What Is A Marketplace?

You’ll know the operators as Amazon, eBay, notonthehighstreet.com, Etsy, and Alibaba amongst many others. In many cases they are effectively search engines for retail.

In essence a marketplace is an entity operated by a company that acts as a shop window for thousands of sellers. Consumer transactions are processed by the marketplace operator and then delivered and fulfilled by the participating retailers or wholesalers in a process known as ‘Drop Shipping’.

In general, because marketplaces aggregate products from a wide array of providers, selection is usually more varied, availability is higher, and prices are more competitive compared to vendor-specific online retail stores.

Marketplaces can help any vendor sell to anyone as they tend to be experts at search engine optimisation (SEO), marketing and promotion.

Marketplaces aren’t just ‘back bedroom’ retailers and hobbyists selling when not doing their day job. Today, Marketplaces are the key location for anyone looking to sell more online, be they an independent jewellery maker, right through to multinational retailers looking for further reach.

Who Should Sell On Marketplaces?

Small Etailers

If you are a smaller etailer they’re the ideal place to start your online sales operation, since the marketplace essentially does most of the grunt work in getting set up for you. It also provides you with a massive platform and reach that allows you to scale way beyond your wildest dreams pretty much from the get go.

Those Looking To Expand

For the more experienced retailer, marketplaces are ideal for expanding your reach to new markets, especially overseas, and can act as a neat way to also promote your own online site. With most top marketplaces offering assistance with everything from delivery to warehousing – not to mention improving your SEO, marketing and more – marketplaces are the key to getting a bigger presence and moving your business along.

The Big Boys

Increasingly marketplaces are set to be a key area of expansion for large multinational retailers too. They can help to expand reach to new territories without massive capital outlay, allow for the development of an omnichannel presence for those that don’t already have one and they simply can make sure that the maximum number of people get to see your wares.

Why All Retailers Should Use Marketplaces

Why marketplaces are set to be one of the key retail trends for 2017 revolves around how they can help deliver and develop cross-channel retailing for any size retailer.

Cross channel retail is essential for growth and development of any retail business and relies on being able to deliver four key things.

Driving New Traffic

Perhaps the most compelling argument for using a marketplace is that it can help you reach more people which in turn should drive increased traffic to your site – and hopefully up conversions. Any web search by a customer for a generic item will bring up a range of results, but increasingly we are seeing the top hits and ‘the buy box’ being dominated by goods on Amazon and eBay.

These results are driven by a range of factors including price, availability, location, fulfilment and customer satisfaction. These things are all measured out by the marketplace and are picked up by Google. Making sure that your goods are also on leading marketplaces is going to get you in to the higher echelons of search.

Adding New Products And Services

Marketplaces also can have an impact on retailers stock too. With a plethora of online retailers selling their wares through marketplaces, retailers can easily boost the scope of their inventory by tying up with other marketplace retailers. This has the advantage of allowing for expanded stock without the cost of warehousing, product development and more. It is like selling direct from your suppliers to the market.

Creating The Endless Aisle

One upshot of this increased access to inventory is that, combined with the ability to use marketplaces as a key online selling site (and taking advantage of the marketplace’s logistics and warehousing support) allows any retailer – especially those with bricks and mortar shops – to create “endless aisles”. Here the marketplace can be used in store to help sell your whole inventory, rather than just what you can stock. Combine this with the ability to also deal with third party suppliers direct from the marketplace and you can take your business to a whole new level with minimum fuss.

Increasing Loyalty

Combined, all this access to more buyers and more stock makes your business more attractive – and that should, if handled right, deliver more loyalty. This is where it gets tricky, as we shall see, but in essence you need to use the marketplace to attract in new customers, but then use it to help direct them to your own site so that you benefit from them as your customer. Once you have them loyally revisiting your site, you can then start to tap into marketplaces to increase product offerings, help with delivery and if needs be handle returns.

A Cheat Sheet On How To Get The Most From A Marketplace

Marketplaces are your ‘frenemy’ – on the one hand they deliver vast amounts of eyeballs and potential shoppers to your door, but they also kill repeat business and loyalty as the customer sees the marketplace as the brand they have dealt with, not you. And you want them to fall in love with you.

If you already run your own ecommerce site, then it’s worth thinking about adding the marketplaces on eBay and Amazon as extra channels. However, it’s not all plain sailing, so here are some points to bear in mind.

Think Like A Franchisee

Selling on Amazon or eBay is like taking on a franchise. They provide a lot of support, but you have to play by their rules (which are strict), with the franchiser taking a big share of the spoils. These marketplaces can let you both build and expand your businesses, but make sure you own the long term value.

Market Your Own Site

The danger with marketplaces is that you build their business more than your own. It may be a good idea to think of the marketplaces a little like advertising, you are promoting your products and service for a price, generally the listing or commission fee.

Maximise the opportunity by including a flyer for your own website, possibly with a discount for coming direct. The fact that some marketplaces don’t allow this demonstrates how useful it is

Understand Marketplace Pricing

The fact that it is so easy to start up is a double-edged sword. eBay and Amazon help to level the playing field with the big boys, which is good. Against this is that they encourage swathes of naive traders. A lot of these are new to business and think they should compete by having low prices. They don’t last long as they lose money for a while and then drop out. Unfortunately, they are then replaced by more of the same. In the meantime they devastate everyone’s margins.

To compete you have to understand pricing and to some extent hold your nerve. As with ‘normal’ retailing, good customer service can help you justify your pricing and maintain your position as the fly by nights come and go.

Do The Maths

To get your pricing right you first need to fully understand your own costs, so do the maths to find your margins. You cannot scrimp on things like delivery, as poor feedback will destroy your business.

Look at the same or similar products to your own and track the high and low prices over time. Keep this in a spreadsheet so you have a quick reference when setting your prices. Remember that ‘loss leaders’ are simply likely to be loss makers when most people are looking for only one item.

The only excuse to sell at low prices is to do so for a limited period in order to build up substantial positive feedback before moving to realistic prices. It’s best to either have a unique product or price somewhat above the lowest. Never chase prices to the bottom

Get Your Service Right For Positive Feedback

Good service is impossible to over-emphasise. Unfortunately it’s all about huge attention to detail and hard work. Customers rate you, and even when you are perfect, some individuals will still give you poor marks. If you get many low ratings your sales will be low, and below a certain threshold you will be thrown off the platform. So respond as quickly as you can to incoming orders and queries.

And That Goes For Delivery And Returns Too

Good packing materials are a must as nothing destroys your reputation more than the delivery of damaged goods. If you are responsible for fulfilment, pick a carrier you can trust to provide speed, certainty and quality. You will find some carriers sometimes claim to have left a card at a customer’s premises but haven’t even been there, others toss things into gardens as a form of delivery when they are in a hurry. Ask on for other merchants’ experiences on forums.

The appearance of the driver and the van, the persistence in trying to get the door answered, and their collection of a proof of delivery or leaving a card all make a massive impression. So watch them like a hawk. Offering customers a no questions refund for a reasonable period is well worth the cost as it minimises time and morale-sapping disputes and negative feedback.

Take Pride In Your Appearance

While the above are vital to getting the most from a marketplace, it is also important to take pride in your listings. The consumer feasts first with their eyes, so make sure you are awash with good, clear images that really sell the product.

Then make sure that your opening paragraph about the product is clear, to the point and not a load of waffle. By all means, list the products many features – and even tell the customer about your business – but leave that for later. You only have a tiny amount of time to get their attention so use it wisely.

Use Multiple Marketplaces

Don’t be shy, put yourself and your products on as many appropriate marketplaces as you can find. On all sites, take pride in what you do and how you present yourself, but also tailor what you say and how you display to each marketplace’s nuances. One size doesn’t necessarily fit all.

Know What Excites The Shopper

Understand the triggers that get your customers to buy particular products and make sure that they are listed at the top. Also make the most of encouraging reviews, recommendations, feedback, star ratings and anything else that endorses you.

This will all help the marketplace see you as a trusted brand and propel you towards the much coveted super seller status. It is a little publicised fact that marketplaces will preferentially push customers towards trusted sellers and super sellers in particular, so to get the most from using markets you need to make sure that you are as liked and loved by customers as possible. This will help drive the much needed repeat business, as well as helping to build loyalty insofar as you can on a marketplace.