Marketplace activity, which was already very dynamic, has directly benefited from the boom in online shopping during the COVID crisis. In the 1st quarter of 2020, marketplace business grew by 5.5% on volume, with a marked acceleration of 8% in March.* The trend was consolidated in the 2nd quarter as the lockdown continued and most businesses remained closed.
This acceleration in sales is also a sign of changes in consumption patterns and new trends, which are key to attracting and increasing customer loyalty.
Like all large merchants, large marketplaces must address these challenges. Let’s discover the ingredients for their success!
1. As many sellers as possible, for a wide and enriched range of products
To make their platform very attractive to consumers, marketplaces are well served by having a very complete range of products. That is why marketplace operators seek to list as many sellers as possible. To manage marketplace transactions, the payment service provider must carry out an identity check of partner sellers, as required by AML/CFT regulations in particular. The payment service provider’s ability to manage such a large number of KYC (Know Your Customer) procedures, while complying with regulatory due diligence, is therefore key for the marketplace. And since business if often done across borders, the provider needs to manage both domestic and foreign partner sellers.
2. Harmonise payment methods across all channels for a smooth customer experience
By offering a customer the same payment methods regardless of their path, the merchant further adds value to the customer experience. To be precise, the consumer should be afforded the same payment modes whether their basket is composed of ‘single-seller’ (products sold directly by the brand) or ‘multi-seller’ (products from the marketplace) items. The purchasing journey is then optimised, which creates favourable conditions for customers to place orders.
Ubaldi, the major household appliance and high tech brands specialist, as well as the mon-sejour-en-montagne.com marketplace, a brand launched by the Ecole du Ski Français and specialising in mountain stays and equipment, have thus integrated the Oney split payment method into their marketplace offering. Find out more about split payments on marketplaces.
3. Use the marketplace model to create new omnichannel journeys
Knowing how to manage omnichannel journeys attracts additional sales: 85% of customers who use web-to-store generate greater value.** Marketplaces are no exception: the transformation rate of purchases is positively impacted by the consumer’s ability to navigate between digital and physical channels. And where a customer’s journey is smooth, they are more likely to return to the marketplace site. The Click & Collect experience, already well known in e-commerce, is just as relevant in the context of an omnichannel marketplace journey.
4. Respond to new consumption habits with the marketplace model
Consumers are increasingly sensitive to responsible commerce. In the fashion sector, the second-hand market is exploding. Several large digital platforms are thus allowing consumers to resell clothes they no longer use to other individuals. Faced with the success of these models, the major brands are increasingly interested in them, resulting in a greener image.
These marketplace models between individuals are also an opportunity to facilitate the emergence of short supply chains, which are everyday becoming more popular with customers concerned about their environmental impact.
5. The marketplace model is reaching more people, and becoming more sophisticated
Always with a view to making life easier for their customers and gaining their loyalty, some marketplaces have moved from product sales to a comprehensive model that combines products and services. For example, in the DIY sector, beyond the product offering (i.e. DIY equipment), the marketplace can offer complementary services performing works or installing equipment. In doing so, they become a one-stop shop for the consumer who, thanks to the marketplace, can order everything online on a single site. And this model can become even more sophisticated when the marketplace decides to integrate as a third-party seller another marketplace that offers a range of services to get the customer in touch with building contractors! By superimposing marketplaces, the model becomes even more powerful.
*Source: Fevad iPM index, June 2020
To learn more about marketplaces, also read the article: The “Marketplace”, a successful business model