The ecommerce landscape has undergone massive changes in the past few years. With the rise of digital commerce, many brands have had to adapt their sales strategies to stay competitive. One such strategy that has gained momentum in recent years is the use of online marketplaces.
The State of eCommerce
Before we dive into the benefits of online marketplaces, let’s take a quick look at the current state of ecommerce. According to a recent report by Digital Commerce 360, ecommerce sales in the US grew by 32.4% in 2020, reaching $791.70 billion. This growth is largely due to the COVID-19 pandemic, which forced many consumers to turn to online shopping to avoid physical stores. However, even before the pandemic, ecommerce was already a rapidly growing industry, and it shows no signs of slowing down.
In order to remain competitive in today’s retail landscape, brands must continually innovate and explore new opportunities that keep presenting themselves in the industry.
The Rise of Marketplaces
One of the main reasons why ecommerce has grown so rapidly is the rise of marketplaces. Marketplaces like Amazon and Farfetch have become go-to destinations for shoppers looking for a wide range of products from different brands. In fact, according to a recent report by Digital Commerce 360, 48% of ecommerce sales in the US are now made on marketplaces.
So why are brands opting to sell on marketplaces? One reason is that marketplaces offer a convenient way to reach a broader demographic. By selling on a marketplace, brands can expand their methods of generating revenue by widening the range of customers. Marketplaces offer convenient accessibility to a wide assortment of products, brands, and sellers, which makes it easier for consumers to find what they’re looking for.
Another reason why brands are turning to marketplaces is that they offer a way to expand their offerings. Marketplaces are essential to growing your online product assortment. This allows brands to meet more consumers’ needs, empowering them to reach a broader audience and drive up revenue.
By partnering with a marketplace, retailers can expand their reach and access new consumers. Marketplaces have an established customer base, allowing retailers to capitalize on the platform’s existing traffic and promote their products to a wider audience. At the same time, the move empowers audiences to compare and purchase from multiple vendors at once.
Retailers can use marketplaces to complement their existing ecommerce channels, offering customers a seamless shopping experience across multiple channels. It is vital however that retailers handpick marketplaces to partner with, as the experience customers have with brands still matter, even if purchasing from a marketplace. The selection should always be made having the customers’ best interests at heart.
A Marketplace of Your Own
Other well known brands such as John Lewis, Decathlon and Next have taken their omnichannel strategy to another level by leveraging their well established brand image and supply chain to start marketplaces of their own.
Next’s CEO Simon Wolfson, for example, has been leading the British label in the establishment of its marketplace offering, giving rival brands the opportunity to make use of their infrastructure to sell products.
Why? According to a feature by the UK Ecommerce Association, Wolfson believes ‘there is nowhere to hide on the internet; one way or another customers will find the brands they want. If they can find what they want on Next’s website they are more likely to come back to us, furthering our ambition to be our customers’ first choice for clothing and homeware online.’
The Data of It All
Marketplaces not only seem to be a win-win situation for retailers, customers and marketplace owners alike, but it also offers several possibilities for gathering data and generating useful insights.
For brands selling on marketplaces, that means access to data from a pool of different customers who may not otherwise have been shopping on their own brick-and-mortar or ecommerce store.
For marketplace owners, there are infinite possibilities for tracking user behaviour and preferences that could lead to assertive personalisation. Furthermore, by synchronising all existing channels and centralising data management, brands can continuously improve the shopping experience by allowing customers to smoothly sail from one channel to another.
The Omnichannel Strategy
While marketplaces are a powerful tool for brands looking to expand their reach and grow their revenue, they should not be the only touchpoint in a brand’s sales strategy. Instead, marketplaces should be part of an omnichannel strategy.
An omnichannel strategy is one that integrates all touchpoints of a customer’s buying journey, both online and offline, into a seamless experience. This includes marketplaces, but it also includes a brand’s own website, social media, email marketing, and even physical stores.
By leveraging multiple channels, businesses can reach their customers more effectively and provide a more personalised experience. For example, a retailer may offer customers the option to buy products online, or have them delivered directly to their homes, and returned in store. A solid omnichannel approach allows customers to seamlessly engage with brands while having consistent and positive experiences, no matter the channel.
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