3 reasons to adopt a cross-border eCommerce marketplace strategy.
Online marketplaces are becoming more attractive as revenue opportunities exceed the cost of selling on such a platform. According to Digital Commerce 360, the world’s largest marketplaces registered sales of around 3.2 trillion in 2021 and accounted for 1/3 of total global eCommerce sales. According to the same source, consumers’ spending on the top 3 marketplaces (Taobao, Tmall, and Amazon), accounted for 41% of worldwide online retail in 2021. By definition, a marketplace is a platform where vendors can sell their products or services, where sellers can gain awareness, catering to a larger number of customers in geographical areas that otherwise would have not had access.
Key Messages
- The world’s largest marketplaces registered sales of around 3.2 trillion dollars in 2021 and accounted for 1/3 of total global ecommerce sales.
- Consumer’s spending on the top 3 marketplaces (Taobao, Tmall, and Amazon), accounted for 41% of worldwide online retail in 2021.
- Brands need to collaborate with other regional businesses to growand create synergeis by using localization strategies. The commercial success of any marketplace depends on how brands engage and understand local communities.
- The eCommerce surge that started long before the Covid-19 pandemic is fueling competitiveness today. Companies must grasp recent market trends and promptly adapt improvements that are relevant to their company to remain visible within their industry sectors.
The advancement in technology, especially for revenue management, allowed marketplaces to attract more and more retailers. For sellers, diversifying the global sales channels is a tremendous opportunity – according to Shopify, companies that sell on marketplaces, websites, social media, or mobile can increase their revenue by more than 190% while benefitting from more awareness, than those who sell on a single channel. Throughout the years, companies have realized one important fact, taking everything in favor of marketplaces: the buying process starts with consumers accessing marketplace websites rather than going on Google or direct to the retailer’s website. This behavior is rather simple to explain – it is all about trust. People are more likely to buy items from companies that sell their products or services on well-known marketplaces. Consumers make easy connections, if one sells on a well-established platform, then it is automatically trustworthy, and safe to buy. With new technologies being launched and utilized, digital transformation is assisting merchants in staying ahead of the game. E-merchants must keep up with the newest developments in eCommerce and understand how to react to these changes to be well-positioned for 2022.
Chart: Leading online marketplaces worldwide 2019-2021, by revenue CAGR, Source: Statista
Many major brands understand the need to adopt a multi-channel sales strategy. An own website for a well-known brand will offer the opportunity to have control over the brand for domestic and international shoppers. A global website with a localized approach and a strong presence on marketplaces is recommended for a successful sales strategy. For a small brand wishing to tap into a new market, eventually testing and doing research on a smaller scale, marketplaces are the starting point.
- Marketplaces offer a quick access to a larger customer base
Consumers have gotten used to searching on marketplaces for different items they want to purchase. One important aspect for consumers is the ability to compare prices for the same item from different vendors, read the recommendations coming from other buyers, and weigh the decision based on this evaluation. Shoppers prefer marketplaces due to the wide product selection, fast check-out options, and better promotions.
- Marketplaces offer built-in tools for eCommerce solutions.
The development of marketplaces has been bolstered by technology. Marketplaces offer built-in tools which can help retailers to offer a seamless buying experience. Amongst the built, we can mention one-click checkout, mobile app, the ability to use different payment options, multiple delivery options (from standard to express), different delivery points, etc. Tapping into a new international market can be challenging, but marketplaces offer retailers faster product launches, simplified processes, protection against unpaid invoices, or customer support options.
- Sellers can benefit from the marketing power of the marketplaces.
Marketplaces have a high marketing power from which sellers can benefit. For a company that just entered a market, gaining exposure and trust from the local consumers is crucial. Ultimately, the positive shopping experience marketplaces offer will build loyalty, fostering a long-term relationship between the brand and the consumer. One important aspect is the marketplace’s visibility on search engines, easily discoverable, its reputation, and brand-building techniques (subscription services). Lastly, the possibility to study the audience, the buying behavior, and analyze shopping data will provide more insights into whether expand on the market with less risk or investigate other markets with greater potential, suitable for the company’s strategy.
Why has Covid-19 pandemic fuelled market competitiveness?
Companies must grasp recent market trends and promptly adapt improvements that are relevant to their company to remain visible within their industry sectors. The way customers and marketplace owners view the purpose of business has shifted dramatically. Markets based on needs are unable to meet current demand. Convenience, simplicity, and relevance are no longer synonymous with having everything for everyone in one location.
Zooming in, localization is a win-win approach in the post-Covid era, especially for cross-border eCommerce. A powerful localized strategy is required for successful multi-vendor marketplace growth in 2022. Important are product descriptions and customer service to speak to customers in their own language. The first distinguishing element of localization focuses on cultural differences and preferences. Companies must make the marketplace relevant to the local audiences and to engage them. It’s not simply about translating website or app pages into different languages. Localization is much more than that. It entails accepting popular payment methods in the region, displaying prices in local currency, and customizing graphics to reflect regional cultural, socioeconomic, or religious characteristics.
Due to the significant shift in consumer preferences, eCommerce can now operate across borders with little geographical constraints. This increase is not limited to certain items or services. Cross-border purchases range from common necessities to high-end products. Despite all the advantages of marketplace globalization, there is no one-size-fits-all solution for cross-border eCommerce. Different marketplaces provide a variety of possibilities for various markets and areas. This variety assures accurate pricing, client satisfaction, and retention.
About heyworld.
heyworld GmbH was established in 2019, as a 100% subsidiary of Lufthansa Cargo, specialized in cross-border, eCommerce logistics. heyworld translates airfreight processes and standards into the eCommerce world (ex. conversion of chargeable weight into a parcel level-based pricing scheme). We combine airfreight, eCommerce, and logistics know-how, working with a modular service, from first mile, middle mile (air freight) to end mile. We are well Integrated into Lufthansa handling process, and connected to all service providers and process steps via API integration.
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