At Mirakl, we have discovered three keys to success with a Marketplace (where third-party partners sell alongside the online merchant):
- Offer a large array of product choice
- Provide a great buying experience
- Prioritize fair and competitive pricing
You can’t sell what you don’t have.
One of the core benefits a Marketplace delivers is the ability to offer customers a much wider choice of products while also staying true to your company DNA and brand. And, there is no risk of carrying inventory or overhead costs because the product is offered and fulfilled by a trust third-party partner.
55% of online shoppers in the US will go to Amazon first to find a product they need because they know there is a good chance of finding it there, backed by competitive pricing and excellent service. That compares to 28% who said they use search engines like Google, Bing and Yahoo to search for products. Shoppers aren’t starting on retailer websites, either. In the same study, just 16% of searchers said they begin the hunt on a retailer’s site.
Product selection is part of the virtuous cycle.
Amazon has done a commanding job of extending its product offering through a Marketplace model and educating customers about the choice available. This model builds on a trusted relationship with the customer, earning their loyalty, as part of Jeff Bezos’s virtuous cycle strategy.
In this strategy, a broader array of products available leads to more choice, which attracts more customers, which leads to increased revenue and profitability. This is equally true for a horizontal Marketplace where customers can find a bit of everything, or a vertical, more specialized Marketplace. In either situation, the golden rule is that new customers should always find what they expect from the retailer’s brand.
Find and attract net-new customers
Without an extended range of products, it can be difficult to attract and win over new customers. 80% of people visiting a store with an intention to buy, leave without a purchase due to unavailability of a particular size, color or model. In a Marketplace, while existing customers may already know about your site and its excellent product selection, new prospects do not. A Marketplace model can add such a variety of products it attracts net new customers who are now exposed to your product set as well.
Size isn’t everything; be consistent with your brand
The key, when offering an extended product range, is to do so in a way that is aligned with your corporate strategy and focus. We don’t recommend adding seller catalogs if they don’t fit into the corporate mandate, or if they extend the company beyond what it can realistically focus on given its resources or brand. Marketplaces are successful when they offer customers products that are consistent with brand image and global strategy. For example, fashion Marketplace Farfetch offers a huge selection of clothing, but does not offer electronics - that simply wouldn’t make sense for the brand.
The future of e-commerce will be shaped by three types of players:
- Big generalists
- Click & mortars
- Vertical pureplay specialists
The categories of products and product range may differ from one Marketplace to another, but as an operator, you should strive to create a selection as large as possible within your core business.
Then, seek to differentiate your Marketplace through your branding, product category or service positioning, marketing, and your level of service to keep customers coming back. Customer loyalty is, after all, your #1 objective with a Marketplace.