5 Myths about Marketplace We Need to Talk About

Kelly Gow - February 7, 2019

Marketplaces around the world are growing at an unprecedented rate. At a time when many retail malls and high streets are struggling - marketplace has given businesses a powerful strategy to offer their customers greater product choice and quality of service. Yet despite their prevalence and success, many businesses don’t fully understand the power and potential of the platform approach - and it’s time for this to change.

Marketplace is a platform where multiple sellers can compete on price and you reap the benefits. Both retailers and B2B companies are using marketplace to rapidly enter new categories, complement the assortment they already have and platform their business.It won’t be long until marketplaces will account for more than 50% of global online transactions. But some companies are uneasy about what launching and managing a marketplace will entail, what it would mean for their business, and how it would be perceived by their customers. Since marketplaces allow these companies to scale using third-party sellers, companies may have concerns about transitioning pricing, customer service, and responsibilities to other parties.

Let’s bust the myths around marketplaces. Discover how thousands of companies are capitalizing on connected systems, and providing greater value to their customers.

Myth #1: “Marketplaces are complex to build and difficult to manage.”

Given the scalability of marketplace platforms, the opposite is true. It is one of the easiest ways to scale your assortment both rapidly and successfully because it leaves the heavy lifting to trusted sellers on your site. And since marketplaces have a unique price-competition benefit, companies needn’t micromanage third-party pricing or other customer benefits for which those sellers are responsible.

Adopting a marketplace doesn’t have to strain your workforce, either. Even large companies like Kroger and Darty have only small teams managing their new marketplaces with unprecedented growth. Companies like J. Crew and Siemens went live with their marketplaces in five months or less.

Marketplaces become streamlined when you have the right technology backbone. Here are some advantages marketplaces have over other eCommerce solutions that try to achieve the same quality assortment and customer experience:

  • Fewer HR requirements—one marketplace manager can manage approximately 100 sellers

  • Seller performance tracking and automated quality controls

  • Integration with your existing eCommerce site

  • Consistency with your branding, even with third parties

Myth #2: “I’ll lose control of my eCommerce site to third-party sellers.”

In fact, it’s the opposite. Companies that own marketplaces take a strategic and systematic approach to onboarding sellers so you can count on them to improve your ecosystem and your brand. Even as you maintain ownership of the environment, you can manage a large supply of sellers, and achieve a large product catalog.

Before onboarding, you can diligently qualify all sellers, measure their quality of service, and prioritize them according to your internal requirements. And the benefits go to both you and your customers. Your sellers can ensure continuous product availability and breadth of choice while you maintain your brand.

It’s great that these sellers do so much to contribute to your ecosystem—create products, manage customer orders, ship products, and handle customer service while you collect a profit. Keep in mind, their efforts become an extension of your brand; they become an integral part of the customer experience. Fortunately, marketplaces make it easy to ensure sellers uphold your standards as they interact directly with customers.

Myth #3: “We won’t be able to compete with Amazon.”

You don’t have to become the next Amazon to succeed. In spite of Amazon, brands are transforming eCommerce with specialized niche marketplaces that are thriving. Amazon reinvented eCommerce, now you can reap the benefits of that innovation.

Regardless of your vertical, marketplaces are the undeniable future of online selling. In fact, our study with Forrester Consulting found that marketplaces help retailers boost loyalty, increase average order values, and build deeper relationships with customers. Why wouldn’t every retailer follow suit?

What’s more, any buyer who has shopped on Amazon is already trained to buy on a marketplace.  Amazon can be intimidating, but perhaps they’ve done other companies a favor as those companies differentiate their own marketplaces.

Myth #4: “I won’t be able to recruit the sellers I need.”

Seller recruitment can be challenging, but it is a critical element of a successful marketplace. Fortunately, there is no shortage of viable sellers looking to set up shop online. This especially applies to niche and specialty brands, where their owned websites rarely get enough traction.

Onboarding sellers is simple and straightforward for both the marketplace operator and the seller. Operators create their own product catalog hierarchy, which allows sellers to map their product catalog to the operator’s. This process enables the operator to automate product selection by importing only products from the categories and subcategories supported on the marketplace.

Myth #5: “It’s too costly and disruptive.”

Now that 86% of consumers expect more product choice—even in the same category—marketplaces are one of the most cost-effective and lucrative ways to scale your assortment and sales. And since you profit from your sellers with minimum upkeep or heavy lifting on your part, the sky's the limit in terms of how much you can make.

Concerned about disrupting your existing channel partners? B2B brands like Siemens, Toyota, and METRO have already revolutionized how they leverage partnerships using their marketplaces. That’s what happens when customers have a one-stop destination to research and purchase products, sold and shipped by your distribution partners—you are embracing your channel partner ecosystem, not disrupting it.

Don’t believe the myths. A marketplace will transform your business model to capitalize on connecting systems, allowing you to easily scale your network of partners and offer more value to your customers. That means capitalizing on what you’ve already built—your brand, your knowledge, and your relationships—by creating the right ecosystem in an approachable, cost-effective way.

Kelly Gow,
Global Product Marketing Manager

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