By Joanna Perry | Head of Marketing

Global online marketplaces are a thriving aspect of cross-border ecommerce, writes Practicology’s international ecommerce expert Bianca Mercer. In fact, retailers predict marketplaces will own almost 40% of the global retail market by 2020.

Prior to our participation in Pentagon’s Fashion Without Borders event on March 23rd – where retailers can meet marketplaces from all over the world - we thought it was worth highlighting what you need to think about when considering whether marketplaces are right for your international ecommerce strategy.

There are two simple reasons behind their success.

Firstly, ecommerce is not the same everywhere in the world and the structure of online retailing differs from country to country. Take China as an example, customers tend to start their online journeys on marketplaces as opposed to search engines. As a consequence, you will find that the importance of marketplaces in a country like China can be extreme, with up to 80% of all online B2C sales being generated through them.

The second reason for their growing success is the simple fact that they tend to be customer-centric in their approach. They offer two important things to the consumer - ultimate convenience driven by innovation and product choice at a competitive price. If you are looking for canned unicorn meat and a relaxation capsule to be delivered tomorrow, both can be bought in one swift transaction on Amazon today.

Many successful brands have kick-started their digital-first internationalisation process through marketplaces because working with them means:

Customer acquisition:

Very few customers will visit a marketplace searching for your store, but they may be searching for - and discovering - your products. Marketplaces can be a great cost effective way of acquiring new customers, specifically in a market you have little brand awareness in.

An infrastructure that suits the customer:

Customers may prefer the all-in-one aspect of a marketplace, but also marketplaces provide a series of localised offerings in areas such as payments and customer service that brands can take advantage of when testing new markets.

Search benefits:

As mentioned previously, in many international countries local search engines are not where the customer begins their search. If you want to be found, you need to be on the relevant platform.

Access to local services and support:

In some markets, China for example, the biggest marketplace (Alibaba Group) also owns the local mobile and social network (WeChat) and the top online and mobile payment method. By working with them you are likely to get access to a lot more local services and support.

Low investment costs:

There is very little up-front investment needed when launching with a marketplace and ongoing cost is commission-based. In comparison to launching a localised website, this is a low risk option in terms of investment.

Considerations for choosing marketplaces as part of your cross-border ecommerce strategy

But of course there are not just positives. Marketplaces restrict the degree to which you can brand your presence, communicate with customers, dictate which items you can sell, and so on.  In addition, you will not be the only company selling products, so prices can be easily compared and you might be under pressure to discount more than you would like to.

The question on how much importance marketplaces should have in your internationalisation strategy and channel mix depends on many factors, but the kind of question you need to answer are:

  • How many transactions can you expect?
  • Are you able to fulfill expected volume without compromising other channels?
  • Does it make financial sense?
  • What resource is needed to run that online store?
  • What is the impact on team, brand, price and stock levels?
  • Who else is selling the same product and at what price?
  • Besides sales what other benefits could being on that marketplace bring like brand exposure, local experience etc?
  • What is your future business strategy and how do marketplaces fit into that plan?

We are here to advise and help you answer these questions, but also delighted to be involved with Pentagon’s Fashion Without Borders event on March 23rd, allowing you to meet some of the world`s leading marketplaces. You will be able to learn how the international retail landscape differs across the globe, explore the ecommerce landscapes in their respective regions and ask these marketplaces questions that are relevant for you as a brand.

Join us at Fashion Without Borders on the 23rd March at the QE11 Conference Centre in central London and meet the world's online marketplaces. Register here now.

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