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Credit: Pattern

How digital marketplaces help brands grow sales in constrained economic times

Around 60 per cent of global retail sales are currently generated on digital marketplaces: a sales channel that brands can no longer ignore. Dynamic Business sits down with Merline McGregor, General Manager, Pattern Australia and New Zealand, to discuss how brands can use marketplaces to boost sales.

Digital marketplaces have undergone a transformation over recent years. Initially, the predominant player in Australia was eBay, but Ms McGregor says that Amazon’s arrival in 2017 brought dramatic changes.

How digital marketplaces help brands grow sales in constrained economic times
Merline McGregor, General Manager, Pattern Australia and New Zealand. Credit: Pattern

“We’ve seen an absolute plethora of marketplaces enter this region, both from a market entry point of view, but also from homegrown Australian retailers starting their own digital platforms,” she explains. “So, customers have become increasingly accustomed to purchasing from online marketplaces.”

Digital disruption reshapes retail

The Pattern 2023 Marketplace Consumer Trends Report revealed the extent to which digital marketplaces are disrupting the retail sector. It found 88 per cent of shoppers bought from a marketplace in the past year, with 92 per cent intending to do so in the year ahead. 

The report also uncovered that in the past year, 62 per cent of consumers bought from eBay, while 52 per cent bought from Amazon. Both marketplaces expect sales growth in the year ahead, as do Catch, MyDeal and Kogan.

Ms McGregor believes that marketplaces create disruption on several levels, including in response to macroeconomic factors. 

“We are experiencing tightened control of spending, tightened discretionary spending; we know what rising interest rates do to consumer sentiment,” she says. “But marketplaces themselves create a certain level of disruption. Retailers are tightening how much they spend with their brand partners. Brands then say, ‘How else can I sell all this stock sitting in my warehouses?’ As a result, they’re starting to look at marketplaces as a legitimate avenue for creating customer and consumer engagement, as well as another channel to sell products at full price.”

The perception that marketplaces are a discount channel is a misconception, Ms McGregor is quick to refute. 

“We work with a lot of premium brands; when I say premium brands, they’re either at the apex of their category or close to the top. And part of their strategy is to make sure that they sell their product at full price, which you can do on a brand-consistent marketplace. 

“It is a matter of choosing the right marketplace and ensuring you effectively manage your product data, while also either owning your real estate on that marketplace or collaborating with a partner like Pattern who has the team and expertise to help you establish a robust presence.”

Retailers often resort to discounts in challenging economic times, but Ms McGregor says marketplaces can become a profit centre instead of a revenue centre. 

“Pattern is a marketplace distribution business, but we also have an agency business that drives revenue through Google search and SEO. In discussions with our clients, we emphasise the importance of shifting their focus from top-line revenue to creating strategies that optimise full price sales. This approach can generate significant benefits for businesses.”

Benefits abound

Ms McGregor says one of the key benefits of establishing a presence on marketplaces is you are playing where the consumers play. “These marketplaces spend enormous money on marketing and traffic acquisition,” she explains. “It can be really beneficial for your brand if you know how to piggyback and ride that wave.”

How digital marketplaces help brands grow sales in constrained economic times
Credit: Pattern

Digital marketplaces are powerful from an awareness and a product trial perspective. Ms McGregor notes that 75 per cent of consumers trialed or purchased from a brand they had never purchased from before in the last twelve months. 

Another consideration is that marketplaces are increasingly used to research products and search for them. Google is the most popular channel to research products online, but 23 per cent of shoppers use other platforms like eBay and Amazon. Power Retail data found Amazon’s popularity as a customer research tool increased by 71 per cent in 2022, compared to eBay’s popularity, which decreased by 17 per cent.

Some marketplaces also offer logistics capability. Ms McGregor explains: “Instead of having to source a distribution centre within the market and transport your products there, you can work with a marketplace to ship it directly into their fulfilment centres and the logistics and the direct-to-consumer shipping is taken care of for you.”

Brands can also work with a marketplace to launch in a new market. “Instead of having to build your entire D2C proposition, which normally takes a lot of time and is quite costly, you can utilise these platforms as a way to enter a new market.”

Ms McGregor notes that Amazon probably has the most consistent interface and backend, but different regions have their own marketplaces, so you may choose to enter Germany using the B2C platform, Otto.de, or into China on JD.com or enter Latin America via Mercadoibre.com.

Help is on the way

Establishing a successful digital presence requires experience and expertise, prompting many brands to consider partnerships with e-commerce accelerators like Pattern for marketplace strategy and ongoing support. Pattern primarily focuses on platforms such as Amazon, eBay and Catch, and Ms McGregor says the agency’s work focuses on efficiency, speed and profitability.  

“We collaborate with homegrown Australian brands or international brands that have an Australian presence to grow their marketplace presence,” she explains. “We do that in one of two ways: we try to understand their brand promise and brand positioning in the market, and then operationalise that. 

One component of Pattern’s offering that is particularly attractive to both emerging and established brands is its partner model.

“A lot of the time, an ecommerce agency says, ‘Okay, we’ll do these services for you, and that will cost X a month. Then, here are the results.’

“What we do is something different. We buy the product and act as your exclusive online marketplace distributor. We own the product, so we take full responsibility and accountability for it. What we do is cut a cheque for the brand each month when we order products from them, and they love that. This is a way to help and partner with brands, so we end up not being an expense; we end up being a revenue centre for them.”

While Patterns works with high-profile international brands like Ray-Ban and Oakley, Ms McGregor says the agency also loves championing local brands such as The Salt Box and Spikeball. 

Visibility is key to maximising sales

Standing out from the competition in a cluttered environment is challenging, so how does a brand approach its positioning?

Ms McGregor says that a brand needs to own its presence in the marketplace and recommends companies start by undertaking an audit to see how the brand shows up. She says an audit may seem tedious, but companies often decide not to go on marketplaces and don’t realise someone else has put their brand on eBay or Amazon. And customers sometimes can’t tell the difference.

Another way to increase brand visibility is to take advantage of all the assets available to you via marketplaces. Ms McGregor cites Amazon as a particularly good example: “There’s an enormous amount of brand-driving activity you can do on Amazon if you know how to do it. You’ve got something called ‘A plus content’, which is rich content. It’s not only product imagery but it’s videos and incremental information. And you can also launch something called a brand store, which is almost like a store in store.”

How digital marketplaces help brands grow sales in constrained economic times
Credit: Credit: Pattern

Visibility can be increased by understanding how a marketplace’s advertising platform operates. “Amazon offers things like different advertising mediums, metrics,” she says. “They also have brand analytics, which shows you not only what your brand is doing, but a lot of the marketplaces will also show where you sit with your competitors or who you can sit alongside. That’s really powerful as well.”

It’s a matter of trust

Trust is foundational to popular marketplaces, and brands need to consider the reputation of a marketplace before establishing a presence in it. New entrants like Temu must work hard to match the trust consumers have in familiar marketplaces like eBay and Amazon. Ms McGregor says this is easier for a brand like Baby Bunting, which has just launched its marketplace in Australia. Baby Bunting is already a familiar and trusted brand for baby and children’s products, which provides rapid credibility for its marketplace.

Ms McGregor believes that the best way for individual brands to create trust and credibility is to ensure that product information is clear, concise and accurate.

As for the long-term, she says, “I think it’s about brands aligning themselves with the marketplaces that suit their customer demographics, but also making sure that those marketplaces occupy robust and niche positions in Australia. I think there will be a readjustment over the next few years and only the strongest marketplaces will survive. The ones that don’t have a key point of difference or a lot of customer credibility and trust will need to fold into something much larger.”

Advice if you’re ready to take the plunge

Ms McGregor considers marketplaces a good fit for most brands unless their products are large scale and provide logistical challenges or those with huge catalogues. 

“I would encourage most brands to seriously consider marketplaces as part of their channel strategy, but you need to understand all the touch points and mechanisms that make marketplaces work. And then, I would recommend either assigning skillsets internally or engaging a company like Pattern to help them with that.

“A lot of brands try and do it really quickly. But if you assign one person to a part-time role thinking that will work, I think you’re setting yourself up to fail. You need a robust approach.”

Ms McGregor says that providing comprehensive technical information on marketplace listings lessens the perception of risk, and increases the likelihood of  consumers completing a purchase. 

“To stand out, brands need to ensure that they have clear and attractive photography and accurate information on the products they are selling,” she advises. “Have at least six product images on your product details page.

“Also, in Australia, remember to use the metric system. We work with many international brands who use imperial, which does not work in this market – So, make sure that you’re speaking to the right audience, that your tone of voice is correct, and that when it comes to delivery times and customer service, you do what you say you’ll do when you say you’ll do it.”

“Many brands think they’ll just upload products to a marketplace and don’t understand why they don’t achieve sales. There’s a simple explanation for that: it takes a lot of backbreaking hard work. Using marketplaces can be very rewarding but I wouldn’t call it easy. It requires its own level of expertise; it requires its own level of knowledge and experience if you want to smash it out of the park.”

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Clare Loewenthal

Clare Loewenthal

Clare is an author, business commentator and passionate contributor to Dynamic Business. She was the Founder and Publisher of Dynamic Small Business magazine, which became Australia’s largest small business publication.

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