Retail giant Amazon.com recently expanded its new Handmade marketplace, similar to Etsy, where artisans can sell handcrafted goods. Considering Amazon’s scale and widespread consumer audience, other online marketplaces have reason to be concerned.
With its one-hour delivery rolling out across the U.S. and rumors of its own delivery service emerging, Amazon has perfected supply chain logistics. Unlike many companies, it can afford to take risks. If Amazon gains traction in this latest endeavor, other online marketplaces may struggle to acquire new customers.
To stay relevant, these companies need to pay close attention to customer data for both buyers and sellers on their sites. While competing with Amazon’s logistical prowess and scale may prove difficult, smaller marketplaces have an edge in one key area: customer relationships.
Competing With Customer Data
Understanding customers is paramount to online marketplace success. A high awareness of purchasing habits, geography and outside influences makes the customer journey more seamless, and personalizing recommendations, deals and ads for each consumer can both lead existing customers to purchase more frequently and attract new customers.
Mining consumer data for insights is key to retention. Etsy, for example, has robust customer data. Looking at customer browsing and purchasing habits, in addition to geographic location, keeps recommendation algorithms, geo-targeted email templates and targeted ads updated.
As Amazon moves in, marketplace retailers should seek new opportunities to wow consumers. Analyzing customer data is crucial for identifying behavioral trends or dynamic retargeting options that can increase relevancy, gain revenue from existing customers and up the likelihood of conversion.
Here are four strategies to stay relevant and improve the customer experience of both buyers and sellers on online marketplaces:
1. Recognize your best customers. Invest in rewarding customers who are vital to your business. Seventy-eight percent of consumers claimed they were more likely to become repeat customers if targeted with personalization, so offer customized packaging, limited-edition lines and VIP perks when possible. Give your branding and loyalty teams the opportunity to shine by personalizing based on purchase history, buyer location and frequency of purchase.
2. Understand on-site browsing behavior. Once you’ve placed your customers in buckets, discern where the purchasing path drop-off occurs. Look for products viewed but not bought, or items added to carts but never purchased. This information can refine your product recommendation engine, influence your site design and pinpoint problems in your checkout path.
Simple issues like shipping fees — which 55 percent of respondents in a study cited as the main reason for abandoning a cart — can make a huge difference. Make small changes to remove friction and, in turn, increase sales and avoid potential customers making the leap to your competitors’ sites.
3. Know what’s working for competitors. Amazon doesn’t sell a huge amount of its own products in proportion to the millions of outside products it offers. Dig deep into both Amazon’s and other competitors’ marketplaces to determine what’s selling well in your category. Let that information guide your product inventory and what you highlight on your own site.
4. Observe crossover and multisite shopping behavior. The odds are high that your customers are already shopping, browsing and purchasing on Amazon. Knowing your audience — e.g., what they’re buying and which of their needs aren’t being fulfilled — creates opportunities for you. Any gaps in competitors’ services represent a chance to entice new customers and keep existing ones loyal.
Bigger doesn’t always mean better. Amazon may be expanding its reach, but its Achilles’ heel is still personalized customer service. This is one area smaller companies should focus on for continued success.
Related story: 4 Ways to Use Customer Data to Win the Amazon Game