4 Ways to Use Marketplaces to Grow

Marketplaces have been around since the beginning of modern society. They are a place where you can buy, sell or trade basically anything. Fundamentally a marketplace aggregates supply and demand.

There is an online marketplace for basically everything. Uber is a marketplace for transport, AirBnb is a marketplace for rooms, Kickstarter is a marketplace for ideas, Ashley Madison was a marketplace for affairs…but we’ll move past that one.

While it’s essential for businesses to own and control their own distribution and customer acquisition strategic use of marketplaces can form an important part of the business mix.

The four opportunities I’m highlighting today are an expanded version of a presentation I gave in Fiji last week to a group of government, NGO and private sector organisations about the opportunities to develop their digital capabilities and sell globally.

At the end I give you some ideas for marketplaces you can use.

1. Product Development

Online daily deals exploded in 2007 and continue to be a multi-billion dollar market today. They met the challenges of local businesses to effectively market online without the need for large marketing budgets or capital outlay. One of the key categories in daily deals are restaurants. Restaurants generally operate on thin margins and the commercials behind 50%+ discounts are tough to justify. To overcome this hurdle restaurants often use special menus or value adds to meet the discount criteria. In NZ the concept of a ‘degustation’ was latched onto. Restaurants could create a tasting menu with selected ingredients and discount it to meet the daily deal sites criteria.

In doing this they have created consumer demand for degustation menu’s outside the daily deal market and developed a new product for the industry. Consumer awareness has been created and now the product is sought out.

google trends

According to Google Trends consumers weren’t searching for degustation until daily deals arrived.

Takeaway: Thinking of testing a new product or niche? Rather than launching yourself think about where your customer persona is already buying product from. Testing it via a marketplace is likely to cheaper and faster.

2. Customer Acquisition

Amazon is known as the ‘everything store’. They currently have 244 million active customers who bought something in the past 12 months and have stored credit card info. I’m regularly surprised how few people know that Amazon themselves don’t supply many of the items they sell. Because Amazon is a marketplace with 2 million active sellers and anyone can start selling today.

I regularly remind you dear reader that the easiest customer to sell to is one who has already bought from you. In this case Amazon is driving sales for these marketplace sellers through it’s considerable infrastructure, sophisticated email marketing and ad re-targeting. All for a lowly $39 a month.

If you’ve got a product that benefits from volume you probably should be selling on Amazon.

Takeaway: Acquire customers through 3rd party marketplaces and have a backend system to market and increase their value over time.

3. Sales Velocity

Ever had a big sales day?

Alibaba does every year. On ‘Singles Day’ in 2014 they had a $9.3 billion big day. This year will likely be even bigger.

Events like Cyber Monday, Valentines Day and Christmas are huge shopping events that drive very large volumes in short periods of time. Planning around these events is crucial and marketplaces can dramatically increase your sales. Consumers enter these periods with intent to buy something for someone so just being there will show meaningful results.

It’s crucial to leverage your supplier relationships in these phases to keep costs low and pricing competitive as it’s a pure land grab.

Takeaway: If you need volume align your strategy with local or global events that generate demand. Use a marketplace to increase the sales velocity.

3. Online to Offline

Click and Collect has been growing proportionately faster than online shopping for retailers like Marks and

bike exchange

Marketplaces create more ways for your customer to contact you.

Spencer and John Lewis. Customers don’t necessarily want to wait at home in a wide delivery window for a package that potentially been drop kicked into a van by the local courier driver.

Serving the customers in-store also has the dual benefit of reducing distribution costs and potential to increase the basket size; they are there so sell to them.

Many marketplaces now offer click and collect to sellers on their platform. Service providers can also use local marketplaces to generate bookings and enquiries.

Bike Exchange, a marketplace for bikes and accessories, has a clever way to generate enquiries for bike retailers while capturing value for themselves.

Takeaway: Having options for customers to visit a store to buy or collect is essential

Theres a Marketplace for Everything

Have skills and knowledge? Sell them on Udemy

Have a room? Sell it on Lookafterme

Have products? Sell them on TradeMe

Have services? Sell them on Expert360

There are customers out there right now. Go to them.

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  • Jarrod Dougal August 28, 2015   Reply →

    I like the idea of instead of trying to create traffic to your website or business finding where people are already congregating online and selling there.

    Really enjoying the content.

    • James Kemp August 28, 2015   Reply →

      Thanks Jarrod. The long term goal should be to ‘own’ the customer and transaction in your own environment but marketplaces are a great place to start or test new products.

  • Julia Charity August 28, 2015   Reply →

    Hi James

    Thanks for sharing your knowledge and re-purposing your content for us to read and digest at home (would have rather been in Fiji!).

    Thanks for mentioning our accommodation market place ‘Look After Me’. I really like the way New Zealander’s support other New Zealanders….


    • James Kemp August 28, 2015   Reply →

      Thanks Julia. Always happy to support NZ businesses.

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