The marketplace model is driving rapid changes in what today’s consumers expect from the online shopping experience. Global and regional marketplaces able meet these expectations (and deliver on price and selection) are quickly separating themselves from competitors who can’t keep up.
The GRIN sat down with a few top marketplace experts on its recent Executive Discovery Call on Marketplaces. These experts weighed in on global marketplaces, discussed what problems they are facing (and solving), and shared their insights and experiences.
Glen Richardson, the CMO of Fruugo, a B2B and B2C marketplace platform operating in 23 countries, spoke to what a cross-border shopper looks like.
A Cross-border shopper has several key characteristics:
1. They believe they are changing the way the internet can be used one click at a time.
2. They are savvy, not impulsive.
3. Purchases are made after research and price comparison across sites.
These shoppers have different priorities and expectations. Their preference is for availability over speed and for unique and personalized products rather than what “everyone else has.”
The takeaway: the platform delivering the product that the customer is looking for will win the buy-box, regardless of source.
James Aaron from Kungfu Data, a Tmall partner that helps Western brands learn what it takes to ‘localize’ in China by working with local marketplaces.
His response to merchants who hear the simple pitch “Come to China – it’s a huge market!” is that if a brand has platform support in the form of Category Managers from one of the big platforms, then the move is probably worth it. Platform support can mean millions of free views on products, and the increased exposure during promotions can result in over 50% of yearly sales on the platform.
Brands need to carefully consider their strategy, however. Increasing competition between JD and Tmall means it’s harder for brands to sell through both platforms. Moreover, detailed strategies are necessary for capitalizing on and maintaining the traffic generated through platforms.
Ultimately, it is all about the data. If you are in a category and product that is performing well or is trending upward it is worth taking a look at developing business in China, if not – you might want to take a good look if it is worth going to China right now as focusing on other countries with in Asia may be a more productive approach.
The takeaway: With China’s big marketplaces dominating product search traffic, platform strategy is crucial for any Brand looking to do business in China. Not only is it important to know which platform to work with, it’s necessary to understand how to perform on these platforms as well. Product and Brand ranking are becoming increasingly important – especially in the mobile context – as smaller screen sizes shrink search results and put increased pressure on brands to win in their category.
Al Gary is the CEO of ZigZag Global, a software service linking warehouses around the world in order to handle local package return services.
His take on which marketplace to partner with is invaluable. Amazon, for example, is also a retailer and acts as a competitor in many categories. Moreover, mature marketplaces like Amazon are hyper-competitive, making it harder for vendors to get the necessary views and traction to make selling on the platform worthwhile.
On the flipside, less mature marketplaces like Flipkart have less competition in many categories, offering massive opportunity for brands and vendors that can win in certain categories.
Chris Foley is the Founder and CEO of Mall for Africa, a company that helps retailers sell into Africa without risk and the usual worries around taxes, import restrictions, or payments.
He spoke to the marketplace landscape in Africa. Big players like Amazon are starting to enter the scene, but selection is still small (fewer than 300K SKUs). AliExpress also ships, but most of the goods are low-quality. There are also several, growing regional marketplace competitors. Notably, Rocket Internet-backed companies like Jumia and Kaymu are entering the scene.
The takeaway: Africa is an attractive market for retail. There are over 1 billion people in Africa, and it is home to a rapidly growing middle class, as well as 5 of the 10 fastest growing global economies.
Moreover, there are not many locally produced retail goods, meaning there are huge opportunities for cross-border retail to serve the consumer needs of this growing consumer class.
The GRIN Executive Discovery Call (EDC) series takes an in-depth look at timely, topical issues around global commerce. Please email us at email@example.com if you are interested in participating as an expert or simply listening in.