Marketplaces – Marketplaces Are Becoming Increasingly Important Selling and Marketing Channels for Retailers and Brands

Marketplaces – Marketplaces are becoming increasingly important selling and marketing channels for retailers and brands. Driven by demands for greater convenience, shoppers turn to these one-stop destinations to both research and buy products.

SPONSORED BY BURNING QUESTIONS

• How can I improve sales on Amazon? • What’s new in online marketplaces? • Should I launch my own marketplace?

Worldwide, marketplaces accounted for 52 percent of global online sales, reporting $1.8 trillion in online sales in 2018.52 In 2018, Amazon alone captured half of total ecommerce sales in the US. Still, that figure pales in comparison to the dominating position that marketplaces own in Asia-Pacific. Alibaba has operations in over 200 countries and its online sales have surpassed those of Walmart, Amazon, and eBay combined since 2015.

All trends indicate that marketplaces are poised to continue taking up a larger percentage of ecommerce over the next two to three years. Retailers should already have a marketplace strategy in place, or at the very least, be working on one, to expand reach, enhance sales and benefit from the retail technology innovations that many marketplaces offer.

THE MARKETPLACE TRIFECTA

Product Selection Value Convenience

Large marketplaces offer huge Marketplaces such as Amazon or Jet Amazon Prime with One Day Free product selections (Amazon has drive lower prices and greater value Shipping provides the ultimate over 300MM SKUs) while niche for shoppers convenience to consumers marketplaces offer curated product selections for specific categories

DID YOU KNOW?

A Marketplace is an ecommerce platform that enables merchants as well as individuals to list their items for sale or establish online storefronts and leverage the platform and its services. These include search, product information, transactions, payments, order management, and sometimes even fulfillment. Because of the larger number of sellers in a marketplace, the consumer benefits from greater product selection in one place.

Most people associate marketplaces with Amazon, but Amazon is not the only marketplace that retailers MARKETPLACES and brands should consider when developing their marketplace strategies. Different types of marketplaces 1. Amazon are extremely important when expanding globally 2. Global and targeting specific audiences. There is also a 3. Retailer-operated significant opportunity for retailers to launch their own marketplaces to increase assortment, keep customers 4. Niche/Vertical longer, and thereby increase sales and engagement.

Although a solid marketplace strategy can significantly increase profitability, some stay completely clear of marketplaces, while others struggle to find the optimal balance and approach. It can be beneficial to align with a partner that specializes in marketplace strategies and execution.

There are several solution providers that make it easier for organizations to publish and manage marketplace listings and execute marketing tactics. Some digital commerce platforms offer application plug-ins and extensions to help connect to marketplaces. There are also specialized software integrators or data feed managers/aggregators to connect and manage multiple marketplace accounts or data feeds.

OUR TAKE: It is OK to double dip

You should leverage marketplaces to increase your domestic and international sales and learn from them. It is impossible to ignore the impact marketplaces have on the industry so better to embrace a marketplace strategy while strengthening owned channels.

2018 ONLINE MARKETPLACE SURVEY Source: Internet Retailer 2019 Marketplaces Report

$1.66 trillion spent globally on Marketplace sales account for $525 billion sold on US the top 75 online marketplaces 52% of global online retail sales marketplaces

Part-marketplace/part-retailer Amazon has dictated and shaped the overall commerce landscape, impacting both online and offline retail. This retail Goliath is showing no signs of slowing down and grows stronger every year. Larger retailers like Best Buy and Kohl’s have been wary of partnering with Amazon in the past but they are now testing new initiatives by selling certain product lines on the marketplace and accepting in-store returns on Amazon purchases to drive more foot traffic and increase sales in their brick-and-mortar stores.

Organizations should look for smart ways to leverage Amazon as a channel to increase reach and sales. Those who want to avoid a full-fledged launch on Amazon can build a strategy that complements their business model. For instance, some sell selectively on Amazon, with only a few product categories instead of the entire product catalog. Some also opt to leverage Amazon’s global fulfillment network, enabling them to take advantage of Amazon’s distribution centers to minimize delivery times.

SEEN IN THE FIELD

Kohl’s announced that starting July 2019 all stores (more than 1,150 locations across 48 states) will be accepting free, convenient, unpackaged returns for Amazon customers. Kohl’s will accept eligible Amazon items, without a box or label, and return them for customers for free, providing additional service and convenience to Amazon customers. Amazon Returns at Kohl’s creates convenient locations for Amazon customers to return eligible Amazon.com merchandise to their local Kohl’s store. Kohl’s will also expand its product relationship with Amazon by carrying Amazon products in more than 200 stores.53

Amazon Marketplace Web Service (Amazon DID YOU KNOW? MWS) is an integrated web service API that helps Amazon sellers programmatically exchange data on listings, orders, payments, reports, and more. In 2019, the U.S. ecommerce market will be dominated by Amazon ($317 Billion). This is more than Data integration with Amazon enables high levels half of ecommerce spending in the U.S. (52 percent). of selling automation, which can help sellers grow their business.

Some studies suggest that over 50 percent of product searches start on Amazon, surpassing, Google as the top destination for shopping research. Rather than looking at Amazon as a competitor, look at the marketplace as a search engine and an integral part of your marketing mix.

Global

When it comes to global expansion, the first step for most brands is marketplaces. Marketplaces dominate ecommerce in large markets in Asia-Pacific and offer a low-risk opportunity to expand reach and gauge market expansion potential before investing in a broader global expansion strategy. In Asia-Pacific, marketplaces such as Rakuten in Japan, Taobao and Tmall in China and Lazada in South East Asia, are extremely important. In China alone, 90 percent of business-to-consumer ecommerce sales originate from marketplaces, with over 50 percent dominated by Tmall.

OUR TAKE: Dip your toes in the global pool

Use marketplaces to tap into an already-established customer base in global markets. Entry into new markets using a marketplace strategy is a low-risk approach. What do you have to lose?

DID YOU KNOW?

Singles’ Day is a Chinese holiday started by a group of students at Nanjing University in 1993 to celebrate being single. The date, November 11th (11/11), was chosen because the number “1” resembles an individual who is alone. It wasn’t until 2009 that Alibaba spotted an opportunity and encouraged retailers on its platform to offer discounts for the day and transformed Singles Day into the largest online shopping day in the world.

Retailer-Operated Marketplaces

Most organizations leverage marketplaces to expand reach, while others launch their own marketplaces to combat competition. Perhaps the greatest advantage of launching a retailer-operated marketplace is the

Marketplaces | 82 © 2019 ability to expand product assortment without the restraints of adding more inventory and managing distribution. With a retailer-owned marketplace, retailers can gain additional revenue streams by offering a broader product assortment.

Launching a marketplace is not a viable strategy for every organization. Online marketplaces have complex ecosystems and require the right technology and resources to achieve success. Gaining recent popularity, a few platform providers have emerged, offering technologies and services to help power these retail-operated marketplaces including vendor onboarding, product catalog integration, order routing and regulatory compliance.

REASONS FOR LAUNCHING A RETAILER-OPERATED

MARKETPLACE SEEN IN THE FIELD

• Filling in assortment gaps For retailers such as Staples, with product categories that are highly competitive • Reduced inventory/markdown risk and costs with Amazon, expanding into non-core product categories through the launch • Offloading shipping costs of a marketplace is a potential life-saver.

• Improved relationships with vendors/suppliers Since launching its marketplace, Staples. com has expanded its product selection by 400 percent.54

Niche/Vertical Marketplaces

While Amazon, eBay, Alibaba, and Jet.com typically get the most attention, there are several niche and vertical marketplaces that can help retailers and brands expand reach such as Lyst, Houzz, Orchard Miles and Wanelo. Typically, these smaller marketplaces are specialized vertical platforms that target a specific audience looking to purchase a specific item or category of products. They offer different fee structures from larger marketplaces and more differentiated services such as marketing support. These smaller marketplaces provide the opportunity to reach a highly-engaged target audience through curated experiences, often integrating content and social media elements into the shopping experience.

In recent years, there has been an evolution of product directories with an affiliate business model, inspirational content sites, or even quasi-social media platforms that are turning their sites into transaction- enabled marketplaces.

Prominent in the home décor space, Houzz delivers curated content and products. Initially a home- improvement app, today, it allows users to purchase the products featured on the website and app.

SPOTLIGHT ON DATA

Marketplaces present a significant opportunity for retailers and brands to expand reach and meet demands of today’s consumers. Marketplaces are also great channels for testing demand in new markets. The data used to run and manage a marketplace business is basically the same (and just as important) as the data used to run a digital commerce business. Retailers should consistently capture and analyze the data below to optimize sales, reach and customer engagement:

• Product selling - promote best sellers, markdown or remove poor performers

• Inventory - make sure you have enough weeks of supply to fulfill projected demand

• Marketing - depending on the marketplace, such as Amazon, you can promote your products and track your ad spend and ROI

• Customer satisfaction percentage

• Merchandise fulfillment percentage

• Overall profits and losses - you want to make sure you are tracking your sales and managing your expenses so the marketplace is profitable

PROVIDED BY

It’s no secret that consumer behavior is evolving. That doesn’t mean optimizing one or two marketplace Today’s consumers have more choices than ever strategies. It means taking a holistic look at how all when it comes to discovering, purchasing and of your strategies are working together to deliver receiving products. And as a result, they’ve become the best experience for your potential customers. It more demanding. means putting consumers at the very center of your advanced strategies across the full buying cycle — Many of these modern expectations have evolved from marketing, to selling, to fulfilling. from their experiences on marketplaces like Amazon: Endless choices. Low, competitive prices. Easy checkout. Fast, free shipping. Turning Browsers Into Shoppers With more competition vying for limited screen This ever-evolving consumer behavior is driving space — especially when you consider the limited much of the innovation we see across the space on mobile devices — there’s only so much real e-commerce landscape, as well as the responses estate for your products. Brands and retailers need made by leading brands and retailers: smarter to create sophisticated branded and non-branded advertising, optimized listings and speedier strategies in their advertising campaigns to be seen fulfillment. early in the buying cycle. That means constantly In some ways, Amazon — and other similar testing, experimenting, measuring and tweaking. marketplaces — represents a perfect microcosm of the entire e-commerce space. Turning Shoppers Into Buyers

But every e-commerce innovation and opportunity When it comes to selling — or, a shopper making — on Amazon and beyond — still revolves around the decision to actually buy your product — content one thing: the empowered consumer. If you aren’t is key. Optimizing listing content and automating taking steps to understand how your potential a dynamic pricing strategy will lead to more top customers are searching, shopping and buying, positions on marketplaces, create more visibility you’re probably falling behind. and, ultimately, encourage more conversions.

Fulfillment is the final piece of the purchasing Our unique blend of e-commerce expertise and puzzle, and fast, inexpensive shipping options advanced technology means you’ll have everything have become standard. Every company’s business you need to engage with consumers at the most model is different, so it’s up to brands and retailers critical stage of the buyers’ journey — offering the to choose what fulfillment model is financially right product, to the right consumer, at the right time. right for them and still allows them to provide the most convenient shipping options to potential Increase Sales consumers. Whether that’s self-fulfillment, fulfillment by third-party logistics providers (3PLs), From stronger pricing strategies to more accurate fulfillment by marketplaces (FBA) or, most likely, a inventory forecasts, ChannelAdvisor equips you hybrid of several fulfillment types. with every essential tool and tech advantage you need to win more buy boxes, stand out from Choosing the right partner is essential. competitors and supercharge sales.

ChannelAdvisor offers one streamlined solution to guide all of your most critical marketing, selling and Optimize Fulﬁllment fulfilling activities. Our integrations and advanced automation keep Our comprehensive e-commerce platform collects you connected to a full range of fulfillment options your product data once, and then relies on that for faster, more affordable deliveries. single feed to optimize performance across ChannelAdvisor makes it easy to compete and hundreds of channels, including Amazon, eBay, manage all of your e-commerce activities from Google, Walmart, Facebook and more. As orders one central platform. We help brands and retailers and performance information flow back through integrate, manage, optimize and analyze customer the ChannelAdvisor system, results are measured and product data across hundreds of online and broken down to help you make better decisions channels around the world. about your business. In other words, we help the marketing, selling and It’s how we’ve empowered thousands of online fulfilling efforts of brands and retailers by keeping sellers — and why our name has been synonymous the empowered consumer at the center of it all. with e-commerce growth for nearly two decades.

And it’s why we’ve been named the #1 marketplace management provider to the Internet Retailer Top 1000 since 2013.

ChannelAdvisor has been on the front lines of e-commerce since 2001, helping retailers and brands connect with customers, optimize operations and grow sales channels. We’ve grown from a small company in a young industry to an industry leader at the forefront of a global revolution — with thousands of clients and billions of dollars in transactional revenue flowing through our platform every year. For more information, visit channeladvisor.com

OUR MEDIA SPONSOR –

Adweek is the leading source of news and insight serving the brand marketing ecosystem. First published in 1979, Adweek’s award-winning coverage reaches an engaged audience of more than 6 million professionals across platforms including print, digital, events, podcasts, newsletters, social media and mobile apps. As a touchstone of the advertising and marketing community, Adweek is an unparalleled resource for leaders across multiple industries who rely on its content to help them do their job better.

Adweek is part of the Beringer Capital portfolio that also includes BrandShop, a leading full-service partner that works with major consumer brands to employ digital commerce to increase sales, gain valuable consumer insight and create the type of end-to-end experiences that build loyalty and keep brands ahead of the competition. Learn more at adweek.com and brandshop.com REFERENCES –

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IDEA

Order Management Marketplaces Selling Marketing Marketing Retention Acquisition

Payments In-Store Customer Service Fulfillment Analytics/Reporting

DOORSTEP

FitForCommerce is a leading boutique consultancy that helps hundreds of online and multichannel brands and retailers make informed digital, ecommerce and omnichannel retail investment decisions. Leveraging years of experience, state-of-the-art tools, strategic diligence and tactical planning, FitForCommerce helps brands and retailers define strategies for growth, improve the customer experience, plan and hire the right organization, and find "best fit" technology solutions. | www.fitforcommerce.com