Creating a Marketplace Strategy
Whether you're new to e-commerce and just starting off, or you've been selling online for years, online marketplaces should be a part of your overall strategy.
What is a “Marketplace”?
Think of marketplaces as a digital mall where consumers can view (and hopefully purchase) a variety of brands across different categories. The consumer can get to know the merchant behind the product in an online marketplace.
But for a seller, the benefit of a marketplace is the traffic. Returning to the mall analogy, you are setting up a shop in a marketplace that already has people coming and is brimming with activity.
Essentially, everything is already there for you to sell. You have a place to list your product and describe your product. There's a way for you to attract people in the market, and there's a way to advertise. There's a way to fulfill your orders, a way to warehouse, and there is a way to ship.
Marketplaces offer a simple way to penetrate the market quickly.
95% of the world's population lives outside the United States, so expanding into global marketplaces such as Asia-Pacific, Europe, or Latin America can drastically increase your reach.
The ability of cross-border commerce is becoming easier. The barriers are lowering every single day, and the demand for American products in China is booming.
Cross-border commerce is a channel to explore, and marketplaces are the route to that channel. To have these opportunities on your radar ensures that you are continually growing beyond your Shopify site or your Amazon account. Plotting out an expansion roadmap with additional revenue streams and opportunities in your pipeline creates an environment where you’re always working toward expanding.
And when the time comes that you decide to sell, a prospective buyer will appreciate the projections on your expansion roadmap where you can show a stable growth trajectory. You can show that you have a viable business with a long runway of profit opportunities.
The benefits of a marketplace
What I like about marketplaces is that if you follow their formula to be successful in the marketplace, you can apply those same rules to your own sites and across other marketplaces, wherever your products are, and you're going to be successful.
The formula is relatively simple: great product, great content and reaching your audience through advertising or promotion. And we've touched on it before, but calculate your profits and focusing on your profitability. You can have a reliable product that looks good and sells well, but it's expensive to advertise, and it's eating away your profits.
Tracking your profitability can be daunting, but that's where the tools come in for automating your pricing, calculating your profit. Tools that collectively bring in your advertising so that you are spending the right amount. There are tons of tools out there to automate.
The formula of marketplaces is essentially a best practice, but the bare minimum that you should be doing. Their tools are just the basics. If you follow the basics in the marketplace and be successful in the marketplace, you can be successful outside of the marketplace.
Marketplace provides sellers with the necessary basic structure to be successful online. So if you follow the best marketplaces and create your own formula for what works for your brand that can be applicable across marketplaces and borders, then you create a viable, sustainable business that can be agile enough to deal with pretty much anything thrown at it.
If you're serious about growing your eCommerce business—expanding to multiple marketplaces should be on your strategy list.