Tag: Product

Companies that don’t take marketplaces seriously risk falling into the same trap as companies who rejected e-commerce as a passing fad. 

Digital commerce flourished in 2020, which should come as no surprise to anybody who has seen groceries arriving on their neighbors’ doorsteps or who has crumpled many cardboard boxes in their own recycle bins. 

In the early days of the pandemic, customers under stay-at-home orders embraced new modes of buying, prompting a quick transition to internet commerce. Nonetheless, even when pandemic limitations were lifted, the momentum in e-commerce remained strong, with many consumers evidently not just coping with but also leaning toward online buying. Overall, e-commerce sales increased by 44 percent in 2020, the highest single-year growth rate in two decades. 

Digital marketplaces—where numerous businesses list and sell their products and services—saw even more remarkable growth, with gross merchandise value increasing 81 percent year over year, in the midst of this unusual boom in an unusual year. To put it another way, digital marketplaces nearly doubled the rate of ordinary e-commerce. 

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What factors contributed to the success of markets in 2020?
 

What is it about marketplaces that attracts people? Many buyers were already accustomed and at ease with existing marketplaces managed by the biggest companies in e-commerce, which offered a vast range of products across many categories. In 2020, however, a new type of marketplace emerged: agile businesses that swiftly innovated by developing their own digital markets. 

Brands of all sizes may use this new type of marketplace to sell not just their own products and services, but also a curated selection of third-party items and services that complement their own. Every sale is subject to a commission, and third parties are usually responsible for their own fulfilment logistics. 

 

Several elements have contributed to the marketplace’s success: 

People were pushed into new modes of working, studying, eating, exercising, and many other activities as a result of pandemic closures. The behavioral stretch was more about investigating and playing with purchasing rather than simply discovering digital channels because most consumers were already familiar with buying online. Virtual solutions of all kinds were welcomed. Especially if it made their life a bit simpler and more streamlined after their unexpected shift. Marketplaces responded by growing their vendor networks by 46 percent on average. 

Businesses that formerly relied on local foot traffic had to change their strategies as customers found new methods to get what they wanted (say, toilet paper, bread flour, and recreational gear). As a method of survival, some started advertising their wares on marketplaces, and were shocked to see their businesses expand even faster than they had previously. For example, a tiny flour mill that relied on sales to regional supermarkets might suddenly access the nation’s growing numbers of sourdough bakers, who were shopping for flour everywhere, including web marketplaces. Marketplaces provide the best of both worlds: the trustworthiness of a huge brand combined with the intimacy and engagement of a smaller brand. 

 

Can the market growth shown in 2020 be continued in the future? 

The answer is yes, although at a slower speed. We notice parallels between today’s digital markets and the earliest e-commerce websites, which were launched some 20 years ago. Businesses that don’t take marketplaces seriously risk falling into the same trap as companies who rejected e-commerce as a passing phase. 

Here are the questions that organizations must consider in order to capture the momentum of digital marketplaces—or, for those that are currently on the marketplace crest, to continue their growth: 

 

1. Make a new market place. 

From a technological standpoint, it has never been easier to create a marketplace. However, they are also their own companies, therefore before diving into a technological platform, you must first address key issues such as:  

1. What considerations would you use to select goods and services that are appropriate for your brand?  

1. What types of new services would you like to try out?  

1. What procedures will you need to put in place before you start contacting potential third-party vendors?  

1. Will a marketplace have an impact on your existing relationships, such as with vendors?  

1. How will you utilize the information gathered from the new marketplace to impact the rest of your business? 

 

2. Other marketplaces where you may sell.

Selling in other marketplaces may be a good place to start for some firms, particularly smaller ones. Brand and reputational issues are critical with this strategy. Your brand may suffer damage to the reputation if you fail to live up to the promise you make on a marketplace. When compared to your own site, which items do you wish to sell on marketplaces? Will the marketplace also sell the items of competitors? What plan do you have in place to safeguard your pricing point? Do you have enough inventory to meet demand from a marketplace with tens of millions, if not hundreds of millions, of customers?
 

3. Keep your market momentum going.

Congratulations if you already have a marketplace up and operating. But don’t make the mistake of thinking of your market as a one-and-done, immovable endeavor. The flexibility and agility of markets is a significant advantage. For example, your marketplace is an excellent area to experiment with offering new product or service categories. Examine your traffic, search, and sales statistics to determine what customers want and whether they can find it with you. Do any of your third-party vendors fall short of your sales or service goals? Now is the moment to get rid of them. How can you, on the other hand, strengthen your bonds with your most dependable third-party vendors? 

 

In 2020, marketplaces proved to be locations where buyers could discover what they wanted—which is increasingly the possibility to buy various things on dependable sites with regularly refreshed choices. In this new era of e-commerce, forward-thinking businesses must ask themselves the proper questions in order to develop a marketplace strategy that attracts and maintains loyal consumers while also driving income.