Which strategies and data brands should know to succeed online
Research shows that almost 1 online shopper out of 2 buys on marketplaces like Amazon, eBay and Zalando. What do brands need to successfully connect with their potential customers online? We asked this to Vito Perrone, CEO and founder of YOCABÈ.
Why most brands should include marketplaces in their distribution and sales strategies?
Shopping behaviors are changing fast. During the sales process on average each buyer interacts with a brand through 8 offline and online channels, including marketplaces. According to the Connected Shoppers Report from Salesforce, 47% online shoppers choose to buy on Amazon, Zalando, Etsy and so on. This is happening for three main reasons: wider offer, convenient prices, fast deliveries. Several researches point out that 49% product searches on the web start on Amazon. So the introduction of the marketplace model – together with the more traditional supplier-retailer B2B one – is offering brands new opportunities to engage potential customers on a larger scale. This is particularly true for brands with a weak brand awareness. An example? On average an Amazon page converts 5x more than a not well-known e-commerce page. According to Millward Brown Research, the Amazon average conversion rate is 13%. For Prime Members is 74%!
How to choose the right marketplaces?
First of all brands should choose the right marketplaces to sell online according to their product category and the marketplaces’s audience. For example 90% users who shop on the French marketplace La Redoute are women, aged 30-45. So La Redoute could be an option for brands who want to target this kind of audience. Having a good knowledge of each channel could make the difference.
It’s also important to choose the right marketplaces according to the geographical area a brand is planning to expand in. An example? In Netherlands the most popular online retailer is bol.com, a generalist marketplace that attracts over 42 million visits per month. Amazon does not even belong to the Top 5 Dutch marketplaces (it’s still a book e-commerce, but the Dutch marketplace will be launched very soon). In China Amazon is the fifth marketplace. In Germany Otto and Real.de are other two main channels, but they are completely unknown outside the DACH region. So, it’s important to have a deep understanding of marketplaces’ popularity in each market .
As regards Switzerland, without considering the product category focus, most visited marketplaces are Ricardo.ch, Amazon.de with over 8 million visits/month, Zalando.ch (with over 5 million visits/month), Galaxus.ch and Amazon.fr with an aver of more than 2 million visits.
What about the sales strategies?
A brand can embrace 3 different strategies to sell on marketplaces:
1. Expansive Strategy
The brand will both sell TO the retailer and sell ON the retailer most of their inventory, both in season and previous season products. We applied this approach with some of our brand partners and they doubled volumes vs. selling only to the retailers. However, margins and control suffer because the online retailer will tend to lower prices to win sales.
2. Selective Strategy
The brand will sell a selection of products TO the retailer and choice a, usually different, selection of products to sell ON the retailer. There are several variations of this approach. A Brand may decide to sell their top sellers themselves to preserve margins and control or, keep for themselves special collections where control is key and sacrifice volumes.
3. Full Control
The brand will not sell TO the retailer because they want to keep full control and decide to sell all or a selection of their products ON the retailer. This scenario is the one with more variations that can yield different results. Here we assume that the goal of the brand is to selectively choose retailers and products and align pricing to their overall strategy.
What are the key factors to succeed on marketplaces?
Brands should pay attention to 4 main aspects. First of all their product listings should be optimized for each marketplace and, of course, localized for each country. In such competitive markets pricing is another key factor. A proper pricing and revenue management strategy should consider the variable marketplaces’ commissions, the shipping costs, share of returns and relative costs. Each marketplace has its own rules and its promotion and advertisement tools and opportunities. It’s vital to have a deep understanding of them to increase visibility and conversion rate at a sustainable cost. Last but not least a proper logistics infrastructure is needed to cope with international sales and strict requirements of many platforms on delivery times and return policy.