In the age of globalization, no retailer anywhere, whether large or small, can afford to limit its ambitions to just one country. Naturally, some sellers are further than others down the road of developing an international strategy – but what none can afford to ignore is the importance of online marketplaces in developing their ability to sell across borders.
Anyone in any doubt only has to look at the figures – in markets as diverse (and fast-growing) as Poland and Australia, nearly half of e-commerce trade is now taking place via marketplaces. Shift your sights to China, and you can make that figure 90%.
Because they are platforms for huge numbers of businesses, marketplaces have a strong proposition for building brand recognition, and the largest of them are among the most-visited sites on the Internet, ranking up there with Google and Facebook.
When retailers sell their products via marketplaces, they get the power of all that traffic and brand recognition at their heels – without having to splash out for extravagant marketing.
How marketplaces drive international expansion
Because they’re all set up and ready to go, and have already gained the trust of local consumers in whichever new market you may be looking to move into, marketplaces allow you to enter that market smoothly and speedily.
Meanwhile retailers, with an eye to their ease of use and low cost, increasingly find marketplaces an ideal arena in which to soft-launch in new territories where they still need to fine-tune their understanding of local market conditions. After all, the products that sell best in France might not be big hits in Indonesia, and it’s better to discover this before pouring big resources into marketing certain lines in new territories.
Marketplaces have often fought hard to win the trust of local consumers, and are hotbeds of local knowledge. Retailers entering a new territory have a huge amount to gain from harnessing this unique understanding that marketplaces have built up – and the improved understanding this gives to retailers helps them do better when they enter other retail channels, too.
Marketplaces aren’t just for discounters
There’s a common misconception that online marketplaces are primarily oriented towards cut-priced goods, and that selling on them can damage the reputation of premium brands. But our experience shows that nothing could be further from the truth.
Rather, online marketplaces offer a flexible space that can fit the needs of even the highest-end brands. For example, fashion retailers who have traditionally been forced to offer deep discounts to clear previous-season pieces from stores can often sell it at full-price via a marketplace, where there is less pressure to clear stock in a certain time-frame. Using local marketplaces, they can also finely optimise the product ranges offered in different territories, according to local market conditions.
So just as shoppers go to marketplaces for flexibility, so they offer brands and retailers a flexibility that is just as valuable to sellers of luxury items as it is to those offering basic goods.
As in any venture, there are challenges to be met
Of course, each marketplace is different, and launching on a new platform will always require careful planning and a significant outlay of knowledge and labor.
As in any field of endeavour, you probably won’t succeed in your move into marketplaces if you’re not realistic about the bases that need to be covered: language support, integration of your existing technologies with those of the marketplace, logistics, legal regimes and sales tax are all areas that require solid expertise to be established.
But as we may have already mentioned, the rewards are there for those willing to take these on.
Local knowledge is the key to global success
All cliches are based on at least a grain of truth, but this one has it in bucket loads: any business that wants to do well in different markets around the world must understand the deep differences that still exist between countries and cultures.
For retailers and brands, marketplaces are a brilliant mechanism to aid in this process, giving you a window into different markets in different places, and letting you enter them with relative ease. As ever, local obstacles must be overcome – but marketplaces offer a forgiving and constructive learning environment where you can build the up the knowledge you need to reach new places and new customers. With their growing importance in online retail globally, brands and retailers should be asking only ‘how’, and not ‘whether’, they will enter online marketplaces.