Developing Your Own Marketplace Can Grow Your Business, Enhance Omnichannel Experience
As retailers build out their omnichannel capabilities, many of them are simultaneously launching their own marketplaces as a way to deliver the enhanced selections and limitless online shopping aisles that online consumers increasingly demand. Expanded virtual inventory delivers the breadth of choice consumers seek, offering retailers a reliable tool for growth without the infrastructure costs that physical inventory brings.
Inviting third-party sellers to participate in a marketplace structure brings opportunity, but it also potentially poses a threat to a seamless shopping experience. Consumers want consistency across channels — i.e., the same enjoyable buying experience whether they're shopping in-store, online or via mobile. This means that retailers should proceed cautiously when adding commerce channels in which they lose any measure of control over the process. Managed incorrectly, marketplaces can harm brand reputation, customer service and product fulfillment.
As retailers develop a marketplace environment that allows them to grow by satisfying consumers with more SKUs, they must also put in control mechanisms to offset risks. Consider the following tactics:
1. Vet suppliers and products. A marketplace can affect brand identity in two key ways: First, an endless product aisle is only valuable if the products are relevant to your brand. Straying too far away from the offerings that your customers want and expect from your brand can be a confusing turnoff. For example, a general merchandiser that specializes in apparel shouldn't necessarily start carrying big-screen TVs, but perhaps a more nuanced approach to electronics, such as specialty items intended as gifts.
Second, customers may like expanded choice, but they'll nevertheless hold retailers responsible if something goes wrong. So while third-party sellers on marketplaces are in charge of fulfillment, blame for a bad shipping experience still falls on the retailer.
A thorough vetting of sellers can help retailers avoid problems by making sure new product offerings are high quality, work with their brand and resonate with customers. To do this, brands need to be able to access information about each supplier, including past performance, product listings and system compatibilities. Before launching a marketplace, retailers must have insight into these critical areas so they can make informed judgments about third-party sellers and know what to reasonably expect.
2. Set up rules and alerts. Retailers work tirelessly to ensure that customer service is top notch, but once a shopper enters a marketplace, they're putting faith in third-party sellers. Because these suppliers aren't often linked to the retailer's normal shipping system, neither the customer nor the retailer has visibility into shipping and delivery status. Should an issue arise, the retailer cannot manage the order and provide the level of service that their customers expect.
By implementing real-time tracking and alerts, retailers gain "Big Brother" oversight and control over the marketplace. Through rules and alerts, they can instantly receive notifications when a problem develops and monitor the status of an order at any given point. By watching closely over third-party sellers, retailers can protect their brand reputation and catch problems before they negatively impact the customer experience.
3. Optimize shipping service. Fulfillment poses the final challenge to retailers in a marketplace. Since most third-party sellers don't provide real-time order tracking, retailers often lose control over when and where products get packed and shipped. This makes it especially difficult to manage customer expectations and provide reliable delivery dates.
Automatically optimizing shipping service levels based on factors such as delivery window, inventory location and destination solves this. By closely monitoring shipments, retailers can upgrade or downgrade shipping service in order to meet customer expectations and reduce unnecessary costs. In other words, get an order to its precise destination, on time and at the lowest possible cost.
Marketplaces can help beef up the top line and spell growth, but only when managed correctly to make sure the customer experience and service levels are acceptable, even when implemented by third-party sellers. More channels mean more ways to reach new customers and sell more, but an integrated commerce strategy requires more know-how and tools to succeed.
Frank Poore is founder and CEO of CommerceHub, a merchandising and fulfillment platform for online retailers.