*This article was written by Angelica Valentine, Marketing Manager at Wiser.
Leveraging Online Marketplaces
Selling on a webstore is a great way to get your products into shoppers’ hands, but there’s something about marketplaces that can’t be replicated. Retailers are catching onto the importance of marketplaces, as 32% surveyed between May and June 2015 said that they intend to spend more on marketplaces this year compared to 2014.
When these 240 retailers were asked what they plan to spend their digital marketing budgets on, marketplace expenditure came in second with 16%, tied with SEO spend and only beat by SEM.
Amazon is the king of marketplaces in the US, owning 23% of all online market share. But even beyond Amazon, marketplaces have a few things in common:
- Massive reach: Selling on your webstore can be tricky because it’s all on you to attract customers. Marketplaces are established bazaars that shoppers have become accustomed to visiting to do research and make purchases on. An added bonus is the built-in product discovery through strong recommendation algorithms.
- Double-edged loyalty: Shoppers keep on coming back to marketplaces, especially on Amazon if they’re Prime subscribers. This creates a constant flow of potential new customers for sellers. The only issue is that marketplaces don’t necessarily foster customer retention for individual retailers, as remarketing opportunities are slim or nonexistent.
- Data for days: Marketplaces provide sellers with piles of data of their sales, although some fear that Amazon in particular uses it against sellers to carry the hottest items at lower-than-low prices.
- Perks galore: There are over two million sellers on Amazon that gain access to their customer base and they account for 40% of all sales on the marketplace. During 2014 they sold over two billion products globally. Sellers that use Fulfillment by Amazon (FBA) not only have Amazon hold their stock, but also handle shipping, customer service, and returns. Sure, this costs them a pretty penny, but it also makes their lives easier and their products Prime eligible. Prime subscribes spend twice as much as regular customers each year. In 2014 FBA grew by 65%, so retailers are clearly finding value in the service.
- Integration with third party tools: Just because you’re selling on a marketplace, it doesn’t mean that your favorite optimization tools will no longer work. From inventory management to pricing software, the best tools carry over to the marketplace of your choosing so that your selling experience can be the best possible.
Times Are Changing in Online Retail
Marketplaces are becoming more important, as more shoppers begin their research there. Amazon in particular is where 39% of shoppers in the US begin their online search in 2014, compared to 18% in 2009. Search engines are seeing the opposite trend; 11% of shoppers started their research on Google in 2014 versus 24% in 2009.
There are no signs that marketplace sales will be slowing down anytime soon, especially with the rise of the subscription model that is all the rage right now. Marketplaces want to keep customers checking out on their sites and not converting to a retailer’s webstore. But selling on a marketplace doesn’t have to only be an order-acquisition method.
Marketplaces present just as many opportunities as challenges. Retailers that are able to present a unique value proposition will be able to retain the customers they gain through quality products, effective pricing, and impeccable customer service.