The core strategy of any multi-vendor marketplace is to become an online destination. The E-commerce boom started long before Covid-19 pandemics continues to fuel the competition today. To remain noticeable within their industry segments, companies need to understand what shifts took place recently and quickly adopt changes applicable to their businesses.
We’ve come up with a list of 5 major approach transformations in marketplace development that should help you shape your E-commerce business strategy for the upcoming year.
Needs-based vs brand marketplaces
The first and most powerful shift took place in the way customers and marketplace owners see the aim of commerce. Needs-based markets fail to satisfy the present demand. The main principles of convenience, ease, and relevance are no longer about having everything for everyone in one place. A positive buyer experience requires more than just a shopping destination. Thus, even mega or niche marketplaces can’t fulfill the consumer’s needs for the buyer (not the product) to be the center of merchants’ attention.
Brand marketplaces surge
To stand out a marketplace should be more than just a transactional site. And that’s why brand marketplaces are on the rise. Now it’s all about something for someone anywhere they need it. And to inject life into commercial operations, marketplaces aim to build strong relationships and gain customer loyalty. That includes personalization, growing communities, and providing customized service with online shopping. Thus, the latter turns into a meaningful and united virtual experience. Particular products are targeted to particular customers and create a one-stop-shop.
Another reason for this tendency is that brands try to get rid of the risks of retailers and dealers ruining their brand equity. Thus, any customer at any point has one and only destination for a certain brand. And the popular option is to browse products online, find a physical store location, and click and collect, either offline or have it shipped anywhere. Seamlessly integrated buyer experience matters most.
What makes a brand marketplace
Brand marketplaces create not just buyer experiences, but membership experiences, and aim to turn into membership economies in the long run. Unbranded search in everything-for-everyone mega marketplaces is replaced with the brand building to provide greater value to the audience.
To remain relevant in these volatile times, brand marketplaces need to:
- Invest in smart or unexpected collaborations to explore new customer territory and stretch the margins of brand identities. As opposed to outdated brand protectionism.
- Provide overlap between digital and physical brand presence to support multiple touchpoints and hybrid structures.
- Ensure technical maturity across markets to streamline the customer journey.
Enterprise vs small businesses & localization
Another natural alteration relates to geographical location and its influence on commercial success. In the past, it was all about large enterprises merging (read – swallowing) smaller companies to dominate with the same products and services global-wide. In the post-Covid period when local communities get lots of support, localization is a win-win strategy. Especially for cross-border E-commerce.
Successful multi-vendor marketplace development in 2022 requires a powerful localized approach. The latter helps international brands gain more revenue in different geographical areas. What matters is speaking to the shoppers in their language in product descriptions and/or customer support.
Localization is not equal to text translation
The first distinctive localization feature is attention to cultural distinctions and preferences. To engage your local audiences, make the marketplace relevant to them. And it’s not just about translating the pages of websites or apps into other languages. Localization goes far beyond that. It includes offering payment options popular within the region, presenting prices in native currency, and adjusting imagery to the specific cultural, social, or religious features. 73% of consumers are still unwilling to trade a localized website for a price 30% lower, as the International Online Shopping Survey shows.
Multi-vendor marketplaces can also benefit from local service bundling. Large platforms may offer local services to make them exclusive and preferable in certain areas.
Large marketplaces empowering local businesses
One more localization approach is to apply the supply chain consolidation local-wise. You can either use only local suppliers and deny international ones or focus on particular domestic regions.
At the same time, large marketplaces have the power to help local businesses either to emerge or evolve. But this doesn’t mean swallowing or blending them. Effective marketplace development in terms of localization means creating bigger ecosystems where small businesses have their part to play.
Collaborations of companies of different sizes unlock more value for all stakeholders. They boost the local economies via generating additional jobs directly or as side-effects. Large companies also benefit from better matches for different regions. They can get more from the same amount of effort. Yet, to apply this strategy successfully, you should consider the social environment and competition in the local market.
Single-channel vs omnichannel strategy
The single-channel strategy may still work for companies with limited budgets or scopes. Yet, technology made it possible for consumers to shop across channels with no or little difference in buyer experience. Thus, marketplaces have to do their best to develop their presence in all possible channels. And that incorporates interactions between a brand, a customer, and a retailer.
The prevalence of the omnichannel strategy among multi-vendor marketplaces proves once again that it’s no longer about the product. The focus is shifted to the customers themselves. Brands create a faultless customer experience and leverage the customer data across all channels.
After all, it’s worth the effort. Businesses with the omnichannel customer engagement strategy retain about 89% of their customers compared to 33% for those with weak omnichannel customer engagement, as the Cybra research proves.
Omnichannel strategy advantages
The benefits of the omnichannel strategy are rather explicit.
- Better customer experience. Consumers interact with the marketplace in preferable ways. Synchronized customer information helps provide a personalized customer experience with little or no chance for incorrect data or shipments.
- Increase in sales and traffic. Expanded and more agile sale strategies and value-added content drive revenue.
- Boosted customer loyalty. Increased customer satisfaction and high-quality content across all channels help retain customers.
- Better data collection. The marketplace gets valuable insights on how to generate content and what offers will work better both online and offline.
The benefits of this strategy also might generate some challenges, as they call for a lot of attention to detail and consolidated processes. A seamless shopping experience requires perfect knowledge of your audience to create the right strategies in the right channels. Thus, another issue is the selection of channels that matter to your audience and working on a solid strategy for each of them.
Yet, the most fundamental factor is the cost and accuracy of the strategy for developing all channels in an integrated and interconnected manner. Consistency requires a lot of resources like time, knowledge, and maintenance. And that results in building teams, skills, content, and tools to manage these processes.
Why switch from B2C to D2C
To ensure a compatible omnichannel policy, B2C marketplaces can’t afford not to have a powerful D2C strategy. This robust approach allows businesses to prevent their overreliance on brick-and-mortar or third-party retailers. Using D2C channels helped blend offline and online presence in a new clicks and mortar business model.
The retail disruption during the pandemic proved that proper D2C strategies also help maintain business continuity and satisfy the evolving demand for uninterrupted no-middlemen customer experience. The latter gives direct access to valuable customer feedback that can be used to drive sales. Total control over all aspects of customer experience helps build emotional relations and nurture customer loyalty.
To build decent customer-facing D2C experiences, marketplaces need to optimize their back-office processes. In such straightforward re-designing of the commerce models, you need to focus on business core competencies. Yet, this challenge can be seen as a benefit for your improving business strategy as a whole. To succeed, learn to concentrate on doing what you're best at and what matters most. Weigh your options and delegate other aspects that can take too much opportunity cost like custom E-commerce development.
Local vs cross-border trade
The immense shift in consumer habits allowed E-commerce to go cross-border with virtually no geographical limitations. This surge doesn’t only apply to certain types of products or services. Consumers make cross-border purchases of everything – from everyday items to luxury.
And this is not a short-term issue, rather an evolving tendency. Those who converted to online shopping during the pandemic are likely to stay after things go back to normal (well, the new normal). And the predictions are that the bigger part of it will be cross-border.
In a nutshell, despite all the benefits of this marketplace globalization, cross-border E-commerce has no one-size-fits solution. Different marketplaces have multiple options for different markets and regions. Such diversity ensures proper pricing, customer satisfaction, and retention. To stay relevant and profitable, cross-border E-commerce has to tackle several challenges.
Multi-vendor marketplace consumers expect payment options that use local payment networks, their own banks, and new mobile methods. Yet, when a shopper makes a cross-border purchase, the transaction involves not just their bank but the merchant’s bank. It also includes a payment processor, card network, issuing bank, an acquiring bank. Whether the customers select the preferred payment type themselves or follow the merchants’ options, the FX margin may be quite different and, thus, increase the total purchase price. And that’s what your customers need to know in advance.
Brands selling cross-border need to follow local tax laws, import and export regulations. The outbreak of Covid-19 increased the number of countries that tax foreign exchange payments as well as the tax amount itself.
Failure to understand the nuances in local regulations could result in serious financial penalties and damage to brand reputation. If the consumers bear these additional costs (and they usually do), it’s not the bank, but the merchant who is responsible for all the clarification. Transparency is the only strategy to avoid misunderstanding as to why and what taxes they are charged.
Price variation across countries
Marketplaces that involve cross-border E-commerce cannot and should not have the same price in different markets and regions. Pricing policy should be elastic locally and internationally. And elasticity is not only about the price but the value as well, both tangible and intangible.
Price alteration comes in two options.
- Cosmetic changes happen when the merchant only converts the price applying local currency. Earlier, we addressed the importance of localization for gaining trust. Shoppers expect to make a transaction in their local currency (by default or choosing it among other options) regardless of the product’s country of origin. Conversion can still be carried out in different ways. Sometimes it allows the merchant to grasp additional fees and not to let the card issuer benefit from it.
- True price localization is when the price differs across different markets, countries, and regions. In this case, price (and availability) for goods or services may vary globally or even across one country either due to governmental policies, currency exchange rates, taxes, tariffs, and insurance factors or market individuality like consumption composition, facilities, providers, competitors, brand preferences and local market needs.
In any case, the three major points are: to be transparent with the buyers, to stay within the internal pricing corridor for price differentiation, and to handle the price localization yourself.
Thus, to make the price relevant to actual market value, it is possible to use automated monitoring tools. They help keep track of products in different distribution channels, resellers and competitors, inside different countries and markets. Automated monitoring tools save the merchants time and money. And the data you receive prompts how to improve your branding strategy.
Multi-vendor marketplace development also requires reliable and seamless systems to support cross-border payments. Firstly, it’s vital to keep constant track of data protection regulations. These are specific to countries involved in E-commerce and tend to change the terms and compliance dates. Their violation may result in budget and brand reputation loss.
The cross-border trade boom also means a greater number of online crimes. To make cross-border transactions safer and prevent cybercrime, leading payment providers started to introduce or, at least, consider utilizing biometrics and KYC identity verifications. To protect revenue streams and ensure customer security, online marketplaces may also need to involve these technologies. As well as international payment messaging standards like ISO 20022. At present, 70 countries across the globe have adopted the latter, and more should join to provide interoperability and online purchasing security.
Build vs buy in marketplace development
When it comes to marketplace creation, custom E-commerce development is always the choice. Yet it does not mean that all the functionality will be written from scratch. To launch faster, experienced tech teams opt for ready-made API-level solutions or parts of those to solve some trivial tasks and focus on those parts of the E-commerce platform that brings the most value to the end-users.
It makes sense if marketplace development is seen not just as a platform creation but as shaping the engine that moves the E-commerce business forward. This option allows instead of reinventing the wheel and diving into troublesome and long-term development, to focus on what makes your business special and constitutes its core competencies.
For example, if you run a cross-border marketplace, you would obviously need a custom solution for banking, payments, and taxes. At the same time, you can integrate a SaaS product for website analytics or email marketing. If your marketplace possesses a variety of products that are hard to categorize and the integration of the full-text internal search is the only way to help users find the necessary goods, this aspect would require the most effort of your development team.
Recent transformations in the global E-commerce industry create multiple opportunities for marketplace development. Here are the main handy takeaways you can start implementing.
- In marketplace development, consider buying existing components, many of which have become commodities nowadays, and invest in building what makes your business core value.
- Focus on the brand of your marketplace. The strategy of selling everything to everyone is in the past. It’s all about personalization and customization now.
- Collaborate with small regional businesses to evolve together and create mutual benefits. Apply thorough localization strategies. The commercial success of your marketplace across the globe directly depends on how well you can relate to diverse local communities.
- When exploring new horizons through cross-border trade, do not underestimate the risks related to banking, taxation, pricing, and security.
- Embrace your customer's attention through multiple channels. Make your brand omnipresent and integrated into offline and online shopping.