Mastering the marketplace: Four models to choose from
18 Dec 2019 Mastering the marketplace: Four models to choose from
We are well aware about the power of marketplaces. The rise of Flipkart and Amazon has been instrumental in building the momentum for online retail in India. With the growth of marketplace revenue predicted to double in the next 2-3 years accounting for 52% of global web sales in 2018, there is no denying the dominance of marketplaces in eCommerce.
The benefits can’t be ignored: marketplaces bring traffic, provide value-added services in technology, marketing and delivery and, for retailers, offer the means to drive increased choice for consumers (assortment expansion) without the need to invest as much on resources and inventory.
Transition from “shopping experience” to a “Brand experience
As consumers demand more digital customer-facing tools across their shopping journeys, retailers are forced to rethink how they connect with their omnichannel shoppers. However, there are only a few brands who actually have an omnichannel operation. For example, many brands still support individual channels, cobbled together with fulfilment options. This doesn’t allow shoppers to seamlessly hop channels between touchpoints and continue their shopping journey regardless of which channel they used last. As consumer transition between channels, brand consistency is a must from a messaging, navigation and service perspective.
There are 4 key models of marketplaces for retail brands to consider:
An open marketplace, where sellers self-list their products, such as Amazon, Flipkart, Myntra and Tata Cliq enables retailers to surface their brands through virtual shops.
Many fashion brands and retailers have turned into a specialist marketplace to deliver the experience they know their customers will expect. Some are channels that only serves brands and vertically integrated retailers that make and sell directly to consumers. Some cater to independent brands and take a heavily curated approach to deliver an exceptional customer experience, and some are fast-growing marketplaces that are focused on luxury brands with a high-quality delivery service.
An adjacent marketplace is one where retailers set up a separate part of their own website to sell products from other companies, usually curated to match their customer preferences. All top eCommerce marketplaces in India have the option to set up a separate ‘Shop-in-shop’ option.
An integrated marketplace is particularly effective when it is advantageous to offer product range extensions to offer more sizes or colours for products that a brand already stocks. It is a type of ‘hidden’ marketplace, where the retailer mixes an offering of products it both stocks and doesn’t stock.
Which route you should take as a brand?
A retailer embarking on a marketplace strategy has many options to consider, but first and foremost they must have a strategic intent and brand presence to operate open, specialist or adjacent marketplace model to deliver substantial results.
Many international brands prefer starting their own private label rather than listing their products on marketplaces. For a multi-brand retailer, there is much to be gained from adopting an integrated marketplace model to grow and expand, but retailers must ensure that choosing this path does not have the potential to dilute their brand and bring down the customer experience.
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