with Ozon and several hundred sellers, one pattern stands out. Almost everyone who enters a marketplace wants to make money right now. Very few want to build a business that pays off over time.
People want everything in one month or nothing at all. But product business works by different rules. You can spend months selling at break-even while putting every bit of profit back into your own production or into promoting your product cards. Later, once you have built and tuned all of it, the money you invested starts working for you.
Most sellers do not think in terms of long-term returns. The phrase "long-term strategy" makes them sleepy. In reality, planning profit for the long haul is the most sensible strategy in product business.
That means accepting that for three months, six months or even a year you may simply spend time building critical mass: setting up a small production, growing a brand, forming a base of repeat customers. All of that takes time, money and energy.
Why strategy defines your actions
It also takes a huge amount of focus, and that focus is the whole point. Everything depends on whether you have a strategy and a clear understanding of where you are going. Your daily actions and the thoughts running through your head every minute follow directly from that.
Take the strategy "make money on Ozon right now and recover all costs within a month or two". It implies one set of actions. You will most likely focus on product selection, card design and aggressive promotion through marketplace campaigns. Every dollar you earn you pull out of the business as net profit.
The strategy "build a long-term, sustainable product business" implies completely different actions. You need to understand your competitors, so you give that task maximum attention. You work deeply on product quality and on promotion through both internal marketplace ads and external advertising. Part of your profit goes back into production, into building your brand and company, into aggressive advertising and so on.
These are two different strategies. In my observation, 99 percent of marketplace sellers follow the "grab the cash now" strategy and barely think about what will happen to their business in one, two or three years. The remaining one percent are willing to sacrifice immediate profitability to earn more net profit later. And that one percent is where the largest capital is built.
The details and tools most sellers skip
Business on marketplaces in general, and on Ozon in particular, consists of a huge number of nuances and small details. Together they shape the results of the whole business, meaning its sales.
Take the localization index tool. Many Ozon sellers ignore it because it was introduced fairly recently and they have not had time to learn it. They also assume it is not important.
What do 90 percent of sellers do? They read something somewhere, watch a short video review at best, and think they now know everything about the tool. In reality most tools have their own nuances and tricks that nobody explains publicly.
After that shallow study, people start selling and find that the tool does not work for them, or does not work the way they expected. The same happens with other areas and other tools. I have seen a huge number of such sellers.
A superficial approach no longer works
Some of them could be helped: those open to new knowledge and approaches. Most simply stopped selling on marketplaces and moved into other kinds of business.
The lesson: in product business as it exists today, with growing competition in almost every category, a superficial approach no longer works. Two or three years ago you really could ignore the nuances and sell several million dollars a month without understanding the tools and algorithms. Today, if you want to earn well on marketplaces, you have to go deep into how promotion tools such as cost-per-click and cost-per-order work, and how search algorithms affect their results.
You have to understand how a store's internal metrics influence promotion tools and how all of it connects. Frankly, the algorithms of Ozon and every other marketplace are getting much more complex. The knowledge and actions that worked six or twelve months ago are no longer enough.
Few people want to restructure their approach, and few are ready to put in the effort.
Mistakes and the number of attempts
Every business, whether product, services or anything else, involves hypotheses you test and that fail. In fact, according to my experience and that of the large company owners I have worked with, the vast majority of ideas in business do not work at all.
You come up with 10 ideas to increase sales, and 8 or even 9 of them fail. One or two deliver results and pay back all the effort and money spent. You need to be ready for that in advance.
Keep in mind that what you do this minute, this day, this month, this year may not work. You launch a new product or start advertising, and most of your attempts will be unsuccessful. That is reality.
I will not promise that marketplaces will be easy. They are not. In business, including product business, you have to work, study new tools and grow day by day to earn well.
The worst thing you can do at this stage is blame others for your failures. "I launched ads and they did not work." As a marketer with 11 years of experience, I can tell you this is a problem across the whole market.
The best thing you can do for your future and for your business now is simply to keep making attempts. This ad did not work? Fine, you got results, drew conclusions and relaunched it differently.
The point is that the number of attempts you make to grow and promote your business decides whether you succeed. While one entrepreneur makes a single attempt, fails, gets disappointed and falls into despair, another makes ten attempts in the same time and finds the solution that increases sales. That is what separates those who earn a lot on marketplaces from those who earn little.
The number of attempts. Less informed people believe the secret of business success lies in the size of the starting capital or in mythical connections. It does not.
A success story: Timir
Take the story of my student Timir. He started on Ozon from scratch and in less than ten months reached over $233,000 in sales. That is from a complete zero.
Timir followed my advice step by step and made a lot of mistakes. But every mistake built the experience he needed and ultimately led him to a very good sales volume. I have many such stories, and the point is always the same.
The biggest money on marketplaces is earned by those willing to make mistakes. Make mistakes, learn, make mistakes again, learn again. And so on in a loop until you reach your goals.
Takeaway
The biggest money on marketplaces is earned by those willing to make mistakes, learn and keep making attempts. A long-term strategy and attention to detail matter more than the desire to get everything at once.
What changed since the original recording
One point from the original video has been updated:
- Then: sales volume on Ozon largely depended on the store's localization index. Now: the key logistics metric is the "share of local sales" (Analytics - Sales locality), and it influences ranking more than anything else. The benchmark is at least 80 percent.
