Marketplace eCommerce Platforms – Tips for Starting an eCommerce Marketplace
May 22, 2019
The phenomenon of online marketplaces has provided a challenge for eCommerce retailers. $1.8 trillion was spent on marketplaces globally in 2018, accounting for more than 50 per cent of online sales. Whilst retailers struggle to compete with these giants, there are lessons to be learnt from what they are doing. And, in some cases, opportunities to capitalise on what they are unable to do.
Amazon, Alibaba, and eBay, amongst others, are already capitalising on AI with recommendation engines, fulfilment, and customer service. They are also investing in visual and voice search, and lead developments in mobile customer experience.
This is changing how we shop, shaping the internet into one big marketplace through a labyrinth of digital possibilities. Amazon has teamed with Snapchat to develop a social commerce offering. Pinterest drives sales on Etsy. Google Shopping provides a digital shop window, whilst Google Express lets shoppers purchase from a range of merchants in one app.
Finding the niche
But brands need not invest in these platforms to sell their products. There is growing interest in ‘vertical’ – or niche – marketplaces, where they can deliver a specialised customer experience, instead of the generic experience provided by ‘horizontal’ environments.
Horizontal platforms – Amazon, eBay, Alibaba and so on – sell a huge range of products at low prices. Searches provide hundreds of results, of varying quality, styles, prices, and relevance.
Experienced buyers in search of specific products are more likely to require specialised buying journeys. Niche marketplaces deliver experiences that horizontal platforms cannot provide, selling products in one particular vertical, such as fashion, home, or electronics.
By bringing specialised products and sellers under one virtual roof, these marketplaces offer more sophisticated products and greater expertise than horizontal platforms.
Two of the biggest digital startups – Uber and Airbnb – are examples of successful niche marketplaces. These companies identified opportunities, built communities of ‘sellers’ (drivers and landlords), and provided a super user-friendly experience in a centralised site and app.
Top tips for starting an online marketplace
So, marketplaces provide an interesting opportunity for retailers to build a new revenue stream. And there are a variety of eCommerce platform products on the market that make setting up a multi-vendor marketplace easier than before. Magento and Shopify for instance, have solid offerings.
It’s worth bearing in mind that, compared to standard online eCommerce stores, multi-vendor marketplaces require some unique features, such as:
Easy registration and product listing – It’s not just about the end customer user experience, but also the experience of the vendors. They’re looking for a quick and easy platform to register, list products, and receive payment. A customisable vendor profile page is also a plus.
Commission charges – The main source of revenue for marketplaces is through charging commission on the products sold. The platform needs to easily facilitate this and make payments transparent.
Quality search capability – For online marketplaces, search is highly important. Unlike standard eCommerce websites, where visitors may use menu and navigation features, the search tab is the first stop in most marketplace visits. And with a potentially huge collection of products, search results need to be quick, relevant, and ranked.
Reviews – Unlike buying directly from a well-known brand’s website, marketplaces allow customers to buy from micro-vendors. These vendors need to establish a reputation for their vendor profile, as well as their respective products. So, an integrated survey is a handy function, and automated for visibility on the front end.
Specialised user experience
Specialised user experience design is the differentiator. Whether through guided selling tools, mobile apps or more distinct faceted search or navigation, consumers looking for a specialised experience are likely to be satisfied on a niche marketplace.
One example is Brayola. The site’s conversion rate is around 5.5 percent – the average ecommerce conversion for mobile is 2 percent – due to a unique user experience for a specific audience, around an intimate product that many would be uncomfortable buying in-store. Brayola has a recommendation engine that asks users to share their favorite bras, taking into account styles, colours, and sizes, recommending options based on their preferences.
But the crowdsource concept, ‘Fit or Not’, is where the site has really flourished. Women upload a picture wearing their favourite bra, not showing their face. Other users vote on the pictures, as to whether or not the bras fit the wearer, and a ‘bra expert’ makes a final call. The polling helps these women better understand how a bra should fit, in an environment in which they feel safe.
Niche advantages also apply to digital marketing. Amazon buyers are likely familiar with ads and emails used to tease buyers to their site. These often display a diverse range of items – one ad or email can include screwdriver sets, cycle helmets, office stationery, and cosmetic goods. Amazon casts a wide net, but smart marketers know targeted marketing is more effective.
Niche marketplaces know their communities are already engaged with their products, so conduct more specific, timely campaigns. Social media ad platforms have made it incredibly easy to segment to the finest detail, from gender, age, and location to favourite sport, book genre, or pet. These businesses have more specific data insight to create targeted email campaigns.
Menswear marketplace Thread delivers hyper-personalised emails at scale. Thread’s free ‘personal stylist’ takes visitors through a survey to understand body type, colourings, tastes, and budget. The stylist then provides ‘hand-picked’ recommendations, delivered through personalised emails – usually a link to a curated list of items alongside a personal message.
Despite providing ‘hand-picked’ recommendations for over 650,000 customers, Thread actually employs fewer than 10 stylists. Obviously, algorithms are hard at work behind the scenes. Recommendations are generated by a machine learning system. Emails are segmented by location, or what the weather is like, to resonate with customers. A handful of ‘stylists’ are used to face up the front end, making the experience feel super-personal.
Going niche in B2B
Marketplace principles apply to the B2B arena. Much like their B2C counterparts, horizontal B2B marketplaces like ThomasNet, eWorldTrade, and Amazon Business provide the ability to compare and buy products from different sellers in one place. They have B2B-specific features, such as bulk shipping, quantity discounts, payment by purchase order, quotation and RFP options, and customised pricing.
These marketplaces are a means for manufacturers, distributors and wholesalers looking to expand sales channels, and a low-risk alternative to building their own eCommerce platform – being relatively low-cost and quick to set up, as well as having ready-made audiences.
B2B niche marketplaces are also growing. From field engineers, office space leasing, and software solutions to industrial spare parts, chemical products, and equipment hire, there are a wealth of niche markets being targeted.
Honeywell Aerospace is a manufacturer who exploited a gap in the market and built its own marketplace. Less than 2.5% of all transactions in this space were done online – a platform to shop for aviation spare parts with prices, images and detailed documentation did not exist. Sites that did exist contained basic parts listings, and lacked transparent pricing and product images.
GoDirectTrade.com, Honeywell’s digital marketplace, simplifies buying and selling aerospace parts, providing the product and pricing detail that buyers need. Sellers can customise their storefront, take advantage of site analytics, and engage with customers through online chat. Buyers can enjoy browser or app experiences, read online reviews from other customers, and pay by purchase order.
Who knew the Amazon of aviation would take off?