Online marketplaces have experienced a rapid rise in recent years. We'll explain how you can leverage online marketplaces in your e-commerce strategy to be successful. You'll also learn why excellent product data plays an important role in this.
An online marketplace is a digital platform where you, as a seller, can showcase and sell your products or services. It is a virtual marketplace that brings together buyers and sellers, allowing them to interact and conduct transactions.
On an online marketplace, as a seller, you can display your inventory, present product descriptions, set prices, and process transactions. In return, you pay the platform listing fees and/or sales commissions. Buyers have the ability to search, compare, and purchase products or services. The marketplace serves as an intermediary and often provides tools for payment transactions and shipping. So, an online marketplace is somewhat like an online store, with the key difference that many sellers offer their products there. Sometimes, it's not immediately apparent to the buyer with whom they are entering into a contractual relationship. For instance, Amazon is also an active seller on its own marketplace.
Examples of well-known online marketplaces include Amazon, eBay, and Etsy. These platforms enable individuals and businesses to showcase their products to a large audience and reach potential customers worldwide.
Online marketplaces play a crucial role in e-commerce. Below, we elaborate on the numerous benefits for both parties:
Greater Reach: By participating in an online marketplace, sellers gain access to a large number of potential customers. These marketplaces often attract millions of visitors, increasing visibility and sales opportunities. Amazon's reach is just one example. It's not surprising that well-known German online retailers like Zalando or traditional retailers like Kaufland, Media-Markt, or Douglas are entering the online marketplace business.
Easy Access: Starting as a seller on an online marketplace is relatively straightforward. Most marketplaces have a straightforward registration and setup process, allowing sellers to quickly list and sell their products. Additionally, there are tools such as Tradebyte that make this even more convenient.
Trust and Credibility: Many online marketplaces have an established reputation and enjoy the trust of customers. By participating in such a marketplace, sellers can benefit from this trust and reduce the risk of fraud or uncertainty.
Infrastructure and Tools: Online marketplaces often provide comprehensive infrastructure that facilitates the sales process. This includes features like product listings, payment processing, customer reviews, and customer support. These tools can help sellers streamline their business processes.
Marketing and Advertising: Many online marketplaces invest in marketing and advertising activities to promote their platforms. As a seller, you can benefit from this advertising by having your products presented to a larger audience. However, online marketplaces also operate with a new form of Advertising Cost of Sale (ACoS): If you want to increase your sales on the platforms, you should use the advertising opportunities within the platform.
International Presence: Many online marketplaces have a global focus, allowing sellers to offer their products internationally. This opens up new sales opportunities and expands the potential customer base.
It's important to note that participating in an online marketplace can also present challenges, such as competition with other sellers on the same platform or paying fees and commissions. Nevertheless, online marketplaces are an attractive option for many businesses to sell their products or services online and benefit from the advantages these platforms offer.
In recent years, online marketplaces have undergone significant development and have become a crucial part of e-commerce. Here are some key developments:
Growth and Diversification: Since the emergence of eBay, the concept of online marketplaces remained relatively unchanged for a long time. It wasn't until the success of the Amazon marketplace that a substantial development in terms of size and diversity took place. There are now marketplaces for various industries, such as retail (e.g., Amazon and Otto), fashion (e.g., Zalando), electronics (e.g., Conrad), furniture (e.g., Wayfair), craftsmanship (e.g., Etsy), and more. This allows sellers to be active in different niches and reach their target audiences.
Improved User Experience: Online marketplaces have invested heavily in optimizing the user experience. Through user-friendly interfaces, personalized recommendations, reviews and ratings, as well as simplified payment and shipping processes, they have made shopping more convenient for buyers. This also applies to the options for listing products for manufacturers and retailers.
Rise of B2B Marketplaces: In addition to B2C marketplaces, B2B marketplaces have also seen significant development. These platforms are geared towards businesses offering goods and services to other businesses. B2B marketplaces facilitate business transactions between suppliers, manufacturers, and retailers. This often involves wholesalers (e.g., Rexel) transforming their business.
Introduction of New Technologies: Online marketplaces leverage advanced technologies such as artificial intelligence (AI) and machine learning to provide personalized recommendations, fraud detection, automated customer support systems, and other features. These technologies enhance efficiency and the user experience on the marketplaces.
Internationalization: Many online marketplaces have expanded their reach globally. Sellers can now offer their products worldwide and reach customers in different countries. This has led to increased global connectivity and a broader range of products.
The evolution of online marketplaces has revolutionized e-commerce, providing sellers and buyers with new opportunities to connect and conduct business. It is expected that this development will continue to progress in the coming years.
What role does advertising play on online marketplaces?
Advertising on online marketplaces is highly relevant and can offer various benefits for sellers and brands:
Increased Visibility: Advertising on an online marketplace allows sellers to highlight their products or services, gaining greater visibility. This is particularly crucial in highly competitive categories with a large number of offerings.
Targeted Audience Engagement: Online marketplaces possess extensive data on the interests, behaviors, and purchasing habits of their users. This enables sellers to target their advertising to specific audiences, reaching potential customers with a heightened interest in the products for sale.
Revenue Growth: Advertising enables sellers to naturally increase revenue. Prominently placing and promoting products increases the likelihood of discovery and purchase by buyers. However, it's crucial to be mindful of efficiency, as advertising costs can impact your gross profit. Keep an eye on metrics like ACoS (Amazon Cost of Sale), especially on platforms like Amazon.
Brand Building and Awareness: Advertising on online marketplaces provides an opportunity to enhance brand awareness and perception. Sellers can communicate their brand identity, build customer trust, and establish long-term relationships with buyers. For instance, including discount cards in packages can encourage customers to make direct purchases in future.
Competitive Advantage: In competitive markets, targeted advertising on online marketplaces can give sellers a competitive edge. Standout ads, special offers, and other advertising strategies help differentiate sellers from competitors and encourage potential customers to choose their products.
Measurability and Optimization: Advertising on some, unfortunately not all, online marketplaces allows you to measure and analyze the success of your campaigns. By evaluating metrics such as clicks, conversion rates, and other key indicators, you can optimize your advertising strategies and use marketing budgets more effectively.
It's important to note that advertising opportunities and policies on online marketplaces can vary from platform to platform. Carefully review advertising options and policies to ensure that your campaigns align with the guidelines. Tip: Tools like Adference or metoda can assist with this, especially on Amazon.
To be successful on online marketplaces, there are several important factors to consider. Here are some key components:
High-Quality Products: Offer products that are of high quality, meet customer needs, and stand out from the competition. Product quality is crucial for the customer experience and satisfaction. Note that the volume of products on marketplaces is substantial, so only those with excellent reviews have a good chance.
Competitive Prices: Ensure that your prices are competitive and offer good value for money. Price comparisons on the marketplace can help you keep an eye on competitors and set appropriate prices.
Compelling Product Descriptions: Create detailed and engaging product descriptions that clearly communicate the benefits, features, and uses of your products. Customers need sufficient information to make an informed purchasing decision.
Quality Images and Media: Use high-quality images and other media to visually showcase your products. Images should be clear, well-lit, and taken from various perspectives to provide customers with a comprehensive view of the product. Feature images, which explain the product's benefits through text, are also becoming common.
Customer Service and Reviews: Provide excellent customer service that promptly addresses customer inquiries and issues. Positive reviews and customer feedback are crucial for building trust with potential customers and strengthening your credibility. Sellers with good reviews tend to achieve above-average sales.
Search Engine Optimization (SEO): Utilize relevant keywords and tags in headlines, bullet points, and the rest of the product description to improve your visibility in the marketplace's search results. Good search engine optimization (SEO) can help make your products more discoverable, and optimizing on online marketplaces is usually simpler than on platforms like Google & Co.
Inventory Management: Ensure that you continuously and accurately manage and communicate your inventory to ensure products are available and can be shipped on time.
Marketing and Advertising: Make use of advertising opportunities on the marketplace to promote your products and increase their visibility. Targeted marketing efforts such as advertising campaigns, discounts (e.g., coupons), or promotions can help attract potential customers. Some marketplaces, like Amazon, offer a self-service approach for most advertising tasks, but others may handle your requirements internally.
Continuous Optimization: Regularly analyze your sales data, customer feedback, and market trends to optimize your sales strategy. Identify areas where your products need improvement and make corresponding adjustments.
It's important to note that success on online marketplaces requires time, patience, and continuous effort. Thorough planning, strategic thinking, and close market observation are crucial to stand out against the competition and achieve long-term success.
Product Information Management (PIM) and Digital Asset Management (DAM) systems play a crucial role in online marketplaces, especially when it comes to managing and presenting product data and digital assets for a large number of products. Here are their main functions:
Centralized Data Management: PIM systems enable sellers to manage all relevant information about their products in one central location. This includes product descriptions, technical specifications, prices, availability, and more. By maintaining everything in a flexible system, you can tailor your data to the marketplace's specific requirements.
Data Standardization and Cleansing: PIM systems assist sellers in standardizing and cleansing their product information to ensure consistency and accuracy. This reduces errors and, consequently, decreases costly returns.
Product Catalog Management: Sellers can create, update, and manage their product catalog, including adding new products, updating information, and removing unavailable products. With a PIM, you can showcase your product catalog completely and keep it up-to-date on online marketplaces.
Multilingual and International Support: PIM systems facilitate the management of product information in different languages (including translation) and help sellers offer their products in international markets. This means you can easily expand your operations to neighboring countries by automating the translation of data.
Management of Digital Media: DAM systems support the organization and management of digital assets such as product images, videos, graphics, and documents. These media are often used to showcase products on online marketplaces. This ensures that you always know which asset belongs to which product. With our Enterprise Digital Asset Solution TESSA, for example, you can also automatically place the Amazon ASIN in the file name.
Metadata Management: DAM systems allow the assignment of metadata to digital assets to enable efficient search, categorization, and filtering. This facilitates the use of assets on various platforms and channels.
Versioning and Rights Management: DAM systems manage different versions of digital assets and allow the assignment of access rights for different users. This is crucial to ensure that only authorized content is used and brand integrity is maintained.
The integration of PIM and DAM systems into online marketplaces enables efficient management and presentation of product data and digital assets. This ensures consistent and accurate information is provided, the product presentation is appealing, and potential customers are convinced. It also facilitates the updating and distribution of product information across various channels and enhances the efficiency of sales processes on online marketplaces.
They are the department stores of the digital age. Due to the breadth and depth of the assortment, it is crucial for manufacturers and smaller retailers to be part of them. The prerequisite is the provision of high-quality product data, appealing visual material, and, not to be forgotten, sufficient advertising investments in addition to the commissions and listing fees that need to be paid.