Interviews, insight & analysis on digital media & marketing

Ecommerce just got BIGGER – It’s why every brand, of every size, needs to lean into the power of marketplaces…

By Rupert Staines, Managing Partner & Co-founder at Maze-One UK

Ecommerce is booming and marketplaces are one of the driving forces of this growth. So why isn’t every brand jumping onboard?

It took seven years for online shopping to get from 9% to 19% of UK retail sales – but only four months to go from 19% to 33%, according to the Office of National Statistics.

This was, in part down to the fact that physical sales also dropped in May, according to the ONS’s lead Covid-19 analyst – but the message is clear: internet retail continues to grow, with changes in consumer behaviour accelerated by the pandemic. 

Little wonder that retailers and brand manufacturers alike are ramping up their online operations and focusing on direct-to-consumer channels such as their own websites to drive sales and gather valuable first-party data. 

They employ sophisticated brand and performance marketing techniques across search and social – but how many do so for their marketplace channels?

Yet marketplaces offer brands – large and small – their biggest opportunities 

It’s predicted that 72% of brands globally will be on Amazon in the next five years, today it’s already 54% and Amazon alone attracts almost 3,000 new sellers everyday globally. There are more than 16 million Prime customers in the UK alone, and some 90% of the population shops on the site according to Mintel… 54% of all product searches now happen on Amazon, according to a Jumpshot report.

One reason for brands’ lack of focus on marketplaces is a lack of understanding, another the myth that marketplaces cannibalise sales across a brand’s owned channels. A third is the assumption that listing on a marketplace somehow ‘cheapens’ a brand.

Marketplaces are essentially technology platforms

They require the same skills and attention as marketers and agencies spend on the likes of Google and Facebook. Amazon is the biggest by far, but consider, also, eBay, Facebook, Rakuten, Walmart or Farfetchto name but a few. In the Netherlands, where we work with Philips, Unilever and RoC, dominates, and in the German marketplace Zalando is expanding rapidly internationally. 

In the US, spend on marketplaces accounts for almost 60% of online sales; the UK and Europe are catching up fast. Yet it is not as simple as being able to list your products on a site and expecting people to find you.

A hybrid approach is required

This is an emerging and complex area – but with the right strategy a brand can win big. You might have to pay to play, and you certainly need an understanding of the ecosystem at large. 

From sponsored product advertising to site and browser SEO and brand stores, everything should be geared towards making your concession look the best it can and act to supercharge sales and brand awareness. 

A full-service approach should encompass consultation, strategy, advertising support and content creation in order to build superior direct-to-consumer relationships and improve customers’ paths to purchase.

The five key strategic questions to ask of your marketplace strategy now are:  why enter? How? how do you protect your brand’s presence; how to leverage and build an operational model to participate; and finally, how to integrate all of this into a multichannel approach. 

The department stores of the future

Essentially, it’s akin to how a brand might approach a department store today. Many will have standalone stores but many would also want a presence in a Debenham’s or a John Lewis. 

Yet a brand has to be careful and consider a number of factors. Should it have a concession, a pop-up, have special offers or not be stocked at all? How does it ensure it is better represented than its rivals? 

A similar challenge is how to manage a brand’s image and trust in that environment in order to increase sales and awareness. Many marketers fear that appearing on a marketplace is akin to a ‘race to the bottom’ and/or that it will then cannibalise sales elsewhere. 

Neither is true. In fact, the evidence points to the fact that a strong marketplace presence delivers better own channel sales. For instance, many people who start their journey on Amazon might then look at a brand’s own site. For this reason, a hybrid strategy will prove best for brands – as it is (or was) on the High Street. 

This is an exciting – and fast-growing space. It’s why every brand, of every size, really needs to lean into the power of marketplaces or face being left in the shade by their savvier rival