If you’ve been in the retail game for more than a decade, you’ve already lived through a lot of change. Now the rise of the online marketplace has changed the environment again. Marketplaces can significantly boost your reach, but there’s a whole new set of rules to play by and marketplace-specific conditions to meet if you want to get it right.
Customers are flocking to marketplaces
The consumer advantages are straightforward: choice, choice and more choice. Marketplaces allow buyers to easily compare items from multiple sellers, with the added advantage of getting access to extensive ratings and reviews from other purchasers. They take the perceived risks out of online purchasing — payments are secure, returns and exchanges are straightforward, and there is comfort in knowing that others have had a good (or bad) experience
Because we’ve been hearing about eBay since 1995, you could be forgiven for thinking that online marketplaces are a slow growth sector. In truth, it is developing at an incredible rate and these websites already account for 40 per cent of the overall e-commerce market. Research company Forrester predicts the online marketplace will account for 66 per cent of business-to-consumer online retail spend by 2022.
More so, according to eBay’s website, 80 of Australia’s top 100 retailers sell via dedicated eBay stores. Big names like Target, Myer, Lorna Jane, The Good Guys, Officeworks and Dan Murphy’s all sell via eBay in addition to their own ecommerce sites and bricks and mortar stores.
Do your research
All marketplaces are not created equal. First up, marketplaces are generally categorised as either horizontal or vertical:
- Horizontal markets — like eBay, Amazon or Catch — offer a huge variety of goods across many product categories.
- Verticals specialise in a narrower product range or category and include sites like The Iconic for fashion or AutoTrader.com.au for cars.
It’s suggested the distinction between the two will eventually disappear as mergers and buyouts claim smaller marketplaces. Horizontal markets offer a broader reach, but you’ll need to determine the user demographics for each potential avenue. Chances are, you’ve got a pretty good handle on who your customer is and what they look for, so ensure that the sites you are considering are relevant to each specific target group.
There are notable differences between online marketplace options and they each have a specific set of conditions that sellers must meet. Fees and commission structures will vary as well. Significantly, some sites own the customer relationship (Amazon), whereas some are just facilitating the transaction for a fee (eBay).
Once you’re listed
Getting up and running is one thing but being easily found and building a loyal customer base is another.
Ratings are everything on eBay and you’ll have a better chance of success if you appear in Amazon’s “Buy Box”, which prioritises products based on data such as sales velocity, conversion rates and history, as well as keyword optimisation throughout product listings.
While each channel will probably require a different strategy, basics like competitive pricing and being able to fulfil orders will carry equally well across all.
If you’re thinking of listing on a marketplace, in addition to your own webstore and bricks and mortar channels, consider implementing a retail and wholesale management platform suited to an omnichannel environment. A solution that incorporates eCommerce, point of sale, inventory and fulfilment simplifies day to day operations, manages marketplace listings and lets you get on with growing your business.
Ryan Murtagh, CEO, Neto