Marketplace strategy in retail
22 November 2016
Having presence online, in what we would consider a saturated market, is one of retail sector’s greatest challenges. Brands need to connect with their customers through various digital channels and platforms. Within this multichannel brand strategy is the marketplace, which is the positioning of products on one or more e-commerce sites, that organize, sell, and process the transactions in exchange for charging a commission on all sales.
There are two types of online marketplaces. First, there are those in charge of managing stock, payments, packaging, and shipping. Or there are those that just show the merchandise or their website, and then when an order comes through on the platform, they notify the vendor. Some of the most important marketplaces are:
Amazon is the world’s largest international e-commerce site, with net sales of $107 billion in 2015. Most of their profits come from the sale of electronics, then followed by apparel and accessories. Due to their global reach, it’s considered to be one of the world’s most valuable brands.
Zalando is Europe’s leading fashion e-commerce site for men, women, and children. Their broad selection includes shoes, clothing, and accessories with free shipping and returns. Working with more than 1,5000 brands, which include the most famous brands, as well as local and own label merchandise. They ship to more than 15 countries across Europe, has their headquarters in Berlin, and their website receives more than 131 million visits a month, with nearly 17.2 million active customers.
ASOS is a global fashion and beauty e-commerce site with more than 50,000 own-label and outside brands for men and women; their offer includes apparel, footwear, accessories, costume jewelry, and beauty products. Their primary markets are the United Kingdom, United States, France, German, Spain, Italy, and Australia. ASOS ships to more than 190 countries from their central distribution center in the UK. With collections specifically geared towards consumers between the ages of 16 and 34, ASOS attracts more than 13.6 million visitors, a total of 12.4 million active customers, with more than a third of them (4.7 million) are in the UK. Asos’s platform is the online fashion platform with the best conversion rates.
The SurfStitch Group
The SurfStitch is the leading e-commerce platform for extreme sports. The group’s international presence comes from different online stores: Surfdome in Europe, Swell in the United States, and SurfStitch in Australia. Boasting more than 6 million unique users, it presents an ecosystem that’s capable of capturing and influencing in all points of the extreme sports’ lifecycle. They have more than 50,000 distributed products across 600 brands.
The Marketplace’s Advantages
A Marketplace strategy can provide significant benefits for brands:
Increased visibility than translates into sales
The opportunity to gain visibility additional e-commerce sales channel for the short, medium, and long term. 45% of all e-commerce shoppers start looking for products on Amazon. Besides that, Amazon receives more than 100 million unique visits a month. This means that if you’re on Amazon, it translates into an enormous increase in visibility for your brand. In this sense, Amazon guarantees an average increase in sales of 50% for vendors who join Amazon Marketplace.
The Marketplace allows brands to overcome barriers to entry into unknown markets by taking advantage of the platform’s research and positioning their products in international markets.
Trustworthy Payment Methods
Four out of eight shoppers that abandon checkout when it’s time to enter the payment method do so because of the platform’s payment solutions. This is a big problem for brands, especially for those looking to expand into new markets because every country’s consumers have their preference for how they would like to pay. Marketplaces, since they operate in several countries, have more than one payment method available. Payments on traditional e-commerce sites, are probably one possible using a credit card, while on Zalando, there are more than five available payment methods like Apple Pay, prepaid cards, PayPal, PayPal Express, and payment on arrival.
Transparent and secure shipping
Offering shipping that’s free to the customer isn’t the only requirement (56% of shoppers abandon their purchases due to shipping costs). Brands also need to make sure that their products get to their customers as quickly as possible and in perfect condition.
A Marketplace like ASOS has six shipping options, besides offering free returns.
Consumers can discover items through a Marketplace. Visitors to Amazon don’t look for the store, but instead, they search for products and categories. If your items don’t show up within a search category, the shopper can purchase the item from a competitor.
By displaying your products in a Marketplace alongside your competitors, you’ll generate opportunity and repeated purchases for your business.
The variety and “all-in-one” angle create an excellent purchasing experience for most consumers. Besides that, Marketplaces have a fantastic customer service arm due to their ample resources. Surfdome can answer customer queries in an average time of fewer than 10 minutes.
Marketplace Selection Criteria
Which Marketplace should I join? After going through all the advantages mentioned above, the most tempting answer would: join them all. But every online marketplace has its proprietary systems, processes, and limitations. There are many things you should consider when you’re choosing one. The first is to think about the online marketplace that best adapts to the products you want to sell. These are the main selection criteria you should consider as you make your choice:
Positioning – SEO
If your sales objective follows an SEO strategy, a Marketplace with good product references will give you the visibility you’re looking for. We all know how important it is to be at the top of Google searches for your product line, so choosing a marketplace well-positioned in your product category is crucial for achieving higher conversion rates.
The best way to figure out if your Marketplace niche is adequate for your product type is to run a Google search to analyze which Marketplace is best positioned in your category.
This selection criterion is based on the brand image, or types of products with I’d like to be related with. For example, if you have a sneaker brand, it wouldn’t be optimal to display your products on a marketplace that only sells running shoes.
Being on a Marketplace is not free. There tends to be a monthly subscription to host your products plus a commission on every product sold that is in the 9-20% range. This variable cost depends on the marketplace and the volume of sales.
Good Rebels recommends marketplaces to any brand as a platform to create a The traditional online retail store model, brands manage the entire purchasing process; from web optimization to improve conversions, to the shipping and tracking of the product, passing through stock management, packaging, and payment platforms. This translates into greater demand for working capital and efficient inventory management. Besides that, it requires adequate demand projections, a knowledge of logistics and the supply chain, which could result in high operating costs.