With millions of ecommerce sites across the world and online shopping continuing its upward trajectory, the battle to attract, acquire and retain customers has never been fiercer. However, among those millions of sites is a massive reservoir of opportunity just waiting to be tapped.
While it may be relatively easy to set up an online store, today’s era of total commerce has made it incredibly difficult for brands to develop and manage an eCommerce site that can consistently drive sales, achieve high customer return rates, and deliver a profit. For these reasons a growing number of retailers are joining the marketplace revolution.
What to consider when making the move to marketplaces
Adapting to the age of total commerce is by far the most pressing challenge eCommerce brands currently face, forcing these retailers to accelerate their expansion plans by embracing multiple marketplaces and new markets that will take them across geographies and borders.
This year alone, it is estimated that two-thirds of global B2C eCommerce will come from marketplaces. However, success on multiple marketplaces in today’s “always on” world requires agility, a clear strategy to turn opportunities into sustainable, profitable, long-term growth, and strong partnerships.
Moving into marketplace sales isn’t as simple as flipping a switch. There are numerous considerations that brands need to take into account such as selecting the marketplaces that are attractive to your target audience; implementing changes to reach and influence new prospects; determining the best way(s) to profitably activate and promote your brand and offerings; acquiring digitally native resources to manage the complexities of omnichannel eCommerce; reaching margin goals, while outpacing the competition, keeping customers engaged, while not losing control to the marketplace, assessing the cost to expand geographically, and more.
There are other factors of equal importance that brands need to consider. For instance, the brand needs to have a clear understanding of the marketplaces’ back-end processes. This will ensure that the front-end is always up to date and well stocked – from the marketplace to the branded storefront. Additionally, brands selling across multiple marketplaces need to comply with the rules for order processing and product formatting. Also critical, brands need to have in-depth knowledge of the marketplaces’ key operating metrics such as average ticket, conversion rate, number of sellers, number of SKUs, and the fees and/or commissions charged.
While moving to marketplaces provide additional channels to market to sell products and services, brands need the right eCommerce strategy to successfully make this transition.
Overcome challenges to thrive on marketplace platforms
Overcoming marketplace challenges starts with a proven eCommerce strategy that encompasses five vital components – (i) adapting to changing customer demands, (ii) using resources and budget to achieve digital transformation, (iii) building and retaining brand trust, (iv) expanding into international markets, and (v) having the right people and partnerships in place.
Today’s customers can be uncompromising, impatient, and disloyal. It’s up to the brand to not only reach and convert prospects but deliver a seamless and personal experience across the entire customer journey. While cost is a consideration, buyers expect value for money, and this means quality, ease, and speed – right down to fast and simple merchandise returns. To give prospects a reason to choose you over the competition, brands need to elevate their value proposition beyond simply presenting products and prices. Doing this requires an ongoing commitment to not just meet customer expectations but consistently exceed them.
According to eMarketer, 80 per cent of retailers worldwide agree that cross border trade has been profitable or that sellers have increased sales by as much as 1,000 per cent after expanding their marketplace presence. Given these statistics, it stands to reason that 75 per cent of Luzern survey respondents stated that adopting a more global approach to selling is an important shift in their business strategy.
However, selling across borders is not without challenges such as cultural nuances, localised regulations, taxes, currency considerations, and data compliance. Online sites must be localised for language, payment options, and be culturally suited. Back-end localisation is also important to support ‘in-country’ transactions. Local currencies are not only important from a shopper’s perspective, but to provide a truly local experience brands may need to include local processing and a local entity to eliminate foreign transaction fees. Although some brands adopt a last-step conversion solution that enables shoppers to decide payment currency during the checkout process, it can result in higher costs for consumers. Brands need to determine, for each geographical location, the best compromise between customer choice, transaction simplicity, and profitability. To achieve long-term, cross-border eCommerce success, it is recommended to partner with a specialist that has the expertise to take your brand into new geographical locations.
While the eCommerce world is facing the same talent shortage limitations as other sectors, the nearly overnight shift to online sales during the pandemic has had a compounded effect for eCommerce companies large and small. The ability to find experienced eCommerce specialists has many brands still playing catch-up three years later. Some brands are trying to fill the resource gap by hastily implementing technology. However, trying to scale the business with processes that may fail can be a costly mistake.
Even though brands remain in the midst of this ongoing challenge, positives are on the horizon as new generations of digital natives begin to enter the workforce. The skills and knowledge required to deliver the best customer experience, maintain a dynamic brand presence, and ensure efficient back-end processes are many and varied, however brands need to ensure that, at a minimum, resources have marketplace expertise, as well as experience in product launch and pricing strategies, seller onboarding, inventory management, search engine optimisation, upselling and cross-selling, order processing and fulfilment, marketplace management, and customer service, including after sales and returns.
Online retailing is a relentless world with 24/7/365 competition from an innumerable number of brands vying for the attention of your customers. Without the right eCommerce platform and skill sets, even routine tasks can become challenging, time consuming, and profit draining. Building and operating a cross-channel, cross-border eCommerce business requires more than just a platform. To make the most of your brand’s online presence, you need to be selling on the right marketplaces for your brand, handle logistics, fulfilment, and inventory management with precision, expand internationally in the most efficient and profitable way, adhere to international compliance regulations, and ensure customers experience a smooth and seamless purchasing journey.
While marketplaces provide additional channels to market and to sell products and services, achieving 10x growth in this crowded and complex environment requires the right mix of the latest digital skill sets; eCommerce experts that have in-depth knowledge of your market and category, and the responsiveness to drive your strategy forward. To accelerate their marketplace presence and set themselves up for ongoing success, an increasing number of online retailers are onboarding eCommerce partners to help them extend their eCommerce capabilities to attract and convert buyers, boost margins and improve the customer experience.
Orla Power is Marketing Director at Luzern eCommerce