Retail recovery: Why you should be selling what you don’t own
Richard Hankin makes a case for the online marketplace as an easy way to engage customers with less effort and financial risk. So, how can you sell what you don’t own?
Throughout the economic chaos of 2020, ecommerce retailers were few among the masses that not only survived th pandemic but thrived, thanks to consumers’ growing need and appetite for online shopping.
If you are one of the companies that have put in the hard yards of getting customers and keeping them during this time, the question for 2021 is: How do you keep sweating your asset? By making more products and growing your range? That is one way, but it’s high risk.
The other way is to sell your customers what you don’t own. This strategy is about investing in the IP to enable you to sell other companies’ products without taking the risk of buying the product and putting your neck on the line. The technology to enable this commerce strategy wasn’t available ten years ago, and it enables endless growth and capability.
What’s a marketplace?
A marketplace is a destination for multiple sellers to come together and for buyers to gather. Here buyers compare what is on offer and make their choice based on needs, wants and price.
From the traditional marketplace to today, online marketplaces still provide customers with one easy, convenient destination to compare a wide choice of offerings from a variety of curated sellers.
An online marketplace can be vertical-focused, offering a single category – such as car parts or activewear – from a bunch of supply sources. Or it can be horizontal, offering access to products grouped around an interest such as cycling or gardening. Or it can be global, giving consumers access to almost infinite products – think Amazon or eBay.
Sell more things
So, why grow your brand beyond your own products? Would that not dilute your ownership or involvement?
Not at all. The key benefit of feature-rich marketplace core technology is that it creates a community for customers and unifies the commerce experience for them. As a brand, this allows you to become more than a single platform selling a single range; you become the umbrella, taking a commission on every product without carrying the risk and cost of producing each one. It also allows you to grow across categories faster and expand your online presence swiftly by leveraging off the existing profiles of the brands you sell.
Think about a huge marketplace like eBay. It does not own the products, but it owns the customer and it owns the experience. Frictionless experience is a drug that consumers cannot get enough of.
Increase frequency of visits
Today, brands can be born on social media overnight, so the most valuable asset a retailer has is its customer base. A marketplace approach to ecommerce increases the lifetime value of your customer because they become part of an evolving community, rather than engaging with your brand for a ‘moment-in-time’ need.
Single platform offerings tend to attract customers for one-off or big-ticket items, like a favourite jumper, skin product and gadget. Maybe they had some spare time and money during lockdown and a google ad caught their attention. But that is not necessarily a purchase they will make again soon.
A multi-brand platform, however, is a lure to return. Any parent that has purchased a pram will recognise the temptation of purchasing through a baby marketplace. It starts with a pram, but there is so much more needed when starting a family – bottles, clothes, bouncers, car seats, carriers – it is endless. That customer becomes part of the community, alert to sales, new products, parenting articles and advice. They are a willing return customer for the foreseeable future.
Fishing with a bigger net
In the same way, a marketplace is also a terrific ice breaker with customers. If you are a brand that makes big-ticket items (think sofas or tables) and that is all you sell, your barrier to entry is high. The customer must be actively looking for that product and it is your job to target them at the right time in the right way.
Through an online marketplace, consumers will be exposed to your brand through natural progression. They might go looking for a candle or rug but be alerted to furniture and discover your products. If their experience purchasing a small item is positive, over time they will return for larger items when they need or can afford them. The possibilities for nurturing and growing the customer relationship are far greater.
Superior technology, great CX to support scale
Let’s face it, no retailer today can exist without an effective, scalable ecommerce platform. But constructing and managing one is more complex than it looks. A great online marketplace offers the technology in-built from the outset, meaning a better online experience for the shopper and more technical support for the merchant.
Customers should experience a full stack technology solution that consolidates a market, allows for range extension, creates a community for customers and unifies the commerce experience for them. This, in turn, also generates modern revenue streams, greater potential for growth and produces valuable data and insights that better support marketing and sales strategies. It also takes the burden of managing and updating the platform away from the merchant, so they can focus on what they do best – brand and sales.
Building a community of loyalists
Online retail competition is greater than ever and there is only so much that one brand can offer. Shoppers will dip their toes in for what they need, but there is a limit to how extensively they will engage with a single brand. Rather than viewing the competition as a roadblock, marketplaces treat it as an opportunity for everyone to grow.
Marketplaces combine many brands and their loyal following under one roof, united not just by a product but by a sense of community. By offering memberships, exclusive offers, premium content and curated selections, your marketplace becomes a unified destination that they are eager to be part of.
As ecommerce rapidly evolves and competition grows fiercer than ever, creating and stocking more self-branded products is an unnecessary risk. Online marketplaces offer a way to expand faster and engage with more customers, more effectively, without carrying the technical or financial burden. Don’t settle for a single offering and risk being trumped by a competitor. Become the ‘umbrella’ and set your brand up for future growth.
Richard Hankin is the VP of sales at Marketplacer.