How to Boost Profitability with Digital Marketplace Capabilities
Diversify revenue streams, reduce inventory risk, and win loyalty with a digital marketplace.
Editorial Lead, Salesforce Commerce Cloud
Nearly every company sells their goods and services online, whether it’s direct-to-consumer or to assist with B2B sales. But until recently, only a few companies could afford to run a digital marketplace — an experience that connects third-party sellers with buyers either alongside or in addition to a company’s own products and services. In the past, digital marketplaces required large investments in business and technology to develop and maintain. But now, game-changing technology gives businesses agility and significantly lowers the cost (and the risk) of creating their own marketplaces.
And the timing couldn’t be better. In the throes of a snarled global supply chain and rising inflation, marketplaces offer plenty of shelter from the proverbial storm. That’s why more than one-third of commerce professionals — across industries and business sizes — are prioritizing adding marketplace capabilities to their existing ecommerce experience.
Marketplaces make it easy (and fast) to diversify revenue streams, reduce inventory risk, and win customer loyalty. Think your business is ready to take the leap? Here’s everything you need to know about marketplaces.
What, exactly, is a marketplace?
In a conventional ecommerce setup, a brand launches its own storefront to sell products and services. It doesn’t share customers with anyone else, and it certainly doesn't share profits. Marketplaces, however, allow businesses to join forces.
In the simplest terms, a digital marketplace connects buyers to sellers. A marketplace can expand online product catalogs by enabling multiple businesses to sell related offerings under one digital roof (think Amazon Marketplace or Etsy). As a business, you can sell through third-party marketplaces, launch and operate your own, or you can do both.
Businesses that launch their own marketplaces curate products from other sellers alongside their own and sell them all on the same digital storefront. Here are the unique advantages of operating a marketplace (along with our top tips on how to get started).
Marketplaces boost businesses in every industry.
Win loyalty with deeper customer insights.
If you want to quickly expand your reach to new audiences, selling through third-party marketplaces is a cost-effective way to get the job done. But businesses that launch and operate their own marketplaces have a major advantage: customer data. Marketplace owners are responsible for onboarding sellers and maintaining the site, but they have the added benefit (and major payoff) of collecting valuable first-party data that provides insights into customer needs and behavior.
Nothing builds brand loyalty and boosts revenue quite like understanding your customers. To give customers the kinds of experiences they want, businesses need data. Here’s how marketplace owners use data to find success:
Almost three quarters (73%) of customers expect companies to understand their unique needs and expectations.
Personalize interactions at scale: Shoppers want a give-and-get relationship with the companies they interact with. In fact, 73% of customers expect companies to understand their unique needs and expectations. Tailored promotions and complementary product offerings customers will love? All powered by data. Streamlined product search that serves customers only the most relevant results? Also made possible by data.
If you’re operating a marketplace with a large catalog, it’s all the more important to implement these personalization features. Customers don’t want to spend time sifting through a sea of unwanted items from the wrong categories. Instead, harness data to give them fast, easy product search and recommendations.
Personalized moments that make customers feel understood can turn a first-time shopper into a loyal fan. It’s no wonder that 88% of businesses prioritize collecting first-party data — and 30% say it’s their highest priority. Owned marketplaces are a proven tactic.
prioritize collecting first-party data
say first-party data is their top priority
Drive efficiencies with data-powered automation: As budgets get squeezed and commerce leaders are asked to do more with less, automation can unlock business efficiencies. The one key resource you need to power automation? Data. Marketplace owners can use data to automate many order management tasks, streamline simple support requests, and even simplify returns.
Automated order tracking means that your service team will no longer spend valuable time answering questions about estimated delivery times. Implementing data-powered chatbots for common questions can also relieve service and support teams, giving them more time to focus on more complex cases.
A whopping 94% of shoppers say that a positive customer service experience makes them more likely to purchase again.
Connect commerce with other areas of business: A whopping 94% of shoppers say that a positive customer service experience makes them more likely to purchase again. It’s critical to harness all the data you collect from your marketplace and turn it into stellar shopping moments. The best place to start? Consider a customer data platform (CDP). This will make it easy to gather data in real time and uncover insights from across your entire business. Once you unify marketing, commerce, and service data, you can automate and personalize every single interaction.
Understanding and better targeting segments of customers with unique offers and products is one of the biggest reasons companies invest in marketplaces — and a CDP will dramatically increase your organization’s capabilities to capture data and better segment offers. Ultimately, a customer data platform enables you to deliver intelligent commerce everywhere and create VIP shopping experiences that feel like magic for every customer, at scale.
It’s not just businesses that benefit from marketplaces. Customers win, too.
Better together: marketplaces make it easier to grow — even in a tough economy.
Weather inflation: Businesses and customers are doing their best to thrive in spite of inflation. Marketplaces can help ease the burden. For customers, marketplaces make it easier to price shop — a particularly beneficial feature as costs continue to rise. Consider the strained customer journey of a shopper feeling the weight of high freight costs. If they were browsing a traditional digital storefront and didn’t see products at a comfortable price point, they would likely exit, perform a quick Google search, and purchase a more affordable option from a competitor. But marketplaces offer a quick way to find similar offerings at a lower cost — without any of the work. From the same storefront, a customer can see specs and prices of a range of similar products, and quickly choose one that meets their needs.
As a marketplace owner, offering a range of products at different prices means you’ll attract more customers. Not to mention, you can analyze data from product groups to see which price points lead to more conversions. This information can help you upsell, retain customers, acquire new customers, and more.