20/07/2017
Evolution of selling on online marketplaces done properly
Selling via online marketplaces is one of the most common steps any brand or retailer will take, sooner or later. Still, the results tend to be rather mixed when we take a deeper look at the situation. Some of the mentioned companies manage to virtually explode using external marketplaces, while the others seem to struggle and never really make a real difference. Of course, the majority of them succeed just in the borders of predictable growth. So, why is this happening, and why are the results so different, even if they do use the same channels and same methods to grow?
The answer is surprisingly not too complex – the successful ones follow the well devised growth strategies, the mediocre ones usually follow the “best practices”, and the ones that seem to fail often try to expand in marketplaces in a completely wrong way and overinvest in the beginning.
The difference between wrong, right, and best practice scenarios is in the way they decide to evolve their business on external marketplaces. In order to do it properly and make sure you get the highest possible return on investment, you need to take a number of factors into consideration, and failing to understand each of them properly can lead to huge financial losses and prolonged periods of inability to execute your predefined strategies in a profitable way. We will make a quick analysis here and address some of the most important issues that often plague retailers and render their efforts futile. Also, we will give you a few basic scenarios that will help you understand how small details can often cause huge trouble, and advise on how to avoid these from turning out to be an obstacle on your path to success.
The most important things to consider when devising a strategy to enter online marketplaces are:
• Goals
• Methods of expanding
• Order of marketplaces to enter
Goals
The first and the most important thing you need to consider is determining the goals. The path is not the same for the established brands and retailers and for the start-ups. Also, it requires a different approach if you are looking to expand the reach in the markets where you are already present, or when you are looking to expand to new geographies. Finally, defining goals needs to be split in two different segments which include short term expansion and medium to long term strategy.
The difference between established brands and retailers and start-ups reflects in the requirements for branding and brand awareness requirements. The established brands and retailers have the luxury to disregard branding to a certain extent and focus on generating sales. They can afford such luxury, as their brand name is recognisable in the mentioned markets, and brand awareness efforts can be conducted through the channels they are using in a standard way already.
This part is important because of the most common dilemma every brand and retailer has in the beginning – whether to start with Amazon or eBay. Established brands usually can afford both options at the same time, and they can combine branding potential of eBay with sales potential of both eBay and Amazon. Furthermore, they are able to use the holistic approach to the issue and fast deploy on all relevant marketplaces for the geography they are targeting.
The start-ups are facing somewhat different situation, as their brand awareness is on a much lower level, and they need all the help they can get concerning their branding efforts. Thanks to the custom eBay design options, they get a much better return on investment if they opt for this path. Simply, the custom eBay store design allows them to add branding efforts to the standard channels they are already using. They can also benefit more from other similar options such as Rakuten as these options also provide the same branding potential as eBay shop if it is done with a custom design option. Of course, it is important to keep track of the presence of a certain marketplace on a targeted market. For example, if you are a UK based retailer or brand who wishes to sell in the UK, then Rakuten English is quite a good option, but if you are a retailer that operates on a market where Rakuten is not significantly present, then you should omit that option.
When it comes to the differences between expanding operations on the markets where you are already present and entering completely new markets, the situation complicates additionally. All what has been said already applies ONLY for the cases when the brands and retailers wish to open the additional channels in the markets where they are already present in some form. When it comes to expansion to new markets, the path changes for the established brands.
They still have all the financial and technological means to try and launch their external marketplace shops at the same time, but their brand presence in these cases is much lower or even non-existent. This means they need to adjust the strategy to these new circumstances and apply heavy branding campaigns there as well. This means that the order of opening channels should be done in the same way as if they were start-ups. They should start with the custom eBay stores, expand via other options that allow increased branding options, and only then go with the Amazon and other options that do not allow personalization. This comes as a natural consequence of brand presence. Simply, without the ability to recognize the brand, the customers will most probably give it a pass and opt for something familiar. In those cases, running operations through channels with a low branding potential will not prove to be profitable in most cases.
The third and the last part of defining goals is making a difference between short term (up to 2 years in advance) and medium to long term goals (2 years and further in the future). It is important to do this projection in order to understand how the expansion should be carried out. For both established brands and start-ups, it is necessary to understand the capabilities of the eCommerce platforms they are using. The short term plans should focus on expansions they plan to make in the near future (about up to 2 years). They need to make sure their current option can support the expansion in as comfortable way possible. In other words, they need to figure out the technical details of the expansions in the near future. This includes connector availability between the eCommerce platform they are using and the marketplaces they wish to enter. In the short term projection, this is the factor that can also affect the decision making on goals.
Medium to long term planning should include evaluation of the eCommerce platform and its ability to provide connectivity to marketplaces in the future. If everything goes well, and if a retailer is making progress within the projected growth markers, it will most probably look to expand to other geographies, and that means that there will be a need to evaluate the replatforming options at a certain point of time, or to evaluate the current eCommerce platform for the future operations on international market, which will allow deep localisations.
This is important because not all platforms are equally suited for running the business on multiple channels in multiple geographies, and when you add marketplaces into the equation, it becomes even more complex issue. This is the part when you will need help from the consultancy and web development agencies, as they know how to lead you through the process and they can recommend the solutions that will fit your long term plans.
Methods of expanding
Methods of expanding can be determined rather simply, as you have only two options – either to manage marketplace operations separately from the main channels or via connectors using your eCommerce platform.
Manual listings are possible, as all of the marketplaces allow such approach, but this method is definitely not well justified for any brand or retailer that wishes to attack the market with force. Managing listings manually is a very time consuming process that requires a lot of working hours even if you are aiming to enter a single market using a single marketplace. With expansion to multiple markets and multiple marketplaces, this approach is completely without sense.
Instead of this, you should focus on integrating marketplace connectors into your eCommerce platform. For example, there are some really great eBay listing templates provided through various connectors that are available as integrations for most of the leading eCommerce platforms (such as BigCommerce, Magento, Volo Commerce, Shopify, etc…). Similar connectors are available for Amazon, Alibaba, Coolshop, Rakuten, or any other relevant marketplace out there.
This approach allows reduction of working hours spent on listing and managing online marketplace stores, and allows better control over every segment of business.
Order of marketplaces to enter
The order of marketplaces to enter is pretty much different from case to case and is very specific for each brand or retailer. In general, we already mentioned the paths that are most likely to produce results, but the pace at which the expansion is possible and the exact steps are definitely case specific and need closer look into details in order to be defined properly.
Basically, it all falls under two rules mentioned before – with focus on branding or increasing sales. Of course, the ideal scenario involves both options, but it also requires a lot of additional operations such as extended marketing, devising the promotions and loyalty programs (different from loyalty programs based on physical store approach), and localisations (in case you are expanding into other geographies).
The bottom line is that it is always best to start with eBay, as the best eBay stores are more than capable of providing substantial turnover and they do allow branding reinforcements that requires really minimal investment (custom eBay store design is not too expensive and any brand or retailer can afford it). After that, the focus should go either to Amazon if you wish to focus on sales with limited branding options, or to Rakuten if it has significant presence in the area in case you wish to reinforce the branding efforts with the customised Rakuten shop.
There are some specific moments as well, in case you are a retailer from Asia or Pacific area, as in those geographies Alibaba is to be considered before Amazon, and Rakuten Asia Pacific has a very strong presence in developed markets in the area, and especially in Japan which is a very strong market that can provide some really significant improvements to your business.
In any case, for each and every step of this road, you could use help from the experts, and we at Studioworx are here to help you with it. We have a huge experience in every segment of the business when it comes to marketplaces and we can provide you with a full spectrum of services you might require.
Our years-long expertise allows us to provide you with consultancy on all important issues, so we can help you determine the feasible goals and recommend the best steps to bring your business on marketplaces on a whole different level.
We can also provide custom eBay store design and custom Rakuten store design, and we have more than a substantial experience in this field. You can see some of the designs we provided in the portfolio section of our website.
Finally, we can help you with the actual management of listings and sales made using online marketplaces and other necessary services (customer support for example) via our trusted partners who are managing those segments exclusively.
You can contact us at any time via our website or via phone, and we will be more than happy to discuss your plans and propose the solutions that will give results. By choosing us, you will be choosing one of the leading agencies dealing with online marketplaces in the UK.