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Diversification of Marketplace Locations: The Best Long-Term Survival Strategy

By Nathan Gordon, CIO, Christmas Central

Diversification of Marketplace Locations: The Best Long-Term Survival StrategyNathan Gordon, CIO, Christmas Central

In the ever-changing and evolving world of e-commerce, sometimes you have to look to the past to see your company’s future. Before the e-commerce revolution, retailers fo­cused on finding the perfect physical location of their brick and mortar stores. While bricks have been traded for clicks, location rings true today more than ever.

Many e-commerce retailers may focus on a single, leading marketplace ‘location’ to guarantee a high number of clicks and sales, but should consider exploring smaller marketplace locations as well. Additionally, you have the option of selling your product on social media marketplaces and, of course, your own website. If you could expand your brick and mortar locations to become a chain of physical retail stores years ago, would you not want to do the same thing in e-commerce today? This makes sense, yet many e-commerce retailers still depend on one large marketplace.

Partnering with just one large marketplace means that any change or any restriction that the marketplace imposes can and will heavily affect your business. More and more major e-commerce retailers are opening their sites to third-party sellers via marketplaces. That is good news for third-party retailers who are being offered more real estate for their products. The more ‘locations’ you provide for your customers, the more sales you can earn. The more eyes on your products, the larger your brand becomes. With more partners selling your products, you become less dependent on one revenue stream.

Take advantage of services that offer marketplace integrations so that your items appear on as many sites as possible. Be sure that you keep your message consistent across all channels. That includes titles, descriptions, images, and prices. This strategy will lead to higher conversions of your items across all sites.

For a young e-commerce company, it has been said that one marketplace may account for 75 to 100 percent of your overall sales. With that logic, any online retailer’s endgame should be not allowing anyone marketplace to become responsible for more than 30 percent of its overall online sales. Diversification of marketplace locations is the best long-term survival strategy for any growing e-commerce business.

By putting your products on as many sites as possible, you make your items easy for customers to find in very few clicks. While your items are not physically on every corner across the country, your items will be in every nook and cranny of the internet. The more avenues you provide to your products, the better chance the customer will find a location to purchase from you.

By putting your products on as many sites as possible, you make your items easy for customers to find in very few clicks

To further diversify and spread sales across all channels, retailers should then begin to focus on their own brand and start looking at first-party sales. First party sales are a great way to continue putting your brand and items in front of consumers across all channels and further limit any one site being the bulk of your sales. While third-party marketplace sales are great revenue streams, they also have intense competition with regard to product selection and price. By manufacturing and selling your own brand, you start to build brand awareness and escape the ‘race to the bottom’ in regards to pricing, all while controlling your own destiny.

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