29 May 2024, 21:55
By David Schulhof May 19, 2014

Using marketplaces to strengthen an ecommerce offering

If you haven’t considered using marketplaces as part of your online strategy then you could be missing out on additional revenue and the chance to reach a whole new type of customer, says Metakinetic’s David Schulhof …

Marketplaces such as eBay and Play.com can provide a great opportunity for furniture retailers to clear leftover, out of season stock and one-off items without damaging their brand reputation or taking up valuable space on a main ecommerce website.

Several larger furniture retailers have already seen the perks of utilising these additional channels to maximise revenues – discount furniture store DFS has a successful eBay store referred to as DFS Outlet to sell off out of season and heavily-discounted stock. Likewise, Furniture Village also has an eBay store which it uses much in the same way, albeit one that is not as well designed or optimised as the DFS Outlet.

What are marketplaces?

Don’t worry if you’re unfamiliar with the term marketplaces – here’s a quick rundown. Marketplaces are simply third party sites which allow users to sell and buy products from other marketplace users. eBay is the most established marketplace, followed by Amazon and Play.com, but Tesco has also launched its own marketplace which I would expect to see gathering traction over the next 18 months.

These marketplaces already have a large and loyal community of users who trust the brand of the marketplace. In fact, a growing number of consumers now actually prefer to make their purchases through these marketplaces rather than on an ecommerce site.

Retailers can utilise this trust to get their own products placed in front of an audience who, before, would never even have considered purchasing from an unknown furniture brand. Success on marketplaces can be attained quite easily so long as you trade on a reputable marketplace and build up good customer feedback.

Why use marketplaces?

The rapidly-changing tastes of interior fashion and turnaround time on furniture trends means that old season furniture stock can soon build up. You might be accustomed to dealing with the bulk of this excess stock via a sale section on your own website, or you may even have a separate discount showroom dedicated to last season’s ranges. Marketplaces can act as an extra channel to place these products where they are ready to be viewed by an audience looking to buy.

A major advantage to using a well-established marketplace over a sale section on your own site is the fact that most of these marketplaces will optimise your listings and help promote your items for you, taking out a lot of the hard work. Some marketplaces will also provide an account manager to business users, who will work with you to position your listings in special promotional sections of the marketplace to increase conversions.

Using marketplaces to help shift additional stock can also save valuable space on your main ecommerce website. Instead of creating a banner or even a whole dedicated category that would then be used to push these reduce-priced products to visitors, that space can be used to promote higher margin items with better conversion rates.

Plus, as I mentioned, these marketplaces are already experts in promoting lower-priced items and getting them in front of the right customers, so you should find that your discounted products shift far quicker on marketplaces than they will sitting on your own site and only reaching your own website visitors.

Finally, the type of customers who visit marketplaces will be very different to your usual website customer. You do still have to provide trust to the end buyer, but as they are already familiar with the marketplace you don’t have to get them to buy into your brand as much as you would for a regular website visitor.

You can trade on the reputation of the marketplace to instil consumer trust in your products. In fact, in some cases your brand might not be important to marketplace users at all. In most cases a customer will simply put in the description of the item they are after, ie oak dining table, rather than searching a specific retailer. It is the item that they are after, not a brand promise.

How to do it well

Marketplace listings are generally quite easy to set up, but there are a few aspects that you will need to factor in before making a decision on these additional channels. Firstly, be aware that any listings added to a marketplace will incur a fee. The amount and type of fee depends on the individual marketplace but most will charge a fixed fee per listing and then take additional commission based on a percentage of the overall value of the sale.

The danger here is to set your product prices so low that you squash your margins. To succeed and make a profit I would advise taking the time to calculate the minimum price each item can be sold at, with all fees included, to still turn a profit. This will help you avoid any nasty surprises once you’ve completed a sale.

Secondly, it is crucial that you fully optimise your listings. Whilst the listings themselves are relatively easy to set up, success isn’t guaranteed! Your listings will still need to be optimised to ensure they are placed in the most relevant categories and that the listing includes the right long-tail and short-tail keywords and search terms to match real-life customer search queries.

Your listings will also need to undergo regular review to capitalise on calendar events and popular sales periods. Channel optimisation is so commonly overlooked, but it is the one area that can make the biggest difference to your sales on marketplaces.

Lastly, be aware that marketplace listing can be very time-consuming depending on how many products you have listed. As optimisation needs to be updated frequently, if you have a large product catalogue you can soon run into difficulty. One way to avoid this might be outsource marketplace management, but there is also a range of optimisation tools such as Linnworks and Lengow which act as a central platform for your feeds, allowing you to make mass adjustments to price and listing content in minutes.

Clearly there are pros and cons to setting up a marketplace, but if you do struggle to get rid of old season stock and have the resource and margins to support a presence on these channels then they should be considered as a way to widen your product reach and increase revenues.

David Schulhof is the head of digital marketing at Metakinetic, an award-winning full service ecommerce agency. This article was published in the April issue of Furniture News magazine.

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