The rise of online retail marketplaces and what they mean for brands

We investigate how growing numbers of marketplaces, such as Amazon, eBay and Catch Group, could help as well as hinder Australian retailers


Price point

But the critical concern is their ability to maintain pricing. MacKinnon says this concern is not insurmountable, as attested by the presence within eBay of numerous price-sensitive brands.

“Of the top 100 retailer that sell on eBay, they are very successful without having to change their prices,” MacKinnon says. “But it’s a valid question, regardless of whether you are on a marketplace or not. Consumers are doing price comparison at the moment anyway, through Google or other sites, and this only going to get worse as Amazon enters the market.

“It is no secret Amazon scrapes millions of prices every day, so something retailers are going to have to accept is that the frequency of price changes they need to make needs to change.”

CEO of Brisbane-based ecommerce solutions company Neto, Ryan Murtagh, offers a number of pieces of advices for brands and retailers to ensure they don’t get caught in a race to the bottom on price.

“Many of our clients sell the exact same product as competitors on marketplaces like eBay and Amazon,” he says. “It isn’t all about price, it is about determining where you are going to focus your energy to deliver the best possible customer experience, and also where you can really start to optimise your product listings on these marketplaces to get the most relevant traffic.”

Murtagh agrees fulfilment is possibly the most important factor, as this can impact eBay ratings, or whether a product appears in Amazon’s ‘Buy Box’.

“Sales velocity and conversion rates and history are really important factors in where you rank on those marketplaces,” he says. “So too is optimising your listing form a keyword perspective, so that people can find your product, and then making sure your images, your buy points, and your actual description are unique and optimised. Copying and pasting from the manufacturer’s website is a thing of the past.

“And you need to ensure that you always have stock and your listings aren’t coming down, because that also affects your overall sales velocity.”

Another option is to spend your way to prominence through promoted paid listings. “It is probably not a long-term strategy, but it is something that can get you that ‘buy’ position early on, and then you can rely on the organic growth of that listing through customer reviews and fulfilment,” Murtagh says.

While price ultimately still plays a key role in consumer decision making, Murtagh says there are numerous tools now available to ensure prices are not set below market expectations, including Amazon’s own automatic pricing engine.

“It can adjust your pricing to help keep you in that Buy Box position,” he says.

Ultimately however, working through a marketplace also means the marketplace operator still has access to that data, and different marketplaces have different perspectives on how they use it.

“You only have to track the sales history of SKUs across Amazon to see that as a SKU becomes popular, Amazon either moves it into fulfilment by Amazon, or an Amazon-owned stock item,” Murtagh says. “That is a big concern.”

Batistich agrees a key difference between Amazon and other marketplace operators is how they use data. For this reason, he says it is vital brands and retailers retain their own online presence in addition to their representation through marketplaces.

“We know that whoever has all the data is ultimately going to win, because the data about intent and purchase behaviour will inform personalisation,” Batisitich says. “So there is no question that Myer and David Jones have to do their own experiences digitally, and build direct personal relationships with their shoppers.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu           

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