In its October quarterly earnings, Amazon posted a 37% year-over-year increase in sales commanding a 38% share of the US ecommerce market. Other marketplace players are following suit in their growth.
With marketplaces being one of the critical vehicles for ecommerce sales, should brands focus all their efforts on it as a sales channel?
The answer is "NO" because marketplaces and branded manufacturers while benefiting from sales increases, have opposite goals.
- Brands want customers to go to ANY retailer to find their product.
- Marketplaces want customers to pick ANY brand that is available at their store.
Marketplaces have full control over the customer journey as well as how products are ranked and displayed. On top of that, 70% of users never go past the first page of the search results, and brands in general have virtually no tools to deliver unique experiences. As a result, it is tough for brands to differentiate themselves to stand out from the crowd.
To avoid becoming too dependent on a powerful marketplace player, brands need to make sure that they have a sound channel strategy spanning which includes other channels:
- Direct to Consumer channel give brands full control over the customer experience and customer relationship. This channel's challenge is that, unlike marketplaces, a brand is fully responsible for driving traffic and customer acquisition.
- Social networks are emerging shopping channels that can be extremely useful in the long run, especially for B2C brands. While today the commerce capabilities are still rudimentary, all of the critical networks are keen on commercializing their extensive customer base.
The approach promises measurable benefits, as Gartner predicts that by 2022 organizations using multiple go-to-market approaches for digital commerce will outperform non-commerce organizations by 30 percentage points in sales growth.
What does it mean for branded manufacturers?
To implement a successful channel strategy, branded manufacturers need to have a commerce solution that allows them to support it:
- Support any touchpoint, be it website, mobile, connected equipment, or social media, to support broad channel strategy. This is achieved with headless API-first architecture that allows developers to onboard new sales channels. Not all APIs are created equal, so whether the APIs are RESTful, well-documented, and easy to use are important factors because they will significantly impact the speed to market for new sales channels.
- Deliver unique experiences across different steps of the customer journey to differentiate against the competition. With legacy commerce platforms, it usually takes significant time and effort to customize the solution due to their rigidity. To overcome this challenge, branded manufacturers need a commerce solution that can be rapidly extended by the developers to accommodate new experiences.
- Leverage marketplaces as a sales channel by allowing the business to manage all products and content in a centralized way and then publish it to the marketplace. It will enable the band to deliver a consistent experience across sales channels and improve speed to market for new offerings.
Composable Commerce provides a way for brands to address all the requirements and create a unique best of breed solution that can support diverse channel strategy.
To learn more about what awaits branded manufacturers in 2021 – get the Gartner prediction report here.