This is a guest post from BigCommerce, a leading eCommerce platform for online retailers.
In an online marketplace, only the fittest survive. And if you want to survive, you need an online marketplace strategy that helps you stand out, make sales, and retain your customers. In other words, success or failure in the marketplace you enter is mainly dependent on your strategy.
So, how do you create a rock-solid online marketplace strategy? Not one that feels like you're throwing spaghetti on a wall to see what sticks and what doesn't. We're talking about a strategy that helps you stand out among other sellers in the marketplace who seem to have figured things out.
A strategy that helps you make sales consistently and retain your customers. A strategy based on principles that have worked for other successful sellers — not tips, tricks, and hacks that won't last you a quarter.
In this guide, I'll walk you through how to create such a strategy because the bottom line of your eCommerce business is sales, revenue, and profits.
Let's get started.
What is an online marketplace and why is it important?
An online marketplace is a virtual market hosted on a website and mobile app that brings buyers and sellers together. As a seller, an online marketplace provides you with a portal and a catalog where you list your products and services.
Buyers find your products through the marketplace's search engine, enter their favorite products into a shopping cart then proceed to the checkout page and pay.
The marketplace owner processes transactions and may also take care of order processing and delivery on your behalf.
Online marketplaces come in two forms:
- Product-based marketplaces such as Amazon and eBay
- Service-based marketplaces such as Lyft and Airbnb
While online marketplaces aren't anything new, their unprecedented growth has gained jaw-dropping momentum. Data from Google trends over the past five years shows that search volume around "online marketplaces" has been on an upward trend as sellers started recognizing their value.
As of this writing, there's a dip on the graph because of incomplete data from Google trends. However, the search term hit an interest score of 100 in the first week of February. As a seller, you can't afford to ignore such a key trend in the eCommerce space.
Still not convinced? Take a look at these stats below and put your doubts to rest:
With Amazon taking the lead, online marketplaces still have a vast market share in the eCommerce space.
Any ideas behind their popularity?
Infrastructure? Investor funding? Being around for more than ten years? Well, that's pretty close. However, the real reason behind their popularity is that 72% of consumers start their product research on Amazon, while 38% use eBay for product research.
These marketplaces have different products, prices, and reviews that allow consumers to learn more about them before making a purchase. Let's see how that plays out in the number of buyers and sales in online marketplaces:
In 2017, 1.66 billion people bought a product or service online, a number that will grow to 2.14 billion by 2021.
Total sales in 2017 were $2.38 trillion, and by 2023, they will triple to $6.54 trillion.
And you can already guess who's going to take the biggest piece of the pie, right?
If you haven't been using online marketplaces, the data above shows you how much consumers love using them. However, online marketplaces aren't just convenient for consumers. They're also a powerful approach for growing your eCommerce business.
The remarkable value of online marketplaces
According to Jay Abraham, esteemed marketing consultant and author, there are three ways to grow a business:
- Increase the number of customers you have
- Increase the number of transactions per customer
- Increase their buying frequency
No matter your stage of business growth, online marketplaces help you grow your business in these three ways.
Once you're sure that your business will grow, you can now focus on critical tasks such as sourcing high-quality products and, if you're a manufacturer, create better products without having to worry whether you're going to get customers or not.
Let's look at how they help you do that in detail:
1. Increase the number of customers you have
Online marketplaces are established brands and consumers use them because they love their transparency in product listings, pricing, and impartial customer reviews.
In fact, Amazon is the second most trusted brand in America, and consumer trust isn't something you build and earn in a day. Why not leverage this trust by listing your product on marketplaces?
We've already seen that customers conduct product research on Amazon and eBay. They want to make sure that they're getting the best product at the best prices.
If you have a great product and you've backed it up with a solid marketing strategy, then listing it on a marketplace gives you the best chance to get more customers.
Online marketplaces go beyond regional and geographical boundaries, and listing your products on one helps you reach more customers who need them through a simple site search on an online marketplace search engine or Google.
Besides which, these marketplaces allow you to run ads to get more visibility for your products. For Amazon, we have Amazon ads while eBay has promoted listings.
Your products show up in front of your customers when they're using the marketplace to search for products, increasing the chances of them buying from you.
2. Increase the number of transactions per customer
Online marketplaces also allow you to make more money through upselling. If you're selling candle wicks, for instance, your product will show up as shown below:
Someone buying candle wicks needs other items to help them make their candles.
So, below the product, there's a section showing you items frequently bought together with the main product to help them make their candles. Depending on their needs, they will buy these additional products together with the candle wicks to improve utilization.
Of course, this is assuming you're not only selling candle wicks, rather everything that one needs to make a candle. If you're able to optimize your product for search on both Amazon and Google, then you're going to make more sales per customer.
These complementary products will show up as an upsell after customers view the main product that they want to buy.
Related reading: A Complete Guide On Upselling For eCommerce Entrepreneurs
3. Increase their buying frequency
You might not have the time and resources that these marketplaces have to run recurring promotions for repeat purchases. Listing your products on one helps take advantage of this and get repeat purchases.
Take peak periods such as Black Friday, Cyber Monday, and other holidays as an example. If you haven't set aside money to pay for advertising during this period, then an online marketplace will cover you because they will promote products to their large customer base to buy.
Even if you have the money, there's always someone who's going to pay more for ads and outdo you, reducing your products' visibility.
If a customer bought your product and loved it, then they're more likely to look for deals on your products and buy from you once more.
In addition, online marketplaces have deals, coupons, and other programs to help increase buying frequency from consumers. For example, Amazon has daily deals for every product category, and this is something you can take advantage of by sending traffic to your product page to buy.
Most marketplaces help you process payments and take care of shipping, things you have to do yourself or hire someone to do it — options that aren't scalable in the long run.
By using shipping options that online marketplaces provide, you're able to meet customer expectations (or even exceed them), earning their loyalty in the process, making them more likely to buy from you in the future.
Getting started with your online marketplace strategy
Your marketplace strategy boils down to how you position yourself in front of your customers, the type of content you share, the relationships you build, and the sales messages you use to drive conversions.
Done right, it elevates your products above your competitors, helping you to proactively engage with customers who visit your storefront and buy them.
Your online marketplace strategy has four pillars:
Your value proposition: Who are your target customers? What value does your product deliver to your consumers?
Your positioning: What's your unique selling proposition? Why would consumers buy from you as opposed to your competitors?
Your business case: What business goals do you want to achieve by entering an online marketplace? How much time, money, and other resources at your disposal are you willing to invest in an online marketplace to achieve these goals?
Your go-to-market strategy: What actions are you going to take to achieve your goals? What platforms are you going to enter? How will you measure success?
Let's dive deeper into each of these pillars, see why they are important and how you can start building each of them:
Editor's note: If you're already selling in an online marketplace, you might have some of these pillars in place already, and that's okay. Feel free to pay attention to pillars that are most relevant to you.
Online marketplace strategy pillar #1: Your value proposition
A value proposition is the value that your products deliver to your consumers as they use them. It describes how their life will change after using your product.
Here's how Ryan Deiss, CEO of Digital Marketer puts it:
People don't buy products or services… They buy transformations.
The better you become at articulating how your product transforms the lives of your consumers, the easier it becomes for them to connect with your brand and earn their loyalty.
Crafting and refining your UVP (unique value proposition) requires you to go back to your existing and potential customers and understand them better and know the value that your product delivers value to them.
Here are four ways to help you understand that together with questions that will guide you to know more about your ideal customers:
Demographics: How old is your ideal customer? What's their income level? (Hint: If you're planning to sell to U.S consumers, here's a list of financial statistics to make things easier for you.)
What's their gender? And their marital status?
Behavioral traits: How often do they buy similar or related products? What benefits are they looking for in your products? Are they loyal buyers?
Psychographic traits: What are their values and attitudes? What's their personality like? What are their interests?
Geographical location: Where do your ideal customers come from? This will help you select relevant products to sell to them and also choose your shipping options.
By the end of this exercise, you will have new and deeper insights about your existing and ideal customers.
You'll also find yourself merging customer segments or end up with one or two new market segments you can target on your homepage, just like Forms on Fire does it:
Now that you know who your consumer is, use the information you have to create customer profiles for each market segment. Here's how it should look like:
Once you have this in place, the next step is to picture their lives without your product.
What's their average day like? What internal and external problems do they have to face every day because they don't have your product? What does that make them feel and look like in front of friends and family?
The answers to these questions will help you articulate the value your product delivers.
Let's see this in action with Zoma sleep mattresses:
- What does an average day for their buyer look like?- They feel tired and sleepy.
- What internal and external problems do they have? - Lack of enough sleep because they have a terrible mattress.
- What does that make them feel like and look like in front of friends and family?- They might feel unproductive, and co-workers might think that they're lazy.
Now, let's flip the script.
What's their average day like after they buy the mattress? What internal and external problems has the mattress solved? What does that make them feel and look like in front of friends and family?
Their average day will be energetic because they had enough sleep. They'll feel productive, and their co-workers will see them as hardworking individuals.
Now, having this in mind, let's take a look at their unique value proposition:
The Zoma Sports Mattress is designed to provide performance-enhancing sleep. Sleep deeper, recover faster and wake up ready for your next day.
See how that works?
Use this template to help you create your UVP:
(Name of your product) helps (your customers) to experience (how their life looks like with your product in it)
Editor's note: When talking about your UVP and USP, it's easy to mix things up, so here's the thing: Your USP is a subset of your UVP. They aren't the same. While your UVP talks about value, your USP tells your consumers why your product is better than what your competitors have.
With this in mind, let's talk about pillar #2
Online marketplace strategy pillar #2: Your positioning
To get a better idea of what you're signing up for when entering an online marketplace, here are the number of sellers in each product category on Amazon:
eBay isn't lagging behind either — it has more than one billion listings spread across eight categories.
Your product may be better than what your competitors have. However, if you can't clearly state why consumers should choose you over them, you're going to drown in a sea of sellers, and no one will notice you.
That's why you need a positioning statement that tells your consumers, "Here's why this product is better than any other option you have."
It's pretty obvious when you think about it. One challenge consumers face when choosing products to buy is that they have to choose one product from a list of different sellers.
Faced with such a dilemma, it's easy to get stuck in analysis paralysis, not knowing which product to buy and which one to leave. Your positioning statement breaks the tie, making it easier for them to decide (and preferably choose your product over your competitors.)
So, how do you create your USP? Here are a few questions you should think about. If you already have a USP, use these questions to refine it for clarity.
- What is the biggest benefit that your product delivers to your customers? - Even if you're selling similar products, there must be something about these products your competitors don't talk about.
- How can they trust that your product is going to deliver that benefit? - Here, talk about a specific claim a customer can test, provide a guarantee on your product, talk about innovation, or your reputation in the marketplace.
After answering these questions, look at what your competitors have to explore ways through which you can create a better USP. For example, if your competitors make a specific claim, talk about your reputation in the marketplace.
Here's how Saddleback Leather does it:
Their 100-year guarantee and the assurance that the bag has no unbreakable parts are bold claims that a buyer is willing to bet their money on to prove their validity.
They've taken this a step further by creating a short video and putting it on their storefront, something I'd suggest that you also do.
With this place, you need to test your USP message to see which one resonates with your customers and drives more conversions. We interviewed the sales experts at Reply, and they put it this way:
"Finding the right messaging for your prospects isn't easy and will involve more trial and error before you find what works best."
Online marketplace strategy pillar #3: Your business case
In this case, your business case will be simpler as opposed to when you're starting an eCommerce store from scratch. Your online marketplace business case builds upon your original project planning template.
Since expanding to online marketplaces should be one of your growth strategies, your business case helps you answer the question: How do you want to grow?
We already talked about the three ways to grow your business, and it's worth repeating them here for clarity:
- Increase the number of customers you have
- Increase the number of transactions per customer
- Increase their buying frequency
So, depending on your stage of business growth, how do you intend to use online marketplaces to achieve your overall business goals?
You might be tempted to choose more than one way to grow your business. However, you'll find yourself distracted because you'll end up doing many things at the same time.
Choose ONE way that you will use an online marketplace to grow your business, then put on the blinders and focus on it for 6-12 months before branching out to other ways.
Knowing this will help inform other elements of your strategy, such as the marketplace you're going to choose, whether you're going to pay for ads and other services such as shipping, or whether you will hire an agency to help you do this.
Online marketplace strategy pillar #4: Your go-to-market strategy
Choose the best marketplace to start with
The online marketplace you choose will differ based on your needs and the type of products you sell. Here's a grid showing you different types of marketplaces:
So when choosing a marketplace to enter, you want to consider the following:
- The amount of traffic the market place gets per month
- Their business model
- Their terms and conditions
You might find more than one marketplace to enter if your audience shops on more than one marketplace, so once you decide the channel to join, consider using an inventory management software to help you manage your online store on different channels.
Build out your go-to-market strategy
It's now time to figure out how you're going to achieve the goals you set earlier on to drive traffic and conversions.
1: Build Awareness
Showing up in each stage of your customer's journey with relevant content that makes them aware that you exist and helps them move closer to buying.
In your customer's journey, for instance, you may find out that your potential customers get stuck when looking for information comparing two or more products they want to buy.
Go ahead and create content that tells a story while providing an honest evaluation of your products and your competitors' products. And yes, stories don't have to be complicated. How you present your content to your potential customers is still a story that you're telling them.
Are you addressing their biggest frustrations in your content? Are you helping them overcome their fears? Is your content moving them closer to their goals or fulfilling their wishes?
Take a look at this comparison post from Loginlockdown. Brad starts by highlighting frustrations that the reader has when looking for a password manager, inviting them on a journey to learn about different password managers so that they choose one that fits their needs. Take a look:
Include relevant keywords that your consumers are likely to use when looking for such content to increase their chances of finding it.
Create guides that solve problems related to your product that your potential customers face, just like Rinkit has done it.
These guides establish yourself as a thought leader, and they're going to trust the solutions you suggest to their problems (including buying your products).
Promote your content by working together with influencers. They give you access to new and larger audiences, and since their followers trust and look up to them, they will pay attention to what they say and the products they recommend.
When working with influencers, identify your goals beforehand to help you measure the results you get from your working relationship. For example, when building awareness, you don't only want them to mention you on their social media channels then forget about it.
Go for something tangible such as an interview, a guest post, or an expert round up because these types of content have a longer shelf-life and will continue building awareness for your store long after publishing.
Look out for relevant people whose audiences are an excellent fit for the products you're selling. Orbit Media, in their in-depth guide on influencer marketing, describes five types of influencers:
Start with nano-influencers because if they're already using your product, they must be talking about it, and they will be open to working with you.
Besides, starting from the bottom helps you earn credibility and build your network, which you can use in the future as you move up to work with macro-influencers and celebrities.
2: Improve your search engine rankings
Your rankings on both search engines and product listings on online marketplaces matter because 95% of consumers will click on the top search results they get.
To start, your content marketing needs to be in-depth and match searcher intent. Make sure you start every blog post beginning with keyword research. If you still need to start a blog, I recommend you check out Adam Enfroy’s in-depth post on how to start a successful blog in 2020.
To get started, if you sell suitcases on your store, make a post about travel gear and highlight your product in it:
Beyond just written blog content, you should also be diversifying the format in which users can access content. One way to do that is by starting a podcast and sharing your content. In addition to having more people find and listen to your content, you also earn backlinks from popular podcast directories and your show notes.
Besides, more than half of your podcast listeners are open to buying products they hear being advertised on podcasts.
Since online marketplaces allow customers from new geographical regions to buy from you, you have two choices:
- Adapting your marketing approaches (localization)
- Sticking to your marketing approaches
And since you still want to connect with them and stand out from your competitors, changing your marketing efforts is your best option. Why?
Customers from different regions have different buying habits and cultural differences that might not be similar to the customers you're already serving.
In your localization marketing approach, consider having a local search campaign in your marketing mix. Loganix makes the case for local search campaigns through local citations this way:
If you're opening a new location, a proper citation building campaign can speed up the discovery process for search engines and help establish local search traffic. If you have an established location, a recurring citation build can help boost both local and organic link signals to help you stay on page 1.
Need I say more?
3: Build a thriving community around your customers
Once customers buy from you, it's hard to know how to keep them engaged so that whenever they need your product, you're their obvious option. Bringing your customers together in a community will help you keep them engaged and connected to your brand.
These communities help you address any issues that they find in your product on time before it gets out of hand and hurts your reputation. In these communities, ask your customers to share the problems they have related to the one your product solved to see if they need more products.
The answers you get will give you ideas on the new products to sell. Once you identify these products, create an email sequence, and lead with content, nurturing your customers again before they buy these new products that they need.
4: Measure and optimize your results
You need to measure your progress to see how well you're doing. The results you get also help you see what efforts are bringing you better results so that you double down on that to get even better results.
Metrics fall into four categories:
Level of engagement: This is reflected in the interactions you have with your potential customers on different marketing channels. Do they read, comment, and share your content? Are you getting repeat purchases from your existing customers?
Rankings: How well are you ranking on Google and your marketplace's search engine? Are you getting backlinks and organic traffic?
Customer behavior: Do the people who see your products buy from you? If not, why is it so?
Revenue: How many sales are you making every week, month, or quarter from your online marketplace? Are you breaking even or making a profit?
That's it. The online marketplace strategy you've just read has laid the framework to help guide everything you're going to do to market your storefront in an online marketplace.
And if you've felt the nudge to take the leap and enter any marketplace, this is the best time to do it. This guide shows you what you need to do.
Besides, the four pillars framework we've used helps you know what trends you need to focus on in your marketing strategy and what to ignore. If you're already selling in an online marketplace, think of it as a refresher course that helps you tie up some loose ends to help you drive more traffic and get more conversions.
As you continue expanding into more marketplaces, you'll find that Linnworks offers tools and resources to help you automate recurring tasks, so you can focus on the most important task: growing your eCommerce business.
About the author
Beatriz Estay is a Small Business Content Marketing Specialist at BigCommerce and the fashion and lifestyle influencer behind The Letter Bea, an Austin, Texas based blog. She holds a B.A. in Communication and Sociology/Anthropology from Lake Forest College and specializes in eCommerce, marketing and merchandising strategies, influencer and branding work, and social media.