Marketplaces and their positioning strategies

Marketplaces are an inevitable reality today, with all brands large and small looking to be present on as many platforms as possible. They offer a large customer base, but competition is fierce and digital advertising does not seem to have a price ceiling. One factor that many companies neglect is the data generated from sales. Defining a differentiated and adequate strategy for each marketplace, considering the type of business and the type of customer, is vital to avoid a tortuous relationship with them.

Ecommerce has grown by leaps and bounds over the past decade, but Covid-19 and technological advances have led it to become a channel that must reinvent itself every day. Within ecommerce we have other sub-channels, where we find marketplaces. These can be as general or specific as we want. There are gigantic digital competitors such as Amazon or Mercado Libre, but also the “traditional” players of the physical world have begun to expand their business on the network with the marketplace format.

All companies that market products have started their digital presence in the last five years, and if they haven’t, they are about to do so in the next two, even niche sectors such as luxury goods sales have started selling online. But here is where one of the first important decisions comes, should I open my own site or sign up for the strongest marketplace in my segment? To answer this question correctly, we must make the business case for both scenarios. For the purposes of this article we will go with the option of starting with marketplaces.

There is a belief that we should offer all the company’s products in any marketplace where we have a presence, but this would be our first mistake. According to the type of customers that the marketplace has, it is the type of products that we should offer. The products must have the right quantity, size and even the right packaging. Studying the competitors is essential when defining which products we will try to sell in these sites. Prices, presentations and even the advertising packages they are using can be obtained in a quick glance at the site.
Another key point for a good presence in marketplaces is to define who will make the final delivery to the customer, known as “last mile”. This can be done by the marketplace itself or by us (see choice of parcels). For this, costs must be considered as a base, but not leaving aside the user experience, since, if there is a problem with the product and it was not correctly handled in the delivery, the customer tends to blame the brands and not the delivery.

In digital marketing issues, you must consider the cost of each campaign or publication, since being a marketplace, this type of information is not always shared with suppliers. Normally these sites will offer advertising packages to all suppliers, according to the level of exposure within the landing page, and the amount of clicks that your products will receive. Once again, it is important to mention that without a previous study of costs vs. sales (P&L) you can be paying for advertising that ends up eating your profits and even leaving with negative numbers during the time the package has been contracted.
Entering the digital world is the ideal option for any company of any kind, going hand in hand with technological advances will help the public to know you as a cutting-edge company. Marketplaces are a good option, and if everything is done with strategies and based on data, the results can be better than projected.

If you have any doubts about what strategies your business may need, do not hesitate to contact us for advice.

David Bernardo
David Bernardo
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