In the last few years, the rise of online sales has dramatically shifted the retail revenue share. eCommerce now accounts for 19% of total retail sales worldwide, showing its growing dominance.
Customers tend to shop on platforms they trust, preferring established marketplaces for their purchases. For example, if a customer wants to buy an electronic item and has consistently bought from Amazon, they are more likely to make their purchase there again.
This loyalty is mainly driven by their trust in Amazon’s delivery services, secure payment options, and overall reliability. In contrast, purchasing from a new or unfamiliar store requires additional effort to research the store's legitimacy and customer reviews, which can be a deterrent.
This behavior shows the importance of optimizing your business for marketplaces. Without a strategic presence on platforms like Amazon, Flipkart, Shopee or Lazada, you risk missing out on a significant portion of potential sales. Marketplaces offer a built-in customer base and established trust, making it easier to convert sales compared to standalone stores.
In this blog, we discuss some of the most effective strategies to optimize your presence on these eCommerce platforms, helping you increase your revenue and leverage the full potential of online marketplaces.
Let’s dive right in!
5 Most common reasons customers choose competitors' products on the marketplace
Have you heard of the Jam experiment? Well, the conclusion of this experiment—though controversial, but implemented quite well by many brands—is that the fewer discounts you offer customers, the more likely they are to actually purchase something.
Gone are the days when you could only win your customers by offering products at a lower price.
Here are some reasons why your eCommerce business might lose sales to your competitors:
1. Poor customer service
Do you care enough about your customers to be available 24/7 for their service? If not, and your competitors do, customers will be more inclined to buy from them, considering their issues will be resolved much more quickly.
Excellent customer service is a crucial differentiator in the competitive eCommerce industry. Prompt responses, easy return policies, and proactive problem-solving can significantly influence a customer’s decision to choose your brand over another. If your customer service falls short, don’t be surprised if they take their business elsewhere.
2. Inferior product or service quality
If your product or service does not meet customer expectations, they will likely turn to a competitor who offers better quality.
For example, consider a customer purchasing a pair of running shoes from your store. If the shoes quickly wear out or cause discomfort, the customer will be dissatisfied and more likely to choose a competitor known for durable and comfortable running shoes for their next purchase.
Consistently delivering high-quality products or services is essential to retaining customers and building brand loyalty.
3. Lack of differentiation
In a crowded market (which eCommerce is), if your business does not stand out, customers won’t even notice you.
Marketing psychology teaches us that unique selling propositions (USPs) can make a significant impact. For example, Apple differentiates its products with sleek design and an ecosystem that works seamlessly together, which draws in customers even at a higher price point.
If your product or service is too similar to others in the market, you need to show what sets you apart—be it superior features, exceptional customer service, or a unique brand story. Otherwise, what incentive do the customers have to not buy from someone else?
4. Higher price than your competitors
While offering discounts is not always the best strategy to attract customers, price remains a crucial factor.
Customers often use price as an anchor to gauge value. You don’t need to provide your products cheaper than your competitors because there will always be someone offering a lower price.
Instead, you must convey why your price is justified. If you fail to do this, customers are likely to believe your competitors are offering the same product for a better price.
You must clearly communicate the value and benefits that justify your pricing to avoid losing sales.
5. Better alternatives on the marketplace
If you haven’t done your homework right, you’re likely to sell products that are not in much demand because better alternatives are available.
For example, if a potential customer searches for headphones on a marketplace and you’re selling wired ones, they are likely to buy from your competitor offering wireless headphones.
Keeping up with market trends and customer preferences is crucial. Regularly update your product catalog and ensure you offer the latest and most sought-after products to stay competitive.
Understanding these common reasons why customers might choose a competitor's product over yours is the first step in optimizing your marketplace strategy. And now that we know these challenges, let’s see how having a clear strategy for marketplaces helps you tackle these challenges.
How having a marketplace strategy helps you tackle these challenges
Here’s how having a clear strategy for your marketplace revenue optimization helps:
1. Optimized inventory and logistics
A well-defined marketplace strategy optimizes your inventory and logistics, ensuring customers see fewer out-of-stock products.
Out-of-stock items represent missed sales opportunities and can frustrate potential buyers.
By leveraging insights from marketplaces like Amazon, Flipkart, or Lazada, you can streamline your inventory management and logistics processes.
This minimizes the likelihood of stockouts, helping you capture low-hanging fruits and increasing your overall revenue.
Efficient inventory and logistics management also build customer trust, enhancing loyalty and satisfaction.
2. Prompt customer service
A marketplace strategy ensures your customer service is prepared to handle surges in queries effectively.
During peak sales periods or promotional events, the volume of customer inquiries can skyrocket.
If not managed well, these unanswered queries can be the difference between high-revenue-generating brands and those that fail.
With a clear strategy, you can ensure your customer service team is ready to provide prompt and efficient support, resolving issues quickly and maintaining a positive customer experience. This responsiveness fosters trust and encourages repeat business.
3. Insights from competitor pricing strategy
With a marketplace strategy, you gain insights into your competitors' pricing tactics. Understanding how your competitors price their products allows you to optimize your own pricing strategy for maximum conversion without sacrificing profitability.
Analyzing competitors' prices helps you position your products more competitively, ensuring you attract price-sensitive customers while maintaining healthy margins.
4. Helps you stay in sync with your customer base
A robust marketplace strategy ensures that you are where your customers are.
By leveraging marketplaces like Amazon, Flipkart, or Lazada, you provide your customers with access to channels they already trust.
This means that wherever your customer base moves, you’ll be in sync with their purchasing habits.
It’s easier to retain and attract customers when they can find your products on their preferred platforms.
7 Effective strategies to increase and optimize your marketplace revenue
1. Choose the right marketplace suitable for your products
The number of eCommerce marketplaces is consistently growing, yet the industry remains dominated by giants like Amazon and Flipkart in India and Shopee and Lazada in Southeast Asia.
However, you can't just pick any marketplace and start selling on it. Selling on every available platform doesn't make sense either because some marketplaces might have low demand for your products and high platform fees. This would mean managing an additional channel for little to no returns, which is not an ideal way to increase your marketplace revenue.
To optimize your marketplace strategy, it's crucial to choose platforms where there is a good demand for your products.
For example, if you sell books, you'll find more demand on Amazon than on Flipkart. On the other hand, if you're selling in Malaysia, platforms like Shopee or Lazada make more sense due to their regional popularity.
Analyzing the market and understanding where your products are in demand will help you select the most suitable marketplaces, ensuring better sales and higher returns.
2. Understand your customers preference
Understanding your customers is fundamental to effective targeting and sales. Without this knowledge, your targeting will always be off, and it will take longer for your products to move off the shelves. You need to know their preferences, buying behavior, and the platforms they frequent.
Initially, you can sell on multiple platforms to gain a deeper understanding of your customers. Observe how they search for your products, where the demand is high, and what alternatives they consider. Most importantly, identify which marketplace they prefer.
If your target audience favors Flipkart over Amazon, continuing to focus on Amazon won't yield good revenue. By aligning your strategy with customer preferences and behaviors, you can optimize your marketplace performance and boost sales.
3. Do marketplace optimization
Marketplace optimization ensures that your products are visible to customers. Without proper optimization, your products may not even appear in search results, leading to missed sales opportunities.
Businesses worldwide sell on marketplaces like Amazon, so you need to ensure that your product listings are optimized for all possible parameters such as local search, broad matches, and thematic relevance.
However, many businesses have not yet optimized their marketplace presence. This presents a good opportunity for you to gain an edge over them.
You can start by optimizing your product titles, descriptions, images, reviews, and FAQs. High-quality visuals and detailed descriptions are essential for attracting customers and convincing them to purchase.
Doing the marketplace optimization right improves your product's visibility, attractiveness, and ultimately, its sales performance. For a detailed marketplace optimization strategy, refer to our dedicated blog post on this topic.
4. Implement dynamic pricing and promotions
Dynamic pricing and promotions can significantly boost your marketplace revenue. By adjusting prices based on demand, competition, and other market factors, you can maximize your profits.
For example, during peak shopping seasons, increasing prices slightly while offering limited-time promotions can drive higher sales and profit margins.
Dynamic pricing ensures you remain competitive while optimizing your revenue. This strategy is more effective than static pricing, as it allows you to respond to real-time market conditions.
5. Data-driven targeted and segmented promotions
Marketplace strategies should be based on data. With access to customer data, you can offer personalized discounts and promotions based on customer segmentation and purchase history. This increases the chances of conversion and retention.
Personalized promotions make customers feel valued and understood, leading to higher loyalty and repeat purchases.
For example, offering a discount on a complementary product to a customer who recently made a related purchase can encourage additional sales.
By leveraging customer data, you can create targeted marketing campaigns that resonate with your audience.
For example, using purchase history and browsing behavior, you can send personalized email recommendations to customers, increasing the likelihood of conversion.
Personalized marketing efforts make customers feel valued, leading to higher engagement and loyalty.
6. Leverage customer reviews and feedback
Customer reviews and feedback are invaluable for developing the right products and improving existing ones.
By analyzing reviews, you can identify common pain points and areas for improvement. Addressing these issues can enhance product quality and customer satisfaction.
Additionally, positive reviews act as social proof, encouraging new customers to trust and purchase your products.
Encourage satisfied customers to leave reviews and respond to feedback promptly to show that you value their input.
7. Conduct predictive analytics to gain data-backed insights
Marketplaces give you access to a large audience, not just your target customers. This means you experience demand throughout the year. However, demand concentration shifts due to various factors such as seasonality, market trends, economic conditions, and consumer behavior changes.
Relying solely on reactive strategies won't help you maximize these shifts. Instead, predictive analytics enables you to make data-driven decisions. This approach is similar to making investment decisions in the stock market, where predictive insights are crucial. Just as gut-feeling predictions don't work in stock trading, they don't work in marketplace optimization either.
By using predictive analytics, you can anticipate market trends, customer demand shifts, and seasonal impacts. For example, during holiday seasons, predictive analytics can help you stock up on high-demand items beforehand. Additionally, it can guide you on when to run promotions or introduce new products based on forecasted trends. Examples of predictive decisions include adjusting inventory levels, pricing strategies, and marketing campaigns based on anticipated market conditions.
Choose the right eCommerce analytics tool to gain insights and forecast future outcomes
Implementing the above strategies will not only boost your revenue but also help you achieve this with a more efficient budget.
However, for predictive insights, manual processes are not effective because, by the time you gather insights, you might miss the opportunity to capture impulse purchases.
This is why selecting the right eCommerce analytics tool is essential.
A powerful eCommerce analytics tool can provide predictive insights and forecast product demand, allowing you to act swiftly and capitalize on market opportunities.
Graas is an excellent choice for this purpose. It offers robust predictive analytics capabilities that help you forecast sales trends, optimize marketing strategies, and enhance strategic planning.
With Graas, you can anticipate upcoming sales trends and adjust your inventory accordingly. It also provides a comprehensive view of your marketing performance across all channels, allowing you to optimize your budget allocation effectively.
By using Graas' predictive analytics, you can make informed decisions that lead to sustainable growth. Sign up for free today!
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