MANAGING MARKETPLACE CONSIDERATIONS If you are a brand, you are already on or you are about get started on Amazon, given that Amazon’s marketplace will account for 68% of Amazon’s and 33.4% of total US e-Commerce, per e-Marketer.

But it’s not just Amazon as a marketplace that should be part of the commerce strategy. While Amazon is the behemoth, local marketplaces in different regions are just as important, especially in the context of cultural nuances and consumer behaviors.

According to WebRetailer globally, more than 50% OF E-COMMERCE SALES WERE MADE THROUGH ONLINE MARKETPLACES IN 2018, and that is forecast to grow to about two-thirds within five years. ‘General’ marketplaces, which sell a wide variety of products tend to be the most common, followed by fashion marketplaces with clothing and accessories being the most popular category. TABLE OF CONTENTS

Colorful World of Marketplaces 4

Marketplaces Drive Borderless Commerce 5

Delivering a Cohesive and Profitable Experience 6

Conclusion 11

About MRM Commerce 12 COLORFUL WORLD OF MARKETPLACES

Website Builder Expert analyzed Alexa traffic numbers of the most visited online marketplaces in 174 countries and mapped them to the different companies and holding groups. No doubtAmazon is the most popular, but the Chinese multinational Alibaba that owns Tmall, , Aliexpress is a close second. also owns more than 90% of Lazada, the dominant marketplace in Southeast Asia, topping the rankings in Malaysia, Thailand, Vietnam, and the Philippines. Argentina’s MercadoLibre covers most of South America, topping the rankings in eight countries there, plus Mexico to the north. Ebay is still going strong, as it remains the most visited online marketplace in eight countries, including Australia. However, borders are fluid online and while there are regional preferences buyers shop from marketplaces that are not local – across markets.

// 4 MARKETPLACES DRIVE BORDERLESS COMMERCE

A 2018 survey by International Post Corporation shows the most popular e-retailers for cross-border purchases were Amazon (23%), Alibaba (16%), eBay (14%) and Wish (10%). While Amazon ranks higher than Alibaba, 38% of cross-border purchases were purchased from China.

AmazonGlobal ships a wide selection of products—from auto parts to pet supplies and fashion—to more than 100 countries and regions around the world. Customers in several countries can purchase from over 45 million products on the US store. Pricing, shipping costs and import duty estimates are also available in 25 currencies. Based on the language options, the is mainly targeted toward Brazil, China, Germany and Spanish-speaking countries.

THE PERVASIVENESS OF AMAZON HAS RADICALLY SHIFTED THE WAY CONSUMERS SHOP. Consumers across the globe now have increased expectations in terms of quality product selection, competitive prices, delivery speed and convenience. They have come to anticipate the same experience they get from Amazon everywhere else.

// 5 DELIVERING A COHESIVE AND PROFITABLE EXPERIENCE

WHETHER LOOKING TO ESTABLISH PRESENCE ON GLOBAL OR SCALE TO REGIONAL MARKETPLACES, BRANDS HAVE TO ENSURE A CONSISTENT EXPERIENCE AND DRIVE PROFITABLE GROWTH.

There are fundamental considerations to do so:

1 Understand the opportunity for the category and the product

2 Determine revenue mix and pricing

3 Leverage the brand and its positioning

4 Drive visibility, consistency and trust

5 Establish and enable clean setup and organizational capability

6 Invest in the right technology and tools

// 6 1 UNDERSTAND THE OPPORTUNITY FOR THE CATEGORY AND THE PRODUCT

This depends on how unique the product is and whether or not it needs to compete on price. As a rule of thumb commoditized, frequently and infrequently purchased items such as packaged goods and big-ticket appliances, respectively that have relied on traditional stores and wholesale partners typically expand through an online marketplace.

But even so, understanding the consumer demand-what is popular with the target consumers- is a necessary step in deciding what that assortment mix would need to be. Regional differences also exist, and what is in demand in one country or market may not be the same elsewhere. One way to assess demand is to find monthly sales estimates for similar products already selling on the marketplace.

Another area to evaluate is whether a subcategory exists, or if competitors have less coverage. Subcategory can offer an opportunity to enhance visibility, provided it is meaningfully related to the product and the target consumer. Product research can offer insight on where the white space is.

2 DETERMINE REVENUE MIX AND PRICING

A diversified revenue mix approach allows brands better control, flexibility and an integrated view; brands need to determine the split between their direct-to-consumer sales, online retail distribution (both through traditional retail and pure-play accounts), and distribution on marketplaces.

Often, brands find investment for direct-to-consumer sales can be somewhat an uphill battle, but a marketplace opportunity can also serve to build a case for direct-to-consumer experience -- deeper insights and control.

Price benchmarking against competitors enables brands to assess what is the willingness of the target market to pay, and how sensitive they might be to price changes. Combined with the costs (including marketing, overhead, shipping, refund and marketplace fees) and desired profit margins, brands can decide the optimal price range i.e. floor and ceiling prices. Another component related to pricing is product bundling -grouping products into competitively-priced packages to increase consumer spend. Brands that traditionally find creating such packaging variations with physical retailers can test faster and scale quicker with different product bundles.

Finally, when thinking about price, brands also need to have a strong MAP (Minimum Advertised Price) policy and actively monitor and enforce it when there are violations. Marketplaces can many times have different sellers - authorized and unauthorized - that may don’t follow pricing policy. Not enforcing MAP means brands risk having channel conflict and more importantly, dilution of brand equity. Consistent pricing sends a clear message about a brand’s value to buyers.

// 7 3 LEVERAGE THE BRAND AND ITS POSITIONING

When thinking about extending to or launching on a marketplace, a brand’s positioning has to be taken into account - whether it is upscale, luxury or mass, and selling niche, crafted and exclusive products or commoditized. This informs the types of marketplaces to focus on and whether those need to be vertical specific and catering to the consumer that brand expects to reach and convert.

Communicating the brand story, value proposition and differentiation is also essential. Many of these marketplaces support the concept of shop-in-shop or brand stores that are an effective way to educate and engage consumers. But equally important is enhancing the product detail content - focusing not only on the functional benefits but also reflecting the brand voice and benefits to differentiate from competitors.

Enhancing and complementing product pages with visual content such as high-resolution imagery, rich media including 360-degree views and videos that highlight the product benefits in a brand-distinct way are increasingly becoming necessary to drive conversions, and more importantly trust with the consumer.

4 DRIVE VISIBILITY, CONSISTENCY AND TRUST

Brands must be the source of truth; ensuring consistent and accurate product information across marketplaces is critical to driving trust. Product content is key to capturing organic search, and search is dominant behavior on marketplaces; 66% of US shoppers now start their search for products on Amazon . Including appropriate keywords and using faceted search approach – that is to account for color or variation – help surface the product in the search results.

Another factor is paid media, which is inevitable to increase visibility and conversion. Brands need to test different products and keywords to find opportunities, in fact paid search can also help with organic placement in cases such as related products on Amazon. Brands can assess the top performing products and identify ones that have potential to become hero SKUs. Additionally, leveraging influencers, social channels and promotional events are important to keep the visibility and awareness. An integrated marketing calendar that captures promotions across different touchpoints is a good way to ensure consistency and find unique opportunities to capitalize on.

For most marketplaces, in addition to accurate and search optimized listings, ratings and reviews, stock and price are important ranking factors. Reviews, of course depend on the experience of the customer, which makes it all the more important to have an accurate description with rich media content, while also making sure product is not usurped by unauthorized sellers that could sell a counterfeit. The more reviews a listing receives the better Amazon or other marketplaces can categorize it. Reviews, naturally contain relevant keywords that help with it and in effect help build trust.

// 8 5 ESTABLISH AND ENABLE CLEAN SETUP AND ORGANIZATIONAL CAPABILITY

Brands that have been traditionally reliant on wholesale model often confront the issue of gray market, especially on marketplaces. According to Forrester, many B2C (business to consumer) company sales depend on units distributed as opposed to long-term brand health and margin. Frequently ignored are unauthorized sellers, because they may still deliver sales.

Gray market – or unauthorized reselling and MAP-violation-related issues – often are from a broken supply chain. Overcoming this challenge requires establishing an organizational capability to support brand protection and governance structure. Global distribution and marketplaces vary by markets, and brands have to assess whether to manage centrally or regionally.

Having a clean setup of distributors and partners that are cooperative and compliant, while enhancing the supply chain with better tracking mechanisms can make scaling across marketplaces more effective and profitable.

6 INVEST IN THE RIGHT TECHNOLOGY AND TOOLS

To avoid discrepancies in pricing, stock and product content data centralized systems are important. A product information management (PIM) can ensure consistency and also improve employee productivity. A centralized inventory management system improves stock control so that if stock is low in one marketplace, direct-to-consumer store, or retailer, it can track, manage and adjust stock levels. An order management system is able to track the sales from different sites to not only help analyze which one is driving better sales and value but also to help with refunds and returns. Finally, to truly understand the opportunities a brand has, one single view of the customer is needed. This single view can help brands track the way the customer interacts and converts on marketplaces and in brand owned experiences.

While these technology systems are important for operational capabilities, brands need to have tools to support keyword analysis and research for organic search, campaign management and optimization and competitive tracking and analytics. Often, the marketplaces offer dashboards and seller tools but those can be hard to use, finding third-party tools can make the marketplace management more effortless.

// 9 KEY TAKEAWAYS

1 UNDERSTAND THE OPPORTUNITY FOR 2 DETERMINE THE REVENUE MIX AND THE CATEGORY AND THE PRODCUT PRICING »» Assess the marketplace opportunity using »» Define the revenue mix across distribution purchase frequency and level of product direct-to-consumer, retailer sites, and commoditization. marketplaces. »» Define the assortment mix based on target »» Decide floor and ceiling prices based on consumer, popular categories and sales history. consumers’ willingness to pay and competitors’ »» Find white space opportunities using pricing. subcategories within the main categories. »» Establish and enforce Minimum Advertised Price (MAP) policy.

3 LEVERAGE THE BRAND AND ITS 4 DRIVE VISIBILITY, CONSISTENCY AND POSITIONING TRUST »» Keep brand positioning and value proposition »» Ensure consistent product information forefront. optimized for organic search on the »» Go beyond functional benefits; encapsulate brand marketplace. voice to differentiate product content. »» Amplify top performing products and identify »» Utilize rich media and different content formats potential hero SKUs with paid media. for an engaging experience. »» Encourage reviews using available marketplace promotional tools.

5 ESTABLISH AND ENABLE CLEAN SETUP AND 6 INVEST IN THE RIGHT TECHNOLOGY AND ORGANIZATINAL CAPABILITY TOOLS

»» Implement brand protection capability and »» Invest in product information management, processes limiting unauthorized sellers and MAP inventory and order management systems. violations. »» Leverage external tools to support competitor »» Determine governance model for centrally or analysis, MAP violations, and paid media. regionally managed. »» Simplify marketplace dashboards with more »» Enhance distributor partner relationship and visual analytical tools. supply chain tracking.

// 10 CONCLUSION

This is indeed an exciting time for brands to leverage the different ways of connecting with their consumers across regions and countries. Quality content, rich brand story telling, integrates shopping experience are all coming together that are making these marketplaces more than just a sales channel. It's time to act differently. ABOUT MRM COMMERCE MRM Commerce (previously Optaros by MRM) is focused on end to end commerce, from commerce strategy and digital transformation, commerce visual and interaction design, Amazon/marketplace optimization, and commerce platform implementation for platforms such as Salesforce and Magento.

We help brands grow meaningful relationships with people through commerce.

We Decode the Science of Relationships We Craft for a Connected Society

STRATEGY & CREATIVITY & CONSULTING CONNECTIONS

Strategy, Consulting & Digital Creative and Interaction Design Transformation Omnichannel Architecture Marketplace Analysis and Optimization

We Mine for Meaning We Redefine What's Possible

DATA SCIENCE TECHNOLOGY & ENGINEERING & ANALYTICS INVENTION

Analytics & Optimization Technology Implementation

Data Architecture & Engineering 24x7 Global Platform Maintenance & Support

// 12 AT MRM COMMERCE, WE CAN HELP.

Our experienced team of commerce experts can help guide you through the whole process.

For more information, contact: Katharine Mancini Business Development & Alliances Associate [email protected]

1 While GMV (gross merchandise value) would be an ideal measure of marketplace size, this is not reliably available for most online marketplaces. Traffic data provides a consistent measure of popularity that can be applied to all marketplaces worldwide. https://www.webretailer.com/lean-commerce/ online-marketplaces/#/ 2 IPC cross-border-e-commerce-shopper-survey 2018 3 E-Marketer: Amazon Around The World 4 Forrester: All Brands Need A Full-Fledged Digital Commerce Strategy 5 Per McKinsey, D2C can play different roles: Some brands leverage a D2C site to i) get better customer insights and develop their test and learn muscle, ii) enhance brand equity with unique and engaging content, iii) use the site as a marketing engine / hub to connect customers across all touchpoints and iv) drive sales as an E-Commerce site. 6 Forrester: All Brands Need A Full-Fledged Digital Commerce Strategy 7 E-marketer: Looking for a New Product? You Probably Searched Amazon

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