Discover the biggest growth opportunities across online selling channels, and how to put your products in front of more shoppers with Linnworks Total Commerce Guide to Growth.
It’s not just consumer behaviour that has changed during the pandemic. Ecommerce has evolved too, into a new Effortless Economy. To grow and succeed in this new competitive landscape, retailers need to be available whenever and wherever the customer wants to interact. That means establishing a presence in multiple selling channels and marketplaces as well as maintaining a direct relationship with customers via a retailer’s own website. It also means maximising the potential of social media and new opportunities with B2B commerce.
The phenomenal growth of marketplaces
Nine in ten customers regularly start their search for a product on a marketplace. The primary attractions for shoppers is choice and convenience and any retailer that is not available for consideration is missing out on a potentially huge sales opportunity. Q4 of 2020 alone saw a 24% increase in the value of goods selling on marketplaces and a 46% increase in the intake of new merchants.
A ready-made audience
Marketplaces offer brands a potentially quick route to new domestic and international audiences, allowing retailers to test new markets at reduced risk. But it’s important to select the right marketplace to suit the product and audience. Platforms like Amazon, AliExpress and OnBuy.com offer a global presence, but there are also vertical marketplaces that cater for particular categories, such as ASOS for clothing, Wayfair for furniture or Gusto for food. Retailers should be guided in their choice of marketplace by establishing where best to find their core customer base.
Optimising to maximise sales and profit
Selling on marketplaces is a continuous learning process. Retailers should expect to adjust their pricing and processes, particularly in the first months, to maximise their sales and profits. Success is rarely based solely on price. A track record of delivering on customer expectations, positive reviews and a reputation for prompt and effective service are vital too. Different marketplaces have different services and cost structures to consider. For example, Etsy’s ads program may promote your products for a fee, while Amazon’s ‘Fulfilled by Amazon’ charges to handle storage and shipping logistics. Retailers need to weigh up the pros and cons on each marketplace.
Going direct to own the customer relationship
Marketplaces may offer new audiences and generate large volumes of sales, but retailers do not normally own the customer relationship or the customer data. For that reason, selling to consumers on the retailer’s own websites or app remains a key component of any seller’s channel strategy. A branded website can also boost customer confidence and make the brand more visible to search engines. Many retailers fear that a marketplace presence will cannibalise existing direct to consumer (D2C) sales but, with the right approach, D2C sales and marketplaces sales can be complimentary, with retailers establishing trust on marketplaces and then moving future purchases to their own site.
Selling through social interactions
As well as marketplaces and a retailer’s own site, an effective strategy should also include social media, where brands can reach highly targeted niche audiences around lifestyle and interest. Social commerce was worth $475bn last year and is set to grow 28.4% this year. Linnworks research found 35% of UK consumers have already made a purchase through a social media site. With convenience again paramount, 71% of customers expect to complete their purchase without leaving the social network. Social commerce strategies should also consider the role of influencers and user generated content. Livestream shopping is booming at present and Coresight Research reports it is set to reach $25bn in sales in the US alone by 2023.
In this new era of the Effortless Economy, convenience is the key priority for 76% of online shoppers – a figure that has risen during the pandemic as ever more sales have moved to the digital channel. To thrive in this new environment, retailers must invest in helping shoppers progress frictionlessly from research to purchase, on any channel and device, and delivering on customer expectations quickly and efficiently. With the right combination of data, processes, and expertise, sellers can seize the opportunity for sustained and profitable growth.