Brands are faced with a dilemma: maximizing their distribution while controlling their brand image and positioning in the eyes of their customers and prospects. Even for brands with direct access to consumers through a network of stores or the use of customer data collected on their website, through their direct marketing actions or their loyalty program, the question arises of expanding their visibility and their sales by being present on marketplaces.
Many questions arise: which marketplaces to choose? General or specialized? Which product selection to offer? At what price? How can you be sure to get a good visibility? How much does it cost? Even brands that are reluctant to use marketplaces may already be present on them without knowing it, pushed by unscrupulous distributors who sell them on the “grey market”. It’s best to take control and take advantage of the rapid growth opportunities that marketplaces represent, in particular with international markets.
First step : set your goals and identify your constraints
Choosing to be distributed on a marketplace is potentially a way to accelerate growth and open up international opportunities, but you need to know the rules of the game and to be clear about your goals. Market targeting? Visibility? Testing on certain products? Opportunistic movement?
You must also ask yourself questions about the implication for your Supply Chain: do you want to keep control of logistics and transport? Or to rely on the marketplace’s logistics, with a dedicated stock of products, so that there are no order cancellations?
Depending on the answers to these questions, the approach strategy will be adapted.
Second step : benchmark your offer vs. your competition
It is relatively easy to see which competitors are already present on the main marketplaces (Amazon, eBay, CDiscount, etc.) and with what offer. We can also analyze the visibility that the platform gives them thanks to the sponsored promotions and campaigns.
Beyond the “known” brands with which the merchant is used to dealing, it is clear that there are lots of completely unknown – or even unpronounceable – brands on the marketplaces, at unbeatable prices, as well as counterfeits, which the marketplaces do not always seem to be very careful about. The price comparison facilitated by the ergonomics of the marketplace will therefore put the merchant’s product on an equal footing with very low-priced products that do not necessarily have the same quality or respect for standards. This is a fact that the merchant will have to live with if he wants to be present on the marketplace. Nothing prevents him from taking action against the offenders if he believes that his products have been counterfeited and that there is unfair competition with confusion for the consumer.
Specialized marketplaces are also to be taken into account because the end-user will find his way more easily than on a “catch-all” marketplace where the navigation will be longer before reaching the right category. Some examples: ManoMano for DIY, Etsy for handicrafts, Daparto for car parts, …
In addition to the intensity of the competition, the benchmark also allows you to see the price level practiced by other brands and to analyze your own competitiveness, taking into account the commission charged by the marketplace, up to 15% on certain segments!
Third step : choose an integrator and select your target marketplaces
Choosing to be distributed on several marketplaces can be a real headache in the preparation, launch and monitoring of the business. Each marketplace has its own requirements on the format of the product data, the documents to be provided by the merchant to be qualified and obtain the right to sell on the marketplace.
To facilitate the preparation of the launch, the registration with the marketplace and then the follow-up of sales and the reporting on the orders made via the marketplaces, it is strongly recommended to use the services of an integrator. The integrator knows the requirements of the different marketplaces and can not only facilitate the IT integration (by API or file exchange) of the distribution on the different marketplaces but also advise the retailer thanks to his experience acquired with other retailers. The integrator also provides the retailer with integrated reporting of their activity on all the selected marketplaces, which allows them to follow their performance on the marketplaces in a consistent manner.
Fourth step : define your product catalogue and set your prices
The retailer does not have to put his entire catalog on sale on the marketplace, especially if he has price competitiveness issues with certain products or if he has to deal with a strong fluctuation in his stocks with risks of unavailability. It is better to have a limited catalog of products that are well positioned in terms of price and with a guaranteed availability, otherwise the marketplace may sanction the retailer.
Pricing is an extremely sensitive subject because it will strongly condition the visibility of the product on the platform. The retailer must make trade-offs between preserving his margin and making his prices competitive once the market place commission has been integrated. It is not uncommon to see a significant price difference between the brand’s own website and the marketplace for the same product. Tools for monitoring pricing on marketplaces can be useful here to be reactive and adapt prices on a daily basis.
Competition sometimes comes from… the marketplace itself, which can be both seller and shipper and uses the massive amount of data from the activity of the retailers it works with to identify the best selling products and set a competitive price. This is a risk for the retailer to take in exchange for an additional market potential that opens up for him with the marketplace.
Fifth step : make sure your offer is visible
The marketing plan linked to the distribution on the marketplaces is a key element of the success of this distribution mode. The best product catalog, with the right pricing, will not be a commercial success if it is not supported by promotions and sponsoring campaigns.
This of course has a cost, but it is an alternative to the SEO/SEA and affiliation expenses that the retailer must bear when selling on his own website. The marketplace will be able to advise the retailer on which products to promote and when to launch the campaign.
Conclusion
Today, a brand can no longer do without considering marketplaces in its distribution strategy. The deployment must be mastered and conducted in project mode by coordinating IT, marketing, supply chain and finance. When well executed, this can be a decisive factor in growth acceleration.
#marketplace #retailstrategy #distribution #growthhacking
