Strategies to scale your E‑marketplace business
An Introduction to the Scaling process on E‑Marketplaces
As Bill Gates aptly put it in the mid-1990s, “If your business is not on the internet, then your business will be out of business”. Truer words have never been spoken as now, in the 21st century, we understand how essential it is for companies to adapt, expand their online reach and attract new customers to remain competitive.
One of the key strategies for growth is diversifying your online sales channels, a concept known as channel diversification. This report explores why diversifying your online sales channels is crucial and offers insights into how to choose the right E-Marketplaces for your product or service. Additionally, it highlights the importance of tracking key performance indicators (KPIs) when entering a new market. By the end of this report, we aim to encourage businesses to take action and explore new marketplaces as a means of scaling their operations.
Growth Strategies: Diversify Your Online Sales Channels
What Is Channel Diversification?
Channel diversification involves listing your products on various online platforms to expand your reach. These platforms represent digital spaces where customers can discover and interact with your brand. Common e-marketplace channels include your own store website, Amazon, eBay, Walmart, social media platforms, and other online e-marketplaces.
Why Is It Important?
At the core of channel diversification are your customers. Many shoppers conduct research before making a purchase, comparing products and prices. Surprisingly, almost half of these shoppers kickstart their research on Amazon, while 35% begin their search with Google. Relying solely on one channel, such as having only your online store, limits your business’s growth potential.
Although Amazon commands a massive audience, exploring other channels is vital. Selling exclusively on Amazon can be complex and costly for sellers, making it worthwhile to explore alternative options. Different shoppers have different preferences for where they shop, so using multiple channels allows you to engage and convert a more diverse customer base. In fact, 52% of online stores now leverage multiple channels to enhance their sales.
Benefits of Channel Diversification
- Scaling Your Business – Selling your products on different channels enhances your prospects for growth. Importantly, you don’t need to compromise success on one channel to excel on others. The most successful brands create exceptional experiences across all their channels, resulting in increased sales without detracting from existing ones.
- Reducing Risks – Diversifying your product listings across multiple channels helps mitigate risks. This approach is akin to not putting all your eggs in one basket. By distributing your products and services, as well as income across various channels, you avoid becoming overly reliant on any single platform, even if some channels generate more sales than others.
- Reaching New Audiences – Expanding your sales to different online places allows you to connect with a wider audience. Your existing products become visible to more potential customers, as they encounter your offerings in different digital spaces. Shoppers who utilize various channels have multiple opportunities to engage with your brand, becoming more aware of your presence and more inclined to trust and make purchases from your business.
In simple terms, channel diversification entails selling your products across different online platforms, a strategy that promotes business growth, risk reduction, and broader customer outreach. It’s akin to opening multiple doors to your shop so that a more extensive audience can discover and engage with your brand, ultimately driving more sales.
Choosing the Right Marketplaces to Scale a Business
Choosing the perfect online marketplace for your products can make a world of difference in your business’s success. As a seller, you’re probably eager to reach a global audience through online marketplaces, but with so many options available, how do you pick the right one for your unique needs?
Steps to Scale
Understand Your Target Audience
To select the right online marketplace, you first need to know who your target customers are. By understanding their age, gender, income, location, and interests, you can tailor your marketing and choose a platform that suits their preferences. Look for a marketplace whose user demographics match your audience.
Explore Niche or Specialized Marketplaces
Specialized online marketplaces cater to specific audiences or product categories. These platforms can help you reach highly engaged customers who share a particular interest. For instance, Etsy is for handmade and vintage items, Reverb serves musicians, and Poshmark targets fashion enthusiasts. Consider if you can tap into a focused customer base with less competition for better visibility and customer relationships.
Evaluate Marketplace Fees and Costs
Before deciding on an online marketplace, carefully examine the fees and costs associated with each one. These expenses can affect your profit margins significantly. Look out for listing fees, transaction fees, subscription fees, and shipping costs. Compare these costs across different platforms to find the one that offers the best value for your business.
Assess Features and Tools
To achieve your business goals, assess the features and tools offered by each platform. Look for user-friendly listing and inventory management tools, marketing and promotion options, robust analytics and reporting capabilities, and responsive customer support. Choose a marketplace that provides the tools you need to succeed in the competitive world of e-commerce.
Analyze Reputation and Credibility
Ensure you trust the online marketplace you choose by researching user reviews and testimonials. Learn about the platform’s performance, customer service, and reliability from firsthand experiences. Also, look into the marketplace’s security measures, like fraud protection and dispute resolution processes. A reputable marketplace will build confidence among your potential customers and support your business’s success.
Competition and Saturation
In a crowded marketplace with many sellers, it can be challenging to stand out unless you have a niche product. Analyze the number of sellers and competing products in your category. Look for opportunities to differentiate your offerings and focus on delivering exceptional value. In less competitive markets, ensure there’s enough demand for your products.
Making a Final Decision
After considering all factors, create a shortlist of potential marketplaces that align with your business goals. Review the pros and cons of each and consider a test phase by listing a few products on promising platforms. Be ready to reassess your choice periodically to adapt your strategy and maintain a competitive edge in the ever-evolving world of e-commerce.
Lesser‑Known Marketplaces as Growth Levers
Flipkart: India’s Leading eCommerce Marketplace
Flipkart is India’s top eCommerce marketplace with the largest market share. It’s a favorite among more than 100 million registered customers. Founded in 2007 by Sachin Bansal and Binny Bansal, it offers products from over 80 categories, making it a one-stop shop. If you’re in India and want to start selling online, Flipkart makes it easy for beginners. You can list your products for free, and they only charge a small commission when you make a sale.
Pros
- Free listings
- Over 100 million registered customers
Cons
- Limited to India
- Longer shipping times for rural areas
Shopee: Southeast Asia’s Leading eCommerce Marketplace
Introduction: Shopee is a major eCommerce marketplace in Southeast Asia. Founded in 2015 in Singapore, it hosts thousands of vendors on its website and mobile app. Businesses can start selling on Shopee without worrying about listing fees, as they only deduct a commission from each sale. It’s an excellent choice for businesses looking to expand in Southeast Asia.
Pros
- Easy setup and use
- Reasonable commission fees
Cons
- Longer shipping times for international orders
- Unverifiable customer product reviews
Rakuten: A Globally Expansive eCommerce Marketplace
Rakuten, based in Japan, is the world’s third-largest eCommerce marketplace. It operates in various sectors globally, including eCommerce, digital content, communications, and FinTech. Rakuten allows business owners to sell their products worldwide without regional restrictions. It offers a wide range of categories, and sellers benefit from features like payment processing, shipping, and product listings.
Pros
- Pricing flexibility
- Global customer reach
- Comprehensive new and existing market research tools
Cons
- Shipping and handling costs for small businesses
- Requires more effort in marketing your store
Important KPIs for Entering a New Market
Starting a new business means paying attention to some critical numbers. Here are ten essential metrics you should keep an eye on when your business is venturing into a new market.
- Number of Customers – Knowing how many people buy your product helps you understand what customers want. Use customer feedback to make your product better, leading to more sales.
- Consumer Perception – How people feel about your product can make or break your business. Check if customers recommend your product, are satisfied with it, and how they see your brand compared to competitors.
- Price Response – The price can affect whether people buy your product or not. Find out how much customers are willing to pay in the new market.
- Cost per Lead (CPL) – It tells you how well your marketing is working. Lower CPL means your marketing is attracting potential customers effectively.
- Conversion Rate – Why it matters: Turning leads into actual sales is essential for success. Measure how successful your sales efforts are in converting leads into customers.
- Repeat Purchase Rate – Returning customers are valuable and can bring in more business. Encourage customers to keep buying from you to build loyalty and referrals.
- Net Profit – Ultimately, you want to make money. Calculate how much money you’re making after covering all costs.
- Return on Investment (ROI) – Why it matters: It shows if your investment in the new market is paying off. Measure the return you get from the money you put into entering the new market.
- Target vs. Actual Sales – Comparing your goals to actual sales helps you evaluate performance. Set realistic revenue targets and monitor if you’re meeting them.
- Month-on-Month (MOM) Sales Growth % – It tells you how your business is progressing on a monthly basis. Track how much your sales are growing each month as a new market indicator.
Build Your Dream with E‑Marketplace.com
E-Marketplace.com is a valuable resource for businesses aiming to expand in the complex world of multi-channel commerce. They offer tailored solutions, expertise, and a consultative approach to help you navigate the challenges and opportunities in today’s marketplace landscape, ultimately assisting you in scaling your business effectively. Below are the various ways they can assist.
- Multi-Channel Expertise – E-Marketplace.com specializes in multi-channel commerce, including e-marketplaces, e-commerce, and multi-channel sales and marketing. They provide guidance and solutions tailored to your specific industry, whether you’re a retailer, wholesaler, brand, or e-marketplace operator.
- Retailers – For retailers operating in a competitive online environment, E-Marketplace.com goes beyond setting up an online store. They help optimize delivery systems, streamline supply chains, and develop multi-channel presences to create effective sales and marketing strategies.
- Wholesalers – E-Marketplace.com assists wholesalers in adapting to the post-pandemic shift towards online operations. They help establish cost-effective sales channels that reach retailers in global markets, focusing on efficiency and cost-effectiveness.
- Brands – Brands looking to expand their marketing efforts beyond websites and social media platforms can benefit from E-Marketplace.com’s expertise. They collaborate with brands to enhance market reach and profitability, recognizing that online presence is just the beginning.
- Digital Transformation – In the era of digital transformation, E-Marketplace.com offers solutions to deploy cohesive platforms that address cross-functional requirements. This scalability helps businesses expand globally, reduce operational costs, and improve customer satisfaction.
- E-Marketplace Operators – E-Marketplace.com supports e-marketplace operators by conducting feasibility studies, proof of concept, implementation, and continuous improvement efforts to stay competitive in the evolving marketplace landscape.
- Comprehensive Skill Set – Their extensive skill set encompasses various aspects of business and marketing, including branding, e-commerce, virtual events, social media management, data analytics, and artificial intelligence. This breadth of expertise ensures comprehensive support.
- Consultative Approach – E-Marketplace.com begins the process with an initial consultation and preliminary research to assess the potential opportunities on platforms like Amazon. They engage in candid discussions and provide detailed, free-of-charge proposals to guide businesses toward multi-channel success.
Conclusion
In short, the importance of diversifying your online sales channels cannot be overstated. As we have explored in this report, channel diversification is a strategic imperative for businesses seeking growth, risk reduction, and expanded customer outreach. By leveraging multiple online platforms and marketplaces, businesses can scale their operations, reduce reliance on a single platform, and tap into diverse customer segments.
Choosing the right marketplaces for your products is a critical decision that requires careful consideration of factors such as target audience, niche opportunities, fees, features, reputation, competition, and more. Each marketplace has its advantages and disadvantages, and a well-informed choice can significantly impact your business’s success in the online space.
Furthermore, entering a new market requires a systematic approach, and monitoring key performance indicators (KPIs) is essential. By tracking metrics like customer count, consumer perception, price response, conversion rate, repeat purchase rate, net profit, ROI, target vs. actual sales, and month-on-month sales growth percentage, businesses can make informed decisions, adapt strategies, and ensure sustainable growth.
For businesses embarking on the journey of multi-channel commerce, E-Marketplace.com stands as a valuable partner. Their expertise, industry-specific solutions, and consultative approach empower retailers, wholesalers, brands, and e-marketplace operators to navigate the complexities of the modern marketplace landscape. With a comprehensive skill set and a commitment to helping businesses succeed in the digital age, E-Marketplace.com provides the support needed to scale operations effectively and seize opportunities in the dynamic world of e-commerce.
