The arrival of new shoppers
Online shopping has rapidly accelerated, but it isn’t new. However, there are some recent changes to online retail likely to have a lasting impact and support increased use of marketplaces.
Matt Newell, Chief Executive Officer at the General Store, says while forecasts for change in the retail sector are generally overdone, one major change has been first-time digital shoppers entering the market.
“On a consumer level, the most important change is the arrival of new customer groups, like baby boomers, to online shopping” Matt says. “There is good upside for retailers who can bed in those new customers. Probably more so than focussing on existing online shoppers who were forced to ramp up because of isolation, as their online shopping will likely return to somewhere close to their original behaviour.”
Since lockdown measures were introduced, Jethro Marks, Co-founder and Director of online retailer, The Nile, experienced first-hand an increase in “buyers who have never thought of buying online before.” These sat alongside existing customers now shopping far more frequently.
Convenience takes centre stage
But Jethro says it’s not just the expectations of new and unknown customers that retailers need to understand. There is a renewed customer focus on convenience following a period “where people couldn’t go anywhere or didn’t want to. If there is going to be one distinguishing factor for retailers, it will be who can make it as easy as possible for the customer to get what they want, in the timeframe they want it.”
And online marketplaces are often synonymous with convenience. The 2019 CommBank research found that consumers were most attracted to online marketplaces’ value, product range and ease of use.8
“Online marketplaces are a one-stop-shop for consumers,” says Alana Fennessy, Manager Account Services APAC and China for ChannelAdvisor. “Their appeal comes from not just product selection and pricing, but a streamlined experience from the product research stage all the way through to post-sale support.”
The online marketplace proposition
When developing an online marketplaces sales strategy, retailers need to tailor their approach. Having operated The Nile as an online marketplace for 17 years, and currently trading through eBay and Amazon, Jethro says that marketplaces are “very different from running your own store”.
“On a marketplace, it’s very different. A marketplace is a product-by-product, listing-level interaction with the customer, and the retailer’s brand proposition is not as relevant.”
“Retailers can have multiple products and they only need to focus on the individual product. That means having a good feedback rating, an attractive price and quick delivery.”
“The system also manages our inventory,” Jethro added. “One of the core advantages over bricks and mortar is that on the marketplace, we are quite fluid. You can range what sells rather than having to range what’s part of the proposition to the customer.”
Optimising the marketplace experience
Given the recent disruption to operations, Alana says retailers with scalable operations and flexible supply chains were able to adapt.
Another element that’s vital is the link between customer service and overall marketplace success. “One thing to know about marketplaces is that if you provide poor customer service, your seller rating will decline,” Alana explains. “For example, getting your orders processed and delivered quickly leads to customer satisfaction. A poor delivery experience will result in your listing status deteriorating and ultimately impact your success on each marketplace."
“The value of data cannot be overstated,” Alana says. “The right data is what should inform marketplace strategy including fulfilment and your understanding of consumer preferences. In this environment, it's no surprise that shoppers are more likely to buy an item when they are confident that they will be able to return it if something is wrong. So, ensuring you offer an easy returns process is important,” Alana adds.
Using marketplaces to move stock
For retailers whose doors remain closed, are decluttering their stores or that sell seasonal products, online marketplaces can help move unsold inventory. As Jethro says, if you are an apparel retailer and you have a build-up of out of season stock, marketplaces in the northern hemisphere could be an attractive sales channel.
“You can as easily list products on Amazon in the US as you can in Australia. There is a massive market up there and it might mean some locally focused retailers become first-time exporters.”
Alana adds that “with marketplaces, you can be creative with how you move products. There are marketplaces specifically designed to appeal to discount shoppers, which can be a great resource for brands and retailers looking to move out-of-season or end-of-life stock.”
Developing a fit-for-purpose strategy
With online marketplaces firmly established as the search engine of retail, here are some important considerations for retailers looking to develop their sales strategy derived from the CommBank Retail Insights Report published in January 2019.9
- Apparent differences in online marketplace spending patterns exist across generations, genders, and shopper types, be they motivated by trust, brand, value or impulse. Retailers must, therefore, consider their customers’ behaviours when matching their use of online marketplaces with their target market
- Each online marketplace has its unique strengths and challenges. It is critical retailers understand their position in the market and their objectives for incorporating online marketplaces in their channel strategy. Then retailers can map these to the online marketplaces that their target customers are using
- Many Australian online shoppers use both Asian and Western online marketplaces. They stood out for purchasing across more categories, buying double the number of products and spending almost twice as much online each month as consumers who only use Western marketplaces
As Alana points out, the primary goal for sellers is to make sure their products are available wherever and whenever their customer wants to shop. It’s about being visible. And with more people now likely to use online marketplaces, having a strategy in place for each channel is critical.