Over the past year, we have seen more businesses make the digital switch and take services online than ever before. For many, an ecommerce offering was a means for survival during an incredibly volatile and unpredictable time. While for others, an online focus has been slowly developing for some time now as the digital revolution becomes increasingly undeniable.
One of the many reasons for the shift is online retail’s ability to offer businesses a number of opportunities, particularly with the way they can get their products in front of customers. For instance, a business can have its own ecommerce channel, be using an omnichannel approach, or selling its products via marketplaces.
It is the latter that are dominating the digital sphere at present. In fact, in 2019, $1.97 trillion was spent on the top 100 marketplaces, globally. Included on this list are the likes of Amazon, eBay and Alibaba – all household names, no matter where you are in the world.
These platforms offer businesses various benefits, which have afforded them their prominent status. Of these, the biggest is their offering of easy access to a substantial pool of customers, who are also increasingly turning to marketplaces due to their convenient, one-stop-shop solution.
As well as this, as platforms are owned and managed by larger corporations, there is little technical or administrative burden on the merchant company when it comes to software upgrades and system integration, for example.
So, with a growing customer base and ease of use clear advantages, it makes sense why more and more businesses are turning to the sales channel, especially those new to digital commerce practices. But is it all as straightforward as it sounds?
Well, not quite. According to Nate Burke, CEO of Diginius, a software solutions partner for ecommerce and digital businesses across industries, marketplaces have their challenges too. And for businesses utilising these sales channels for the first time, or for those struggling to make them work to their advantage, it is likely they are making one, or some of these common mistakes…
Choosing the right platforms
Today, there are countless online marketplaces to choose from, all offering their own unique benefits. It is likely you have heard of some of the biggest, including Amazon, eBay and Alibaba, but there are also many smaller ones which can be just as effective at generating revenue for your business.
Generally, businesses tend to flock to the more well known platforms when setting up shop on an online marketplace. And understandably so, as these platforms attract the largest number of users, thus putting your brand in front of more customers. They also tend to be perceived as more trustworthy, which can then reflect positively on your brand.
However, as more and more businesses take this viewpoint, it is to be expected that the competition on such marketplaces is also on the rise. Therefore, businesses need to take a strategic and informed approach when deciding which marketplaces to use. And this decision should be based on which is frequented by or accessible to your target audience.
For instance, if your target demographic is categorised by geographic location, you may want to consider using platforms that attract the largest audience in those specific countries, such as Alibaba across Asia, and Amazon and Wal-Mart in the US. In Europe, Zalando is the marketplace of choice for fashion.
But with advancements in technology and changing consumer habits, these traditional online marketplaces are no longer the only way to sell, with social media platforms now also getting in on the action.
Notably, Facebook’s investment into developing its Marketplace feature, and now, a Shopping page on Instagram, are changing the way both businesses and consumers interact and make or enable purchases.
So, similarly, the age of your target customer base can also help you determine the right platform, with usage and uptake of such channels more common among the 18 – 34 age demographic, and more precisely, females within this group.
Marketplace management
Although retailers do not necessarily have to manage the technical aspects of a third party marketplace, which is a real selling point for companies with small teams or strained resources, they do have to consider order management and stock list updating, on top of their management of any other channels they are using.
Often, businesses underestimate the amount of work this can involve. But when you consider the reason for using a marketplace in the first instance – to reach the larger pool of customers and maximise sales – the additional workload makes perfect sense.
Whether you are considering using a marketplace, creating your own marketplace, or are having difficulty managing existing activity, don’t let this deter you, because fortunately, there are a number of software solutions that can help.
For example, many of the biggest brands in the world use just one platform, which provides a single comprehensive commerce solution, including marketplace management. It combines activity across every sales and logistics channel, enabling greater efficiency for the business and a unified experience for customers.
For a brand that wants to access global marketplaces, ChannelAdvisor is often used to aggregate data feeds and order management across all marketplace sales channels.
Through use of such platforms then, the management aspect of having multiple order and revenue streams becomes much more streamlined. This will allow businesses to focus on other commercially critical areas, or, scale up their online offerings in order to target the optimal amount of customers in all of their markets, and via the most suitable channels in each.
Furthermore, these platforms offer valuable data capture and analysis opportunities, which also come at no real additional price to the company. With all information held centrally, businesses can get rich insight into the effectiveness of their activity, as well as confirmation of whether their decisions on things such as platform choice for example, have in fact, been successful. If not, the data and insight available could offer a suitable alternative, or at least areas of improvement, enabling the entire process to come full circle.
Ultimately, marketplace success is not too difficult to achieve once you have the right knowledge and tools under your belt. And with clear benefits of the sales channel, and a strong indication that they will be here to stay for some time, there is only a case for businesses to invest in such tools in order to yield fruitful online results.