When it comes to addressing your sales strategy in digital environments, many retailers ask themselves the big question: should we sell or not marketplace? They do not know if it is positive for the business to sell through virtual platforms, like Amazon, serving as a meeting point between buyers and sellers. The decision cannot be taken easily, and that is why it is necessary to consider all the pros and cons that each option implies.
Let’s start by getting an idea of the importance of ecommerce today and the changes in the habits of consumers worldwide. Spain, of course, is no stranger to these trends. In our country, electronic commerce grew up to 32.8% in 2018 compared to the previous year. This gives us a benchmark of its enormous importance in today’s economy, and therefore it is vital that businesses adapt quickly to this new reality.
The importance of marketplaces
Highlighting the importance of ecommerce is vital to get an idea of the opportunities that internet commerce is delivering. And, in this framework, marketplaces are becoming the prominent figure. 70% of online purchases in Spain made in 2018 began in a marketplace. It is an overwhelming figure.
And, obviously, that does not happen only in Spain. 49% of American consumers start by looking at Amazon when buying new products, 36% start the purchase cycle in search engines, and only 15% go directly to retailer websites. Therefore, even the idea that we first search on Google is no longer so clear.
This marketplaces boom is clearly visible in some sectors such as technology, mobile devices and accessories, household products, sports in general and, more specifically, products in the field of cycling. These are good examples of products that more and more users acquire in marketplaces and less on the website of the store or the manufacturer. The case of sports products is especially clear as their purchase through marketplaces has grown by 15% compared to last year, while the brand online store purchases have fallen by 14% and purchases on the manufacturers’ websites have fallen by 4%.
Logically, Amazon has a lot to say about it, also in our country. Spanish small and medium companies reached 4,000 million euros in turnover only on Amazon which means an increase of 50% over the previous year.
Marketplaces in your online sales strategy
When reading all these data, it is likely that many people think about that famous say “if you cannot beat your enemy, join them.” In my opinion, although not every retailer must sell through Amazon or any of the larger marketplaces, it’s important to keep in mind that these virtual shopping centers are the main leaders of electronic commerce. Selling products through them, however, requires a thorough analysis of the opportunities and obstacles for each type of business. What should we consider?
- The different types of marketplaces, depending on whether they are B2C (focused on final consumers), B2B (focused on sales between companies) or C2C (between individuals). Depending on the type of marketplace there will be substantial differences in the sales process, in its complexity, in time, in the price and in the way of selling itself. For example, a sale in a C2C marketplace can have a value of € 10, while a B2B sale can be € 100,000.
- The marketplace category. They can be horizontal, in which all kinds of products are sold; and vertical, focused on a specific sector or category of products. Should our sales strategy go through a marketplace, should we opt for a vertical or a horizontal one?
- Consider the advantages and disadvantages that a marketplace offers. Among the advantages we could highlight the greater number of clients, the best positioning on the internet, the immediacy or the lower need for investment, among many others. But there are also disadvantages such as the price war, the inevitable fees and commissions or the lower sales margins. We will have to evaluate all this very well.
In the end, the key will be to define if marketplaces are an opportunity and we bet on them as a sales strategy, or if we accept the challenge of fighting them. But in case we choose the first option, remember that not everything is Amazon or Ebay, the strategy can have many other variants. I present some cases of smaller marketplaces that have taken advantage of these new trends without having to go to the giants that we all know:
- Too good to go: A market based on a good cause. It seeks to connect restaurants, hotels, supermarkets, fruit shops or bakeries with users who buy their food surpluses for a lower price. It has almost 9 million users worldwide and with more than 170,000 in Spain.
- Manzaning: This platform was created with the idea of moving small neighborhood businesses to the same virtual space: markets, fruit shops, butchers, delicatessens, fish shops, pet stores, pharmacies…
- Delasenia: An initiative that arises from the Federació de Comerciants de la Sénia (FECOSE), with the aim of selling the products of the different member businesses. In this way, it does not only facilitate the purchase to their regular customers, but also allows them to expand to other markets.
In summary, the sales strategy through marketplaces cannot be reduced to being on Amazon or not, it goes much further and the possibilities are enormous. That is why it’s important to make a very thoughtful decision considering all the factors to ensure the strategy suits our needs.