Article

Rupert Staines
Rupert Staines 28 August 2020

Three Ways Marketplaces Can Supercharge Your Online Strategy

The high street has been disrupted - possibly forever. The future of retail is increasingly online, a trend exacerbated by the lockdowns, social distancing and stock shortages we have seen during the ongoing coronavirus pandemic. Many consumers who had resisted going online to transact found themselves doing so out of necessity, and for some of these, necessity will become convenience. Online marketplaces are likely to be one of the first ports of call for certain products, with consumers either visiting these directly or through a search engine. The question is: are brands leveraging the distinct advantages that marketplaces can give?

Here are three reasons why marketplaces must be a core part of brands’ ecommerce and marketing strategies in 2020 and beyond.

1. Ecommerce is growing fast

According to the Office of National Statistics, online shopping accounted for 31.8% of UK retail sales in June, up from 20% in February, the last month before lockdown started. And the amount of money spent online (£2.5bn) has increased at a fast pace since before lockdown, up  61.9% in June when compared with four months earlier (£1.5bn).

A new report by Alvarez & Marsal in partnership with Retail Economics estimates that 17.2 million British consumers plan to make permanent changes to the way they shop, migrating to digital channels.

Much of this growth will be driven by marketplaces (including department stores and supermarkets). In the US, spend on marketplaces accounts for almost 60% of online sales; the UK and Europe are catching up fast. It’s predicted that 72% of brands will be on Amazon in the next five years, and Amazon alone attracts almost 3,000 new sellers everyday globally.

Plus it’s sustainable. Analyst Goldman Sachs last month revised its global ecommerce growth upwards from 16% to 19% for 2020.

“A large part of this is sustainable, with a permanent steepening of the growth curve for ecommerce,” according to the report. It’s not just Amazon, with traditional retailers like Walmart, Target, Ahold Delhaize and Kroger reporting triple-digit growth in ecommerce revenue. Alibaba, Etsy, MercardoLibre, Wayfair, and Farfetch have also seen surging demand.

2. Marketplaces offer scale for brands wanting to grow

Marketplaces offer large audiences for brands big and small. Amazon alone reaches 90% of UK consumers, with some 16m+ opting for paid Prime membership. More than half (54%) of all product searches now happen on Amazon, according to a Jumpshop report. Many brands have shied away from using marketplaces because they believe they will either cannibalise a brand’s own channel or store sales; another is a lack of understanding.

Your marketplace strategy should be as complex as that employed for social or search marketing. In order to cut through you may need to consider everything from sponsored product advertising, site and browser SEO and branded stores. 

A good example is The Coca-Cola Company, which says it is “embracing the pandemic-fuelled ecommerce revolution”. This includes investing in high-quality photos, videos and product descriptions to ensure its brands look as good online as they do in store. Part of this involves partnering with marketplaces and online retailers, and optimising content for search engines.

When Coca-Cola China joined forces with a large ecommerce platform during the country’s largest mid-year shopping event 618 Festival, revenue increased by 65%. Reckitt Benkiser is also investing in its marketplace strategy, including looking at the new ‘shoppable’ opportunities on Facebook, Google and Instagram, to enhance its DTC and traditional channel sales.

3. Marketplaces offer a launchpad for new brands, and a digital footprint for smaller retailers

Having an online presence is essential at a time when footfall to physical shops is likely to be affected. For many small retailers creating their own e-shop takes a significant amount of resource and investment, and a far quicker and cost effective way to reach a larger customer base would be via marketplaces such as Amazon and eBay.

With Amazon, purely because of the economies of scale, the cost of acquisition is going to be significantly lower than that of your own site. Take vitamins brand Nutrivita, which launched on Amazon in 2014, with a DTC site following a year afterwards, though Amazon remains its biggest channel.

Brands must consider whether they want to be a seller, responsible for distribution on the platform, as opposed to a vendor, where goods are effectively sold to Amazon to sell and distribute. Each option has pros and cons so it is essential, particularly for small businesses, to consider what is best. 

Marketplaces are also ideal platforms for taking your brand internationally. Providing you can effectively navigate the ecosystem and the marketplace, you can build a brand that you can take across multiple markets. In the current climate, selling British abroad has never been more important and marketplaces are a fast and easy way to do this.

To succeed in an almost infinite warehouse of goods and competitors however, it is important to get the basics right and build a presence that adds to, rather than detracts from, your overall brand and business. It requires hard work and expertise, but is a cost-effective way of building your business. 

A full-service approach should encompass consultation, strategy, advertising support and content creation in order to build superior direct-to-consumer relationships and improve customers’ paths to purchase.

With the right strategy, marketplaces can not only boost sales in both the short and the long term, but they can supercharge a brand’s own channels, because many searches that start on a marketplace may end on a brand website with shoppers seeking out exclusive offers and added extras. 

One of the concerns is that by focusing on marketplaces, brands miss out on the valuable first-party data and a direct relationship with their customers. But the reality is that you can build the dataset and the direct relationship to customers through marketplaces too. 

But it shouldn’t be an either/or. The most successful strategies will encompass clicks, bricks and marketplaces, working together to build the best of all worlds.

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