What to Consider When Setting Up an Online Marketplace

During the past year, we have seen more businesses make the digital switch and take services online than ever before. For many, an ecommerce offering was a means for survival during an incredibly volatile and unpredictable time. For others, an online focus has been slowly developing for some time now as the digital revolution becomes increasingly undeniable.

One of the many reasons for the shift is online retail’s ability to offer businesses a number of opportunities, particularly with the way they can get their products in front of customers. For instance, a business can have its own ecommerce channel, use an omnichannel approach, or sell its products via marketplaces.

It is the latter that are dominating the digital sphere at present. In fact, in 2019, $1.97 trillion was spent on the top 100 marketplaces, globally. Included on this list are the likes of Amazon, eBay, and Alibaba—all household names, no matter where you are in the world. But there are also many smaller ones that can be just as effective at generating revenue for your business.

Choosing the right platforms

Generally, businesses tend to flock to the more well-known platforms when setting up shop on an online marketplace. And understandably so because these platforms attract the largest number of users, thus putting your brand in front of more customers. They also tend to be perceived as more trustworthy, which can then reflect positively on your brand.

However, as more and more businesses take this viewpoint, it is to be expected that the competition on such marketplaces is also on the rise. Therefore, businesses must take a strategic and informed approach when deciding which marketplaces to use. And this decision should be based on which is frequented by, or accessible to, your target audience, as well as the technical aspects of managing your marketplace.

Geography

For instance, if your target demographic is categorized by geographic location, you may want to consider using platforms that attract the largest audience in those specific countries, such as Alibaba across Asia, and Amazon and Walmart in the United States. In Europe, Zalando is the marketplace of choice for fashion.

But with advancements in technology and changing consumer habits, these traditional online marketplaces are no longer the only way to sell, with social media platforms now also getting in on the action.

Age demographic

Notably, Facebook’s investment into developing its Marketplace feature, and now, a shopping page on Instagram, are changing the way both businesses and consumers interact and make or enable purchases.

So, similarly, the age of your target customer base can also help you determine the right platform, with usage and uptake of such channels more common among the 18–34 age demographic, and more precisely, females within this group.

Marketplace management

Although retailers do not necessarily have to manage the technical aspects of a third-party marketplace, which is a real selling point for companies with small teams or strained resources, they do have to consider order management and stock list updating, on top of their management of any other channels they are using.

Often, businesses underestimate the amount of work this can involve. But when you consider the reason for using a marketplace in the first instance—to reach the larger pool of customers and maximize sales—the additional workload makes perfect sense.

Whether you are considering using a marketplace, creating your own marketplace, or are having difficulty managing existing activity, don’t let this deter you because fortunately, there are a number of software solutions that can help.

For example, many of the biggest brands in the world use just one platform, which provides a single comprehensive commerce solution, including marketplace management. It combines activity across every sales and logistics channel, enabling greater efficiency for the business and a unified experience for customers.

For a brand that wants to access global marketplaces, ChannelAdvisor is often used to aggregate data feeds and order management across all marketplace sales channels.

Through the use of such platforms, then, managing multiple order and revenue streams becomes much more streamlined. This will allow businesses to focus on other commercially critical areas, or scale up their online offerings to target the optimal amount of customers in all of their markets, via the most suitable channels in each.

Furthermore, these platforms offer valuable data capture and analysis opportunities, which also come at no real additional price to the company. With all information held centrally, businesses can get rich insight into the effectiveness of their activity, as well as confirmation of whether their decisions on things such as platform choice, for example, have been successful. If not, the data and insight available could offer a suitable alternative, or at least areas for improvement, enabling the entire process to come full circle.

Ultimately, marketplace success is not too difficult to achieve once you have the right knowledge and tools under your belt. And with clear benefits of the sales channel, and a strong indication that they will be here to stay, there is only a case for businesses to invest in such tools to yield fruitful online results.

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