Today, marketplaces are incredibly popular. But what does this mean for online stores? In this article, we will discuss whether a brand needs its own online store and where it's best to direct advertising traffic.
Features of Selling Through a Branded Online Store vs. a Marketplace
When a customer wants to buy goods without being tied to a specific brand, online stores struggle to compete with marketplaces. Marketplaces offer a wide selection of products from various manufacturers. Selling on a marketplace involves two key aspects: targeting an existing audience—it's best to offer high-demand products—and operating like a wholesale channel, with large volumes of each stock-keeping unit (SKU). The marketplace handles customer relations, so your primary responsibility is to ensure regular product deliveries.
Selling through a branded online store has different features:
Target Audience Orientation: Focusing on brand buyers.
Direct Customer Interaction: Managing service levels, bonus systems, and product assortment.
Limited Series Sales: Selling products produced in limited quantities.
Sales Stimulation Mechanisms: Using various methods to boost sales.
Strategies for Working on Marketplaces
Consider three common strategies for doing business on marketplaces:
Marketplace as the Main Sales Channel: This strategy is often used by medium and small businesses, selling high-demand products at low prices. Active advertising on the platform, including internal tools and price management, is crucial.
Marketplace as an Additional Sales Channel: This approach suits businesses with their own brands. Main sales come from online stores or retail networks, while the marketplace features high-priced products for a narrow audience. Known brands with established customer bases often avoid marketplace advertising, relying on external traffic instead.
Marketplace as a Key Channel for Part of the Assortment: Medium and large businesses with established brands use this method. They sell through multiple channels with both internal and external advertising.
Effectively Combining Sales
To combine sales channels effectively and attract new customers without losing existing ones, follow these three rules:
Divide the Assortment: List high-demand, medium/low-priced products on the marketplace, ensuring regular deliveries and stable inventory. Use branded online stores for limited editions and hard-to-find items, typically in the medium/high price segment.
Segment Advertising by Value, Channel, Audience, and Assortment: Marketplace advertising should focus on direct sales, leveraging internal ads and external traffic for growth. Stimulate sales with promotions and price management. For online stores, concentrate on brand development and maximizing lifetime value (LTV). Use active advertising campaigns, product reviews, blogger promotions, and targeted external traffic.
Develop a Loyalty Program: Marketplace loyalty programs generally incentivize platform-wide sales rather than focusing on a specific brand, lacking direct customer communication. In contrast, online stores can use flexible loyalty programs to personalize offers and maintain regular contact with the target audience.
Conclusion
Marketplaces and online stores each have their pros and cons. Marketplaces offer broad reach and handle customer communication but come with high price competition and limited brand development opportunities. Online stores allow for effective sales of niche products, diverse advertising, and personalized loyalty programs, but they also require significant investment in development and inventory management.
Using both marketplaces and online stores can help balance these strengths and weaknesses. By following the recommendations above, you can effectively increase sales and attract more customers.