With as many as 40% of online sales likely to be made on a marketplace by 2020, marketplaces are becoming more and more important. It is more cost-effective than ever for retailers to reach more customers and markets than through channels other than their own websites. Indeed, expanding into a new sector or a new country can be expensive. But using an existing marketplace can save time and lower costs. And it also works perfectly to gain some insight into what sells in unknown territories. By creating a ‘branded shopfront’, retailers and brands can also take back control of their brand image on these sites. For ECommerce Fulfilment, opening up to marketplaces is therefore very important.
The Opportunities of Marketplaces for ECommerce Fulfilment Services
There is a very simple reason to justify the use of marketplaces: it is where the customers are. Indeed, Amazon and EBay account for 41% of all retail web traffic in Europe. Marketplaces can offer low prices, choice and convenience (with one-click payments and same-day deliveries), they now excel at delivering customer satisfaction. As a result, shoppers now expect the brands and retailers they like to be on marketplaces. And using more and more marketplaces like a ‘search engine for shopping’, shoppers are easy to reach there.
In terms of growth, marketplaces offer a lot of opportunities to retailers: new customers; new market segments; and new territories. 64% of retailers say that they are using marketplaces to increase new customers. The rise of mobile has made shoppers both more considered and more impulsive. To reach customers, marketplaces need to provide the easiest way to search, find and pay for goods.
Challenges and how to Overcome them
For retailers, the main concerns regarding the use of marketplaces are issues with brand values and perception and “the race to the bottom” in terms of price. Regarding new market segments, retailers usually use marketplaces to sell a segment of their products, often sale items. It is also a good place to trial new ways to sell, new services and new products before investing for good in it. Finally, it is also a great option to explore new territories. Rather than spending a lot of time and money translating your own website, marketplaces offer a much more low-risk way to discover whether there is a demand for a product or service and where that demand is located.
Half of the retailers still expressed concern that using marketplaces would damage the perception of their brand. But having an official presence on marketplaces is a way to control brand perception. For instance, Superdry just created a new webstore on marketplaces so they can sell their products on a dedicated store front while keeping their own website. In terms of prices, “best price” doesn’t necessarily mean “lowest price”. The best price is the price that suits the shopper at that time and it may well be that they will pay more for immediate availability or delivery.
In conclusion, marketplaces should not be underestimated. 80% of brands and retailers are using marketplaces, with around 70% using between one and four actively right now. A third of these are generating 50% or more of their online revenues from marketplaces. They are a vital part of Ecommerce fulfilment for growth and development.