We’ve all seen, and probably even used, third party websites to get our goods and services. But what does it mean when we choose to use these third party websites, and how does it affect businesses? Let’s break it down.
What Third Party Websites Offer Small Businesses
On the surface, companies like UberEats and Groupon seem like they are beneficial to small businesses. These third party websites can often act as a secondary form of marketing, by showing your business to a wider audience than you’re currently reaching.
It’s true, third party websites can attract a new audience that might never have considered your business before. In theory, opening up your business to a new market will drive more business to you and help you grow your business further.
Why Using Third Party Websites Hurts Small Businesses
So what’s the problem? The issue lies in the logistics. Websites like Groupon work by offering your goods and services at heavy discounts. By discounting their services, businesses are not able to properly cover the cost of providing those services while also being able to pay their employees’ wages.
On top of the heavy discount, these third party websites charge a hefty fee to use their services. Groupon, for example, takes 50% of each sale you make using their services. To break down the impact these fees have on businesses, let’s do a little bit of simple math.
Let’s say a business offers a service for $30 on Groupon. Normally, they might charge $60 for the same service, so the business is already seeing a 50% loss when customers purchase the service through Groupon. Next, Groupon takes 50% of the $30 that the customer pays, so the business only receives $15 for a service that they would normally charge $60 for. The business has now seen a loss of 75% for the service if the customer is buying their services through a third party.
How You Can Help
So now what? Now that you know how using these third party websites is impacting businesses, how can you make a positive change to help your favourite local businesses?
The solution is simple: buy your goods and services from the businesses directly! By supporting businesses directly, the business makes 100% of the profit for their services.
On a budget? Look into the sales and promotions your favourite businesses are offering. Often, businesses will offer their own sales that are on par with the ones offered by third party websites.
Support Local: In Conclusion
Third party websites can be a great way to introduce you to new businesses, they come with downsides. Now that you know how these third party websites can negatively impact small businesses, you can make an informed decision on how you spend your money going forward.
