Becoming a marketplace means expanding your offer, attracting new customers, and strengthening your market position. But be careful not to lose your merchant identity! A marketplace should not be just a product aggregator with no coherence or identity.
To succeed, it’s essential to maintain a smooth and reassuring shopping experience, overcome purchasing barriers, and optimize your business model. In this episode, discover how to combine choice, convenience, and profitability without compromising the fundamentals of commerce.
The marketplace: an e-commerce site first and foremost
Becoming a marketplace should not mean transforming into a catch-all platform, or a big faceless bazaar. To become a marketplace, it’s essential to remain, first and foremost, an (e) retailer!
The basic rules of commerce therefore need to be upheld. The scale of the product offering is an opportunity for the consumer, but they can very quickly become stuck in the Messy Middle, a state in which sorting out all the information becomes difficult and completing a purchase becomes impossible. Product selection must be qualitative, the customer welcome must be personalized, product recommendations individualized, and customers must be led, on your e-commerce site, to the product they wish to buy.
It is also by tackling the barriers to online purchase that you remain a retailer. Reassure each customer of the supplier’s good reputation, be transparent about delivery costs, and above all, provide an online shopping experience that is smooth and enjoyable!
But retail is also about securing margins, and in the context of a marketplace, this can become difficult. The margins realized by a marketplace are on average three times less than those of a traditional e-commerce operation. This margin is dependent on the rate of commission raised on sales, which is on average 10%. You need to ensure that your marketplace is attractive to most parties but above all to preserve your own sales in order to avoid a drop in income.
Finally, the marketplace is a mine of highly valuable data. It’s important to collect, process and use this data, both to deepen your customer understanding and to set your strategic direction, but above all to improve the experience of your customers along their shopping journey.
Go back to basics to ensure the success of your marketplace
Shoppers go to marketplaces for three main reasons: price, convenience and choice. It is therefore in the interest of any retailer wanting to launch their marketplace to optimise these three factors to ensure that they fulfill their promise, while at the same time tackling the barriers to purchase.
Fully embrace your role as a retailer
There is an overabundance of choice in product ranges, particularly on marketplaces. Consumers are quickly overwhelmed and sometimes find themselves stuck in the “Messy Middle”, the stage where they explore, compare and evaluate products, trying to sort through the profusion of information, opinions and technical data that can be accessed in just a few clicks.
More than ever, the role of the retailer is to assist customers and to make choices easier for them throughout the purchase process:
- Choosing the right products to put in the catalogue (by analyzing and understanding the needs and wants of existing customers, as well as those who still need persuading).
- Welcoming customers to the platform by providing them with personalized information, offering the products most likely to please them, using customer intelligence,
- Offering the most practical services in order to finalise the purchase (payment, delivery, returns, assistance, etc).
Tackle the barriers to purchase
Even though many websites – particularly marketplaces – optimise their shopping journeys to make them as simple as possible, buying on the internet often involves more thought than just taking a liking to a nice t-shirt in a shop window. But by putting an instantly appealing product in front of the customer, a web site can facilitate impulse purchases. There are still barriers to purchase, and some are difficult to sidestep, but with a marketplace it is possible to allay some customer concerns.
- Reputation of the supplier
consumers are worried when they make a purchase on a new or unknown e-commerce site. By going through a marketplace, shoppers are reassured because they believe that the marketplace will have chosen carefully. In addition, reviews and ratings allow the consumer to assess the seller’s reputation. All these elements should be optimised, and the provenance of the product made very clear (as laid out in draft legislation about the accountability of platform operators).
- Delivery costs
price remains a barrier for buyers, especially when delivery costs have to be added at the end of a purchase process. As a marketplace, it is in your interest to unify delivery rates and methods. Why not offer your sellers your own logistics services, if you have already developed your e-commerce business? It’s a way of both increasing your income and sharing costs.
- Bad customer experience
customers who have a bad experience say that they will never return to the site. A whole range of reasons along the purchase process can come together to create this impression of customer experience, but there’s no doubt that in a marketplace, as on any e-commerce site, particular care must be taken to offer a smooth, speedy and pleasant experience, from the product search stage through to the returns process.
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