Online marketplaces in 2020
Digital marketplaces are not a new concept; they’ve been around since the beginning of e-commerce. And in a world that stays at home, digital marketplaces have the advantage of being borderless; they can ship from (almost) anywhere in the world. Given the rise of big e-commerce players such as Amazon, bol.com, and Alibaba, now is the time for brands to boost their knowledge about digital marketplaces.
The basics of online marketplaces
Digital marketplaces are online platforms designed to sell a variety of products from a broad range to very niche items. There are global marketplaces such as Amazon, eBay or Aliexpress, but there are also local heroes in each country like bol.com in the Netherlands or Etsy in the States. Most of these sites have an infinite selection of items that can help solidify the customer experience. However, one of their most significant advantages is the economy of scale, a powerful position which they can leverage during times of lockdown. As more traffic visits and purchases from their website, more third-party sellers will want to sign up, thus providing them with more income to further refine the customer journey.
Now, not every online marketplace is the same. There are three categories that reflect which stage of development a marketplace is in:
- Aggregated online shop: this is a basic platform that allows people and companies to create a profile and to buy and sell products from various vendors. Etsy is a good example of this as it sells no “Etsy” branded product and instead has built a unique creative community where anyone can buy and sell items.
- The marketplace: This is the classic online marketplace such as Dutch bol.com or eBay, which not only sell their own products but also have transformed into a partner platform with certified third-party sellers and seller fees.
- A platform: this category of digital marketplaces has not only sells products but also services and/or data such as Amazon, and its Amazon Prime subscription which sells users a convenience.
When choosing which platform you want to sell your items on, keep in mind your brand needs, your product and your target audience. Take Amazon and Etsy for example, both marketplaces sell varying items and attract different demographics. So it might not be necessary for your brand to be present on both websites.
When you first start selling via a marketplace, your products will be at the bottom. To change this, you need to create organic visibility for your products by optimizing your SEO for each product and product description. However, in order to increase your position, other factors come into play, such as your click-through rate, product availability, reviews, images. So, before you put an item up for sale, ensure that everything is in order and that you have put your best foot forward to ensure its visibility. Lastly, brands can also support their new listings via paid advertising to drive incremental sales.
Marketplaces and branding
Selling via marketplaces, for many brands, can come with some challenges. For starters, it provides potential customers with a limited brand experience. That is one of the main reasons luxury fashion brands do not sell products on Amazon is because they cannot replicate the feel and experience of their brand on Amazon. However, according to Wunderman & Thompson, 15% of consumers’ total online spend goes through a brand website compared to 36%, which goes via Amazon. So though marketplaces may not be able to provide an exceptional brand experience, they generate an enormous amount of traffic and revenue via their website. Brands will need to leverage the pros and cons before making a decision.
In a similar fashion, many brands are worried about becoming merely a product on a shelf. Now that is only partially true. Let’s be honest, if your product wasn’t there, consumers would simply buy the closest equivalent they can find. However, bigger, well-known brands already have an established reputation in consumer’s minds which makes them more credible. Also, reviews are the currency of online marketplaces. So, if you want to build up your brand’s reputation on online marketplaces, simply ensure you have numerous good reviews as this will ensure your product is seen.
Marketplaces will continue to grow
Online marketplaces are currently booming thanks to their convenience. For brands who are interested in leveraging these platforms, picking the right one that suits your needs and ensuring your product listing is in top shape will help you achieve success. It’s a low-cost and low-risk method of generating more brand awareness and revenue.