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Online Marketplaces and the Opportunity They Present Retailers

An online marketplace (sometimes referred to as online e-commerce marketplace) is essentially a transactional e-commerce site where online consumers can choose products from thousands of third party e-tailers in a secure and optimised interface. eBay and Amazon are the most well-known platforms although others do exist including etsy, snapdeal, Flipkart and Rakuten.Choosing the Most Suitable Marketplace for your Products

As the number and offerings of online marketplaces grows the more there is for you as a seller to consider. As well as the popular marketplaces, major high street retailers and specialist marketplaces such as etsy and exist. A strong and varied product range is important when choosing which marketplace to sell on, but it is also important to make sure that your product catalogue is complimentary to the overall marketplace audience.

You should also choose marketplaces with a solid technical platform and the right tools for ease of catalogue integration and listings management. For online consumers, the main advantage of marketplaces is that they provide the ability to browse and easily compare thousands of products across many online e-tailers in one place. Consumers can then enjoy a unified shopping experience, adding products to basket from multiple sellers and transact securely using a single checkout.

From an online retailer’s point of view, there are advantages and disadvantages in using marketplaces. The main advantages include opening your products to a greater and new audience as well as the ability to try out and launch your products in new territories or aid internationalisation where you may not have a physical presence or fully localised transactional website.

The nature of online marketplace allows retailers to trial their product catalogue with an audience that may not know them while allowing them to compete more directly, taking market share of a trusted consumer source. Amazon have something in the region of 24.5million monthly UV’s and eBay 22.5 million monthly UVs [source: ComScore April 2013] illustrating the opportunity available to you on those marketplaces alone….then there are the other online marketplaces listed earlier (etsy, notonthehighstreet, Rakuten etc).

Further Advantages of using an Online Marketplace:

  • As many as 65% of shoppers prefer to buy from marketplaces [source: e-consultancy ecommerce statistics]

  • No need for a fully localised site if you are trialling a new territory

  • Easy to control pricing

  • Shipping and returns can be managed for you (Amazon FBA at a charge) while the channel is being trialled

  • Fixed cost of commission per sale, minimising the risk associated to listing products

  • Conversion of currency can be managed for you if trialling/using international markets on some marketplaces

  • Marketplace inventory tools can identify opportunities for you

  • Security and Fraud protection for both you as a seller and your online customers

There are also a few disadvantages but these are minimal when compared to the opportunity marketplaces gives you as an online seller/retailer. With the commission payment, although this is fixed, this is a consideration when deliberating which products you will list on the marketplace. This commission obviously impacts on available margin, however the fixed nature of this cost is potentially easier to manage than total cost to drive a sale on your own website site from the many other online channels you may manage.The importance of maintaining your listings may also be a challenge for some e-tailers but that is where the Intelligent Reach platform comes into its own, making this an easy process.The key to the success of any retailer utilising online marketplaces is the quality of the product data used to power the product listings on the marketplace. This is the key foundation of the activity and thus there are multiple considerations to take into account to maximise the opportunity:

  • Attention Grabbing Imagery: the better your product images, the more likely your offering will stand out from the competition as you compete against other sellers with similar offerings.

  • Descriptive Content Titles: internal terminology is a no go, it is essential that your product titles and descriptions are optimal, using a language that your online consumers understand. It is worth applying the SEO (Search Engine Optimisation) principles, many electrical product searches include the brand for instance illustrating the importance of using brand, model, colours and sizes if applicable.

  • Accurate Categorisation: ensuring your products are listed in the most appropriate category will help your online buyers to find your products. This can be easily maintained in your product data feed.

  • Product Attributes: stand out from the competition, consumers are more likely to buy from a listing that looks professional and provides information to help them make an informed choice.

  • Understand Pricing: while pricing isn’t always the main factor in a purchasing decision, price points must be competitive against the other sellers of your product ranges...after all everyone loves a bargain. Initial research is vital to make sure that the product you are listing are both competitive while ensuring margins are maintained. Most good marketplaces provide a pricing tool to enable you research and compare. It is also worth considering adding value rather than discounting to give another reason to buy from you, margin depending.

  • Stock Availability: understanding and managing stock availability is a key component to success. The worst consumer experiences can come from lack of expectation management…if you are listing a product, then your audience will expect you to be able to deliver in a timely manner. If you are low on stock then remove those specific products from the marketplace.

As of 1st Feb 2015, Amazon will not be charging a listing fee, instead they will calculate the monthly High-Volume Listing Fee which will be based on the number of active SKU’s offered for sale. The High-Volume Listing Fee will only apply if sellers exceed 2 million SKU’s in a given month, and it will be applied to the highest number of SKU’s above 2 million at any time during that month. For each SKU exceeding 2 million, a fee of £0.0003 will be applied.

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