This article was based on the interview with Steve Denton of Ware2Go by Greg Kihlström for The Agile Brand with Greg Kihlström podcast. Listen to the original episode here:
E-commerce marketplaces have become essential for merchants in today’s highly competitive era of e-commerce. The COVID-19 pandemic has accelerated the shift towards online shopping, and as a result, marketplaces have seen a significant increase in activity. During the height of the pandemic, consumer packaged goods (CPG) took off as a category, with people buying things online that they typically wouldn’t have before.
One of the key reasons why marketplaces have become crucial for merchants is that they have become the new marketing muscle. Just like search engines, marketplaces provide product discovery and content generating power for businesses. Ignoring marketplaces means missing out on a vast potential customer base and exposure.
However, maximizing the benefits of marketplaces requires strategic inventory management. Merchants need to consider which products to sell on their own websites versus marketplaces and employ tactics like ring fencing or quarantining inventory. They also need to stay on top of the complex requirements that marketplaces have around shipping speed, label requirements, reporting, and data visibility.
The decline in loyalty among customers is another factor driving the importance of marketplaces. Ease of use and optionality are key factors influencing consumer behavior. Consumers want to find the best deals and have all the information they need for comparison shopping at their fingertips. In the current economic climate, they are also looking for things they need right away. Merchants need to be present on the channels where consumers are shopping and provide the optionality and ease of use they desire. Failure to do so means missing out on potential sales and customer loyalty.
For newer, smaller, or different retailers, the opportunity lies in delivering an exceptional customer experience from the start. With the abundance of options available to consumers, these brands need to ensure that their first interaction with customers is personalized, seamless, and transparent. The entire supply chain, including delivery tracking and returns, needs to be flawless. Brands that can deliver on this experience have a chance to make a lasting impression and build customer loyalty.
Competition among marketplaces also plays a significant role in driving brand innovation. Brands are compelled to prioritize the customer journey, invest in innovation, differentiate themselves, and provide affordable options. The constant drive for improvement benefits customers, as they have a wide range of choices and can benefit from the latest advancements in the e-commerce industry.
In conclusion, marketplaces are essential for merchants in today’s digital landscape. They provide a vast customer base, marketing muscle, and opportunities for brand innovation. Merchants need to embrace marketplaces, adapt to changing consumer preferences, and prioritize the customer experience to succeed in the long run.
