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The presentation will discuss the growing trend of retailers adding Marketplace functionality to their ECommerce websites, and discuss how to evaluate whether this is right for your business. In particular, the following questions will be discussed in depth: What is a marketplace and what are the business advantages to one? What are the elements of a successful Marketplace launch plan? What are the elements of maintaining and growing a successful Marketplace? Who should not start a marketplace? Having launched and now managing Barnes & Noble's Third-Party Marketplace, combined with 10+ years of experience helping retailers scale their Marketplace businesses, Rick Watson is uniquely qualified to discuss the benefits and pitfalls of building your own marketplace as part of your ECommerce strategy.
Presented at 2012 E-Commerce Europe Summit: http://e-commercesummit.com/program/june-6th-day-2
GM of Marketplace @ Barnes & Noble. Joined last year to relaunch our marketplace as a destination for retailers.
Amazon passed 1.4 million seller accounts in 2007 There is another tier – advertising.
Amazon (2001) Market Leader “ Deal with the devil” Sears (2010) Poor technology: Pricing can be updated only every 48 hrs. Poor categorization: Anyone can add products Overstock Shut down auctions business Tried independent branding/destination Auction-only model eBay Great for many, but … Others have brand/channel conflict Walmart (2009) Marketplace not open: only 5 retailers present Brand-stigma for high-end retailers Buy.com (2007) Anecdotally 50% of site by units Focused on white-label marketplace strategy also (Best Buy)
Because these will be different groups, you need to drive information up the chain as much as possible in order to reduce buyer wait times. This requires information, systems, training, awareness.
Marketplace team should be lean and scale very well. Merchandising team should scale with number of products, promotions, vendors. Seller Relationships team should scale w/ number of buyer & seller support requests.
Difficult to imagine having data-driven conversations about selection, profitability, promotions, etc.
Is Running a Marketplace Right for Me?
IS RUNNING A MARKETPLACE RIGHT FOR ME? Rick Watson June 6, 2012 1
A LITTLE ABOUT ME• GM, Marketplace for Barnes & Noble.com• Software / Technology Background• 13 years in ECommerce Industry• Twitter: @rickwatson• Website: http://rickwatsonsblog.com/ 2
MARKETPLACE: VIRTUOUS CYCLE More Expand Buyers Selection 5
DC WORKFLOW Ship Search / Browse PurchaseCustomer 6
MARKETPLACE WORKFLOW Search / Browse PurchaseCustomer Inventory Feed Order Information Ship 7
ENHANCING SELECTION DC Products Dropship Products MarketplaceVendor Type Manufacturers Distributors Online RetailersVendor Count Hundreds Hundreds /Thousands Thousands/MillionsSelection Profile Narrow and Deep Variable Broad and ShallowGross Margin 40 - 60% ~30% ~12%Inventory Risk High None NoneInventory Title Owner Flash Title Seller 8
WHY CONSIDER A MARKETPLACE?• Expanded pool of products, promotions, pricing, options, availability• Improve unit economics • No cost of goods • Shipping can become a revenue source• Lower inventory risk 9
OPTIONS TO CONSIDER• Product Posture: • Promotional • Non-overlapping • Fully overlapping• Seller Posture: • Closed/Gated • Open 10
AMAZON – CATEGORY PAGE PROMO SPOT Featured sellers/retailers on AMZ. When buyer clicks on the logo, they are taken to that retailer’s listings on AMZ. AMZ offers this positioning to retailers as part of the contract
BUY.COM’S DAILY DEAL Buy.com also has a daily deals slot for retailers.
ONGOING PRIORITIZATION• A Marketplace puts you in the software business – sellers expect you to execute on some of their ideas• Merchants have choices – why are they with you?• Prefer fewer, long-term resources over larger #s of temporary resources for “launch” 24
WHAT “NO” LOOKS LIKE• Most projects in perpetual 1.0 stage• Top vs bottom-line focused• Internal teams not easily aligned• Rigid/inflexible systems• No clear differentiated value proposition for merchants• Internal conversations often not data-driven 25
WHAT “YES” LOOKS LIKE• Clear business owner• Unique customer base• Goal to improve selection & profitability• Willingness to see merchants as customers• Good traffic acquisition strategy• Invest in platform/software over long-term 26
REFERENCE MATERIAL• How to Build an Online Marketplace • Brian K. Walker, Forrester, May 8, 2012 Why Every Retailer Needs an Online Marketplace • Sucharita Mulpuru, Forrester, May 9, 2012 Company to investigate: • Merchantry / Rakuten: Build marketplace platforms 28