It’s the accepted norm that retailers internationalise and target new territories overseas and increasingly retailers are turning to marketplaces to do so. Chris Dawson, Editor, Tamebay investigates the issues.
Marketplaces are reshaping ecommerce around the world. Here in the UK some 22 million (about a third of the UK population) visit eBay.co.uk monthly. Retailers have largely already accepted that they need to be present on whichever platform their customers choose to buy and marketplaces have transformed from their online auction flea market image of 20 years ago to become destinations for fixed price, high volume, new products embraced by swathes of high street retailers.
UK retailers will think first of Amazon and eBay as the de facto marketplace in the UK. European retailers will naturally have a broader perspective – in France, for instance, 8 marketplaces rank amongst the Top 15 ecommerce sites. Cdiscount, Fnac, La Redoute, Rue du Commerce, Pixmaina and PriceMinister rival eBay and Amazon. Similarly, when looking further afield Alibaba and Tmall dominate China, in Japan it’s Rakuten, Yandex in Russia, Allegro in Poland, Flipkart & Myntra in India… Outside of Europe and the USA, Amazon and eBay aren’t the dominate players.
The sheer number of marketplaces a retailer would need to integrate around the globe begs the question “Wouldn’t it be simpler to have my own localised website?”. In many ways, this would be simpler but the costs are significant with no guarantee of success. What marketplaces bring is consumer traffic and the ability to test the waters in a new territory with a significantly lower cost of entry.
Where a marketplace can provide significant assistance to a retailer expanding into a new territory is broad brand exposure. Whilst a brand may be well known in its home country, it may not be actively searched for by consumers in other territories. Marketplaces not only expose brands through general search, but in many cases, may heavily promote them through home page exposure, deals programs, email and social marketing, and in some cases portals specifically for British goods.
One of the key advantages derived from marketplaces is new customer acquisition. Your existing consumer is likely to search for a brand or retailer name. On a marketplace consumers will routinely make much more generic searches (e.g. for ‘15” Windows 10 laptop’ rather than for a ‘Lenovo G50 laptop’. However, having searched for a generic term, consumers still love brands and will be drawn to the names they already know.
This brings us to the question of brand protection which is worth considering. On a marketplace, consumers who see your brand are unlikely to consider who the retailer is. In all likelihood, your brands are already being sold on marketplaces – either surplus stock or end of lines, in some cases simply by traders sourcing and reselling your product, and dealing in grey market imports. The best way to protect your brand is to be present on the marketplace yourself and this applies just as much to overseas marketplaces as it does to domestic sites. Online traders specialise in spotting a gap in the market and country boundaries are no barrier online. Many marketplaces will differentiate between a general seller and a brand owner by displaying the brand logo and providing a store which can many times be skinned to reflect your brand’s own website. Marketplaces may also give the ability to control other sellers and give precedence to products sold by the brand owner (for example the Amazon Brand Registry).
Retailers in the UK and EU are familiar with paid search on the likes of Google, Bing and Yahoo! However, even in the West, 55% of consumers now start their search on Amazon and it’s a similar story in China where Alibaba rules or Yandex in Russia. Marketplaces are no longer simply retail venues, they are rapidly evolving into the shopping search engine of choice. Even when consumers do use general search engines or shopping comparison sites they may still find the product listing on a marketplace.
When developing an international marketplace strategy there are many things to consider, not least is the potential size of the market. China is an obvious choice, but the high cost of entry with Alibaba’s Tmall is often a disincentive. Alternative players may not have the scale of Alibaba, but some such as Azoya offer a fully managed China solution to assist global retailers, brands and wholesalers expand their businesses to China online and offline. Azoya offers the facility for retailers to ship parcels to their local warehouse in your country and then they handle the forwarding to China and to the consumer.
After China, India is the most populous country, but trading here is difficult due to local import requirements, cash on delivery being a popular payment method and the legal requirement to have a local partner. Like China, the potential rewards of setting up in India dwarf online sales in the UK. Amazon is building a presence in India, whilst eBay recently chose to partner with Flipkart which will likely acquire eBay.in customers. For Fashion retailers, Myntra, part of Flipkart, should be a consideration. Myntra is actively recruiting sellers in the UK, and acknowledging the difficulty of starting to trade in India, will work with retailers with various options such as a buy and sell model or a marketplace model working with a third party who will facilitate the logistics part of the business.
Japan is another territory with challenges to start trading, but with the Rakuten Ichiba marketplace handling about a quarter of all online transactions in Japan, it is an obvious partner to launch with. Rakuten has a cross-border program where it brings retailers from around the world onto the marketplace and today is actively recruiting brands and retailers from the UK. Most retailers from outside of Japan are doing cross-border logistics; there is no need to set up a Japanese entity to trade on Rakuten since the company has third parties who can provide business entities on behalf of UK retailers. However, due to the high level of customer service that Japanese customers demand, it’s likely most retailers will want to partner with a third party to handle communications on their behalf and long term, having proven the market, it’s likely a UK retailer will want to establish a Japanese entity in their own right.
It may seem simpler to sell to European countries since they are so close to the UK but comparing the size of European ecommerce to China, India and Japan, the rewards are significantly higher for those retailers that succeed. Europe, although smaller, shouldn’t be ignored. There are 50 companies who together offer more than 220 marketplaces within Europe and whilst having established a presence on Amazon or eBay it’s easy to switch on new EU territories, to integrate with all 220 marketplaces would be a huge technological undertaking. This is where partnering with one of the many multichannel service providers becomes essential as a single integration with your chosen provider can give access to multiple marketplaces across Europe and around the world.
eBay - With 167 million active users, eBay is one of the best-known marketplaces in the world. The big advantage of eBay is that once registered on your domestic country site, you can then sell on all other eBay marketplaces around the world.
Operates in: Australia; Austria; Belgium; Canada; China; France; Germany; Hong Kong; India; Ireland; Italy; Japan; Korea; Malaysia; Netherlands; Philippines; Poland; Singapore; Spain; Sweden; Switzerland; Taiwan; Thailand; Turkey; United States; Vietnam.
Amazon - Amazon has 310 million active customers and its cross-border strategy is unified accounts for the five EU countries (UK/DE/FR/IT/ES) and another unified account for the Americas (US/CA/MX).
Operates in: Australia; Brazil; Canada; China; France; Germany; India; Ireland; Italy; Japan; Mexico; Netherlands; Spain; United Kingdom; United States.
Cdiscount - Cdiscount is a French retailer which has opened a marketplace, now with some 7.7 million active users.
Operates in: France.
Fnac - Fnac is one of France’s leading high-street retailers, specialising in audio, books, CDs, DVDs, games, photography and ticket sales. Fnac’s marketplace sees over 10 million unique visitors per month.
Operates in: France; Belgium; Portugal; Spain.
La Redoute - La Redoute is present in 26 countries, has more than 11 million active buyers and with over 9.2 million unique visitors per month is France’s most popular fashion and home website. In 2010 it added a marketplace to its French site.
Operates in: France.
Rue du Commerce - Recently acquired by Carrefour, Rue du commerce sees 6 to 8 million unique visitors each month and focuses on IT, electronics, home appliances, image and sound, gardening, fashion, culture and leisure. In 2014, it rebuilt its marketplace offering with the Mirakl solution.
Operates in: France.
Pixmania - Pixmania was founded in France in 2000 and known mainly as a consumer electronics marketplace. It is now live in 14 European countries.
Operates in: Belgium; Denmark; Finland; France; Germany; Italy; Ireland; Netherlands; Norway; Poland; Portugal; Spain; Sweden; United Kingdom.
PriceMinister - Part of the Rakuten group, one in four French online shoppers is already a member of PriceMinister which sees 22 million registered members and over 10 million unique visitors per month. PriceMinister is now home to more than 4,000 merchants, including well-known brands such as Zara, Sony, Pampers, Levi’s, Chicco, and many others.
Operates in: France.
Alibaba and Tmall - Tmall is a platform where local and international businesses can sell well-known high street and brand name goods to consumers in mainland China, Hong Kong, Macau and Taiwan. Tmall currently has 400 million active buyers and over 100 million daily unique visitors.
Operates in: China.
Rakuten - Rakuten is the largest ecommerce platform in Japan attracting a quarter of all online sales in the country. Rakuten has almost 115 million registered users and 45,500 merchants trading on it marketplace.
Operates in: Japan.
Yandex - Yandex is a search engine with 53 million monthly users and 20 million unique daily viewers giving a 58% share of the Russian search market. Yandex.market with 20,000 merchants attracts 22 million visitors a month.
Operates in: Russia.
Allegro - Allegro has captured nearly 60% of local online shopping in Poland with 12 million registered users, more than 290,000 buyers and nearly 900,000 products purchased daily.
Operates in: Poland.
Flipkart & Myntra - Flipkart has over 28 million users and features over 10,000 brands, offered by 25,000 merchants. Although Flipkart’s initial offering was focused on consumer electronics, the company’s presence in the fashion category was strengthened in 2014 after acquiring Myntra, a highly successful Indian fashion online retailer.
Operates in: India.
Azoya - Azoya aims to help overseas retailers break into China via cross-border ecommerce. Azoya handles all of the Chinese side of the business including logistics, offering a cost-effective and risk-free approach to break into the China market.
Operates in: China.
In a utopian world a brand would open their own website in each territory they chose to target. In reality, many of the consumers are already shopping on marketplaces so launching there, building a customer base and exposing your brand through a marketplace gives a lower cost of entry to a new country and a partner who can drive traffic to your offers. It’s worth considering how much exposure promoted deals on one of the world’s largest marketplaces can give to your brand compared with the cost of attracting a similar number of views to a localised website.
Ultimately marketplaces offer a route to cross-border expansion with a lot less up front capital expansion allowing a ‘test and try’ approach. Longer term, once a retailer has proven demand in a territory, it’s likely then will want to establish their own website, but realistically they’ll still gain a significant proportion of their sales from their marketplace partner.