Digital Marketplaces: How Companies Can Gain New Customers Without Developing New Products
As more commerce transactions take place online, both B2C and B2B organizations increasingly want to capitalize on the digital relationship with their customers. Meanwhile, consumers want more from their relationships with companies. Fifty-four percent say they want the companies with which they do business to offer new types of products and services. How can merchants and companies quickly and cost-effectively offer new product lines, create endless aisle capabilities, and have multiple vendors shipping the same product?
Marketplaces can be the answer. That’s in part because new solutions make it easier than ever for companies to set up a marketplace and onboard third-party sellers. It’s also because marketplace ownership allows companies to offer customers more convenience and selection without making major investments in new product or service development. These reasons are part of why 63 percent of all U.S. e-commerce business in 2020 took place on marketplaces.
Discovering the Brand Benefits of Marketplace Ownership
When companies set up a marketplace, they can offer their customers new products, including products that complement their existing lines, without having to develop those products themselves or set up drop shipping commitments with vendors. Creating a marketplace also allows companies that sell products to build solutions that go beyond the product space.
For example, a renewable energy supply company that makes parts for solar panel systems could add a marketplace to offer support services from other vendors, like installation by certified contractors and warranty coverage. The company can also expand their marketplace offerings to include related products that help customers reduce their energy consumption even more, like highly efficient replacement windows, insulation products, smart HVAC controls, and solar exhaust fans. In this way, the company can become a hub for customers working on renewable energy and efficiency projects, build a stronger relationship with those customers, generate additional revenue from third-party sales, and still keep a loyal customer base.
B2B marketplaces offer another customer experience benefit: They meet customers’ expectations for self-service and create a more B2C-like buying experience. That experience includes lowering barriers to purchase. For example, a buyer for a hospital chain miught have to deal with multiple vendors for syringes, gloves, masks, and other sterile supplies; on his personal time, he can get all these items for home from one consumer marketplace. By giving that buyer a B2B marketplace that brings all the healthcare supplies needed onto one platform and offering lines of credit, the companyt that owns the marketplace increases efficiency for that customer and saves time on product selection, transactions, and order tracking.
The use cases for marketplaces go well beyond retail. There are already established marketplaces for services, where companies can find freelancers to handle writing, design, and other contract projects. Marketplace opportunities also exist in areas like investment planning and financial services, and we see a massive opportunity for B2B marketplaces where companies can buy and sell data to optimize their customer experience, marketing campaigns, and other initiatives.
Planning and Launching a Successful Marketplace
Start your marketplace plan by researching your customer persona’s journey and what your competitors are doing in terms of marketplaces. Pay special attention to your channel partners’ efforts and which areas they’ll support to avoid potential conflicts.
Once you have a sense of what’s possible, you can start building your merchandizing strategy. For example, will adding new products require you to change the way you organize and classify products on your site? Which kind of marketing will your marketplace require?
You’ll also need to develop a seller strategy that outlines how you'll onboard partner companies, set terms and conditions, and set up a process to mobilize them for sales events. Make sure your expectations for sellers are clear in terms of shipping time, returns policy, technology capabilities, and inventory capacity. It’s also wise to vet prospective sellers to check their reputation online among customers.
There's also the technology to consider. There are many vendors offering marketplace solutions that plug into existing commerce solutions as well as full end-to-end solutions that include a marketplace engine. Beyond commerce capabilities, look for a solution that makes it easy to onboard sellers, offers good order management tools, and has strong analytics.
With your strategic and technology pieces in place, it's time to design your marketplace. This includes factors like content management, content syndication, and consistency of product information and image displays. The design stage also looks at cart, checkout, payment, and security capabilities to see if they need new features or upgrades to support a good marketplace CX.
The next design planning step is fulfillment to ensure that data from separate shippers is available for tracking and analysis. That should include planning for return logistics, including capabilities like printed labels and self-service options for customers. Return logistics planning can also include setting return KPIs that sellers need to meet to avoid being removed from results on your marketplace. Finally, design your analytics tools so you can continuously optimize the marketplace experience.
How much time will your planning, technology selection, and marketplace design require? Every company’s experience is different, but we generally see companies spend one to two months on discovery and planning and another two to four months to design and launch the marketplace.
Organizations that plan carefully and promote their marketplaces wisely generally see ROI about a year after launch. The key is to optimize the customer experience so that they keep coming back and eventually adopt the marketplace. Then you can grow a loyal customer base, generate more revenue, and add more value without developing new products or services.
Rich Minns is commerce and customer experience leader at Capgemini Americas, overseeing architecture, development, and infrastructure and helping clients envision solutions for engaging, experience-driven commerce websites. He brings more than 20 years of executive experience at Top 500 e-commerce retail companies and has led hundreds of successful commerce launches on numerous technology platforms.