Marketplace sales are booming. According to Statista, 63% of consumers start their search on Amazon, 25% on other marketplaces, and only 21% on the brands’ websites. Consumers prefer to shop on marketplaces over brand websites for several reasons, including the availability of fast and free shipping, customer reviews, and easy price comparisons, and hassle-free returns. Consequently, marketplaces, including Amazon, made up 62% of global e-commerce sales in 2020, and the number of marketplaces has quadrupled over the last decade.
Additionally, a recent Shopify study shows that merchants that sell on three or more channels can see up to a 200% sales boost. As a result, many online retailers see a multi-marketplace strategy as a path to sustainable growth. However, to be truly successful in this increasingly fragmented universe of emerging channels, sellers must carefully align their fulfillment and sales strategies.
This article explores the factors to consider and pitfalls to avoid when embarking on a multi-marketplace journey. For a deep dive, check out the on-demand webinar, How to Build an Effective Multi-Marketplace Sales and Fulfillment Strategy.
Fast and Free Shipping Wins More Sales
Retailers that sell on multiple online marketplaces and offer free 1- and 2-day free shipping are seeing their sales rise. The availability of fast and free shipping is one of the most compelling reasons consumers are flocking to marketplaces. In fact, 72% of consumers say that free shipping is what they want to see at checkout. Conversely, unexpected shipping costs are responsible for 70% of cart abandonment. Thanks to Amazon, free 1-day shipping is quickly replacing the old norm of free 2-day shipping. Therefore, it’s crucial to align your eCommerce order fulfillment strategy with your sales strategy.
Marketplaces also give higher search placement and Buy Box preference to listings that offer fast and free shipping. Offers with fast and free shipping generate more impressions on most marketplaces, up to 50% more sales on Amazon, and up to 50% increased conversion on Walmart.
Build a Strong Multi-Marketplace Sales Strategy
The basic principle of a multi-marketplace sales strategy is simple: list your products on all marketplaces that reach consumers most interested in buying them. But, doing this well requires research, planning, technology, and logistics that must come together to achieve sustainable growth. Other factors to consider:
- Choose the right marketplaces that reach your target consumers. There are many niche marketplaces to choose from.
- Evaluate which SKUs to list on which marketplaces based on sales potential and profitability.
- Leverage listing software to efficiently manage and optimize listings at scale.
- Understand the criteria for winning the Buy Box and the ones that lead to higher impressions and conversions.
- Determining what changes you need to make to guarantee free 1- and 2-day shipping without killing your margins.
How to Approach Multichannel Fulfillment
The most cost-effective way to offer nationwide 1-day and 2-day free delivery across channels is to adopt a distributed fulfillment strategy. This means placing your inventory closer to your customers to deliver orders fast using economical ground shipping. Here are three popular options to consider:
1 – Marketplace Fulfillment Solutions
Amazon, Walmart, Wish, Shopify, Newegg, and Overstock offer fulfillment services for orders placed on their respective marketplaces. These solutions work well if you’re only selling on their marketplaces, but they can be costly and limiting for a multi-marketplace strategy. For example, it can cost two times as much to fulfill non-Amazon orders with Fulfillment by Amazon (FBA), and Walmart doesn’t even permit the use of FBA. Furthermore, sellers must keep sufficient inventory at each marketplace and manage inventory levels and inbounds independently for each. This approach can lead to higher inventory carrying costs and endless inventory management and operations complexity.
2 – Third-Party Logistics Companies (3PLs)
Another option is to outsource fulfillment to multiple 3PLs. These are generally smaller, independent companies not affiliated with any specific marketplace. You would have to contract several 3PLs to get nationwide 1-day and 2-day coverage. Order routing across disparate 3PLs will be complex and labor-intensive, so you may need to invest in multi-location fulfillment software to make it more efficient. Fulfillment costs will vary between 3PLs, and not all of them can meet the strict SLAs required to win the Buy Box across channels. Consider using the 3PL request for proposal (RFP) template to get an apples-to-apples comparison when evaluating providers.
3 – Peer-to-Peer (P2P) Fulfillment Network
A modern and affordable alternative to working with multiple 3PLs is to use a P2P e-commerce order fulfillment network. A P2P network is a collective of highly vetted eCommerce retailers who offer up excess warehouse space and resources to provide high-quality order fulfillment to other merchants. As a result, costs are typically lower than a traditional 3PL fulfillment company, and service levels are higher. With a P2P network, multi-marketplace fulfillment with nationwide 1-day and 2-day delivery is the norm. Merchants can use the network solely for outsourced fulfillment – similar to FBA, or they can choose to fulfill orders for other merchants and offset some of their own outsourced fulfillment costs.
The Bottom Line
Successful online operators today syndicate their products to all the channels where their customers shop. And, they give shoppers what customers want most – ease of shopping, returns, and fast and free delivery. A multi-marketplace strategy can deliver rapid and sustainable growth, but only if you do your research and carefully align your fulfillment and sales strategies.
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