29/03/2020
Starting the multichannel, multi-geo journey with marketplaces – good idea or not?
Smaller and new retailers are often facing a real problem once they decide to expand their operations to multiple geographies and make their impact on new markets. Simply, they are mostly limited by human and financial resources, and it is not that easy to simply show up somewhere and dominate. In fact, it is not that easy even to open a new sales channel in new geography without having to suffer some significant losses in the beginning. At least this is a general perception, but is it really the case?
The simple answer would be – no! There are ways to expand in an organic and sustainable way that will give you all the tools you need to succeed.
The main problem every retailer faces is the lack of the infrastructure for every single aspect of their operations in these new markets, and investing in all these things is often too expensive thus impossible to pull off.
If there was a way to just borrow or rent someone else’s resources - that would be an ideal situation, right? Well, the marketplaces have been devised to fulfill that purpose in the first place!
Of course, marketplaces are the right answer to this question. They have the structure to provide everything from the interface, inbound traffic, marketing platform, shipping options, entire logistics chain, as well as all the paperwork that is needed to make these trades.
Still, there are more than a few variables in this equation, and the only way to understand them all is to go step by step and split the entire ordeal into more manageable pieces. These are the most important segments that reaffirm the marketplaces as the best solution for going multi-geo and multichannel at the same time:
• Warehouses
• Logistics
• Reach
• Listings
• Marketing
• Customer service
Warehouses
Storing your supplies in a new market can be a real hell. Thanks to the marketplaces that have their own warehouses, you can do it easily, as they provide this as a standard service. Of course, the best way for each new geography is to pick the marketplace that has the best coverage.
Huge companies such as Amazon do have the best coverage overall, but when you dwell deeper, you will find that some of the local marketplaces are far better suited and have much better coverage in certain locations. This is particularly often in countries outside the EU and the west. Just as an example, the Polish market is absolutely dominated by their own local marketplace called Allegro.
So, make sure that you opt for the most cost-effective option that will be able to give you the edge in a certain marketplace. The most dominant players on a global scale are not always dominant in every country.
Logistics
Shipping and the logistics chain, in general, are of the utmost importance. Your delivery times and costs depend heavily on these services, and marketplaces tend to have the best possible deals in their hands due to their own resources and the ability to use 3rd party service in volume which greatly reduces the price.
Again, the most common and the most dominant solution on a global scale is not necessarily the best solution locally. Since the shoppers in each and every country are prone to using local solutions, marketplaces did their best to accommodate those demands, thus most of the successful ones have the ability to provide exactly that.
It is a far better option than trying to chase everything in this domain on your own, even if you have the resources to cover the expenses. It is better to probe the market using a popular marketplace, as it will allow you to get insight into the most popular solutions in that geography. After that, expanding via your main website is much easier as there will be no bad calls due to the lack of knowledge about the specific geography.
Reach
Starting fresh in a completely new marketplace is rather tough. Getting any kind of exposure is almost impossible, at least not fast and without investing a lot in paid advertising.
This is where the marketplaces are simply ideal. These are not only popular, but usually have an audience stronger than the top 10 individual retailers combined together, or even much higher than that. Of course, their exposure is distributed amongst the sellers that use those marketplaces, but still, it is a huge pool of potential customers your brand gets exposed to in a simple and effective way.
Any attempt to beat that is doomed to fail from the get-go, and investing in advertising on a market that is not familiar with your brand never reaps the fruit you hope for. That is why it is best to start with dominant marketplaces, as this allows you to really introduce yourself and your portfolio without overinvesting. On top of that, a part of the reputation the marketplace has will pass onto your brand and that will make further expansions much easier.
Listings
Listings on any marketplace are simply ideal if you wish to make a quick impact in new geography. Since all of these platforms have the option of premium membership and premium listings, you will get an easy and effective way to stand out.
Since the reach is already there, and the customers already have an established relationship with the marketplace, all you need to do is give them a small nudge towards your brand, and you will enjoy a real boom in comparison to any other entering strategy.
Marketing
Marketing is tough, especially if you are operating in a space where no one has ever heard about you. Getting things going is not as easy as it may seem, even if you have money to invest and time to spend on those attempts.
This is where marketplaces are ideal for several reasons. First of all, they usually have their own paid marketing options. This filters your target to the very people coming in, and that is a much better way to dig into the new opportunities where you still don’t have enough experience to succeed alone.
On top of that, an aggressive presence on the marketplace allows your brand to become recognisable and to become a familiar term amongst the population of the new geography. This is extremely important as it establishes the first contact between your brand and that population. It is possible to carry out this task in other ways, but none of them is nearly as effective, and they are all significantly more expensive.
Customer service
One of the key factors for successful operations anywhere in the world is having a solid customer service. Of course, this usually means having people employed in those roles, and that is connected with quite significant costs.
If you opt for expanding via marketplaces, you will get all the help you need. All of these platforms have their own customer support services, and that means that a part of your tasks will be carried over to them. Of course, you will have to actually deal with these customers if the problem is in the goods you sold, but all other aspects are covered by the marketplace. In this way, you will be able to save quite a lot of money, and quite a lot of headaches, especially if the customers require support in a language that is not one of the predominant ones in the world.
Conclusion
When you take everything said into consideration, it becomes clear that expanding via marketplaces is the way to go forward. These platforms give you the perfect opportunity to penetrate a new market with minimal hassle, minimal investment, and with great initial results. It also makes a perfect introduction to your brand to a new customer base, and also makes expanding in the same markets via other channels a much easier thing to do.