Marketplaces are the search engines of ecommerce: they are a convenient, one-stop location for shoppers to find what they are looking for and, generally, offer a great experience.
For merchants they offer a simple way to set up an ecommerce channel, handle delivery and returns, pricing and more.
While there are downsides – which we shall come to – marketplaces are also the ideal platform for initiating ecommerce growth, particularly into new verticals and new geographies.
In the first of a two-parter in out Growth Post-lockdown series, we take a look at how to use marketplaces for growth, from getting started through to refining your offering and looking a new marketplaces and how they can help.
Should you use a marketplace?
The first thing you need to ask yourself is do you actually need to use a marketplace? It all depends what you sell and where you want to sell it.
If you produce or sell bespoke products, or are operating in a market that little or no competition, then marketplaces can be ideal. You get to pretty much set your own price and, while you will lose some revenue in costs, it can be a great way to get your goods out there, especially if you are introducing new lines, or entering new territories and markets.
With products that are more commoditised and you face a lot of competition, then marketplaces have to be treated with more care. The advantages the offer around handling inventory, warehousing, picking and packing, shipping and returns are still stand.
However, competing against other merchants selling the same of similar goods will inevitably lead to a focus on price or fast delivery, which itself is a cost. Either way, margin is impacted.
This when the ‘where you sell’ comes into play. If you are looking to test the water in a new territory, then localised marketplaces are the ideal on-ramp for growth. Even if you are competing against similar products or other merchants, the savings you can make by letting the marketplace handle logistics can make it worthwhile.
The ideal situation is to use marketplaces to build on sales that are starting to come in from other markets. Recent studies show that internationalisation of shopping is in fact one of the drivers of the lockdown boom on online retail. Capitalising on this has always been a key to growth, but now more so than ever.
You may be seeing organic search bringing orders from distant shores: if you think that there is steady enough flow of these then it is worth exploring – and doing that with a marketplace can be the most cost effective way to do that.
All the competition and cost issues apply, but it way well still open up enough of a new market to build on. It opens the door.
Which marketplaces to use
So which marketplaces do you look to grow your sales? The obvious choice is to go with Amazon, or eBay – they offer the greatest reach and are where you are most likely to get sales.
According to research by Website Builder Expert, Amazon is the most far-reaching ecommerce platform on Earth. Of the 174 countries included in the study, Amazon was the most visited online marketplace in 58 — almost exactly a third. In fact, Amazon reaches more than 1.2 billion people worldwide and is present in every continent.
However, if your focus is on international growth or to target a specific territory, they may not be ideal. As our sister website, Tamebay’s latest marketplace guide, shows, there are many other marketplaces, with each country pretty much having its own local marketplace that is the marketplace of choice for shoppers.
As pointed out in a white paper published by Volo, in China Taobao and Lazada – both owned by Chinese marketplace titan Alibaba, which itself reaches more than 1 billion people – dominate East Asia. Alibaba is also a leading investor in Tokopedia, Indonesia’s online marketplace of choice.
South African media group Naspers has managed to dominate most of the old Soviet Union, with its Avito site being the online marketplace of choice for Russia. OLX, meanwhile, comes out on top in most of the other post-Soviet states. It was Naspers who sold Souq to Amazon.
Norwegian media group Schibsted is carving out a market for itself in North Eastern Europe, its subsidiaries topping the ecommerce rankings in Sweden, Norway, Finland, and Belarus, amongst others.
eBay is still going strong and it remains the most visited online marketplace in eight countries, including Australia, and owns another five platforms topping their national market.
In the Netherlands, bol.com has a tight hold on the domestic Dutch market, as well as the Flemish speaking parts of Belgium and to a lesser extent Germany. Germany, itself, meanwhile, is wedded to Amazon.de – Amazon in name, but entirely in German, with German distribution and dominated by German brands.
Looking at the markets you wish to reach will help inform your choice of marketplace and when deciding you need to factor in, again, costs verses benefits of everything you are asking them to do, along with what the competition for what you sell is doing in those markets – both on the marketplace(s) you have chosen and just in the geos that you have choose.
Running a marketplace store
Setting up on a marketplace is relatively straightforward: register and fill in the many online forms and you are away. For a business of any scale, however, there are other challenges.
If you are already running your own website(s) and perhaps even a presence on some marketplaces domestically or overseas, the key thing is managing listings and inventory.
Many retailers come unstuck by not having the right stock in the right place to make the sale through the right platform. Technologies that can integrate the listing on multiple marketplaces, alongside those that can manage inventory in real-time as things are sold on any platform are key.
Managing delivery and logistics is also crucial to running a multi-site, multi-marketplace sales push. Again, this needs technology to aggregate delivery options so that not only can the increasing diverse delivery demands – next-day, curb-side or locker pickup, international and so on – be met, but also you get to maximise the delivery capacity to get efficiency gains from your delivery options.
Making delivery efficient isn’t just a matter of saving money either. Today’s shoppers are ever-more ethically minded and make choices based on the green credentials of the brands and merchants that they buy from. Demonstrating that you can deliver as efficiently as possibly will help drive sales.
Marketplaces should be a cornerstone of any ecommerce growth strategy. They are ideal for targeting new verticals, testing out new products and tapping into growing international demand.
For many they are the first step on these growth paths, but often they are run alongside own-brand websites, as well as selling through other franchise holders.
The key comes in identifying which marketplaces you need to use to achieve your growth goals, as well as how to then manage using those alongside what you are already doing in ecommerce. This is a massive challenge that can be overcome with the right technology partners.
Getting it right can open up a whole new world of sales and, in these days of increasing ecommerce and growing internationalisation, marketplaces are a vital part of the process.
NEXT WEEK: The changing face of marketplaces and what they mean for growth