Marketplaces are great, but don't underestimate the work involved

A viewpoint from Daley Hub

DIY and building products came relatively late to the ‘marketplace’ party and the channel consequently remains hot news for the sector. While there is no doubt of the opportunity, today’s marketplace proliferation means that they are no longer all the same, and it is therefore worth taking time to understand which ones are most suitable for a product range or strategic plan.

And equally crucial, what it takes to make each different marketplace work effectively – which can require a not to be underestimated investment of time. At Daley Hub, we have built up considerable experience in the field and with Nils Kernchen, the former platform developer for the original DIY and garden marketplace, ManoMano joining the team, we are a perfect source of advice and partnership. Nils is also a freelance associate of specialist marketplace agency, ChannelMojo.

As a platform, marketplaces are now easier to build than ever before and the marketplace format - now around 62% - is predicted to be as much as 80% of all ecommerce sales in the not-too-distant future. They have also gained traction and trust amongst both buyers and sellers, with more and more traditional brands on board, alongside the start-ups and the incomers who were often the earlier adopters.

Popular with shoppers for convenience and price comparison, online marketplaces appeal to suppliers as a flexible business opportunity with relatively low start-up costs enabling the sale of goods without the need for an online store.

The four largest global marketplace leaders of today are Amazon, Alibaba, Pinduoduo and JD.com. In the UK, the largest are again Amazon as well as eBay UK, ASOS, Argos, John Lewis, Currys PC World, Zalando, Notonthehighstreet, Boohoo, and Very. DIY.com is also surprising the sector with the pace of its growth and participation.

But there are many other international names worth considering and a continuous stream of new or imminent entrants including Bauhaus, Hornbach, Zalando, Leroy Merlin, Conrad, and more.

Advantages – including the cross-border opportunity

For sellers the attractions are an additional route to market with apparently lower marketing costs than other sales channels. The online marketplace’s own brand may well provide a level of additional trust in the seller’s brand and the impartial reviews can be a real win in marketing terms. From an operational perspective the supplier can enjoy round the clock trading with availability, prices, and stock levels transparent and accessible in an open

environment. Plus, it can be a great way to overcome export barriers – and this alone may make marketplace trading worthwhile. So far, so very good.

But there are also disadvantages. Marketplaces can charge commission on every sale and fees can vary. There may be restrictive terms, conditions about how to communicate with customers, and limitations as to how a seller’s online presence can be branded.

Don’t underestimate the work involved

Marketplaces today are all different – in their suitability and requirements for success. It is no longer just about appropriate titles, descriptions, images for the category. Each marketplace is different anyway, and then again by territory. Set ups and onboarding procedures all vary accordingly. Some marketplaces are in effect ‘closed’ to newcomers. For those that are ‘open’, there are different brand systems, marketplace inhouse systems, key words, advertising and invoicing procedures, licenses. And that’s just the online part. There are also different product requirements – size, weight. Too small in which case re-present product bundles as ‘kits’; perceived as ‘dangerous’ such as batteries and bladed items. It's not only getting everything right at the start. Sellers will need to undertake continuous monitoring of their own and competitor activity. Surveying every aspect is full-time daily work.

Get some expertise

At Daley Hub, we are fans of the marketplace phenomenon, but real success is not as easy as it may at first seem. To make a go of what is certainly a great opportunity, suppliers need to budget for quality research, knowledgeable recommendations, and ongoing commitment – well above and beyond winning initial listings.

Daley Hub can help.

For more information visit contact us.