What does it take to build a thriving enterprise marketplace?
Enterprise Marketplaces are proving to be an essential priority for retailers and brands looking to capitalise on expansive growth in consumer eCommerce. According to research, in 2020, online marketplaces represented 62% of all online sales, totalling $2.68 trillion globally. Perhaps even more significantly, they grew at twice the rate of overall eCommerce during a period of both growth and unpredictability for the retail industry. The marketplace business case has been proven many times over, demonstrating that those who adopt the enterprise marketplace model enjoy increased agility, sustainable growth and resilience in unpredictable markets. However, for many businesses that have yet to adopt a marketplace, this strategic direction may represent a leap of faith, transitioning into an ecosystem approach that brings high-quality third-party sellers under their umbrella while maintaining a singular identity.
What can companies do to ensure that their enterprise marketplace succeeds? Before major retailers begin growing their businesses with marketplaces, they need to commit to an approach that sets them up for success across the organisation. This article is the first in a three-part series examining marketplace best practices and making key recommendations for businesses large and small that want to take advantage of this transformational retail technology. In this article, I'll focus on planning and preparation. The second will cover operations, and the third will examine best practices for change management.
Vision And Planning
Companies that operate successful enterprise marketplaces often describe their journeys as a form of digital transformation. Therefore, peers should view marketplaces as more than just a new technology tool but also a change in overall business strategy and mindset. For a marketplace to work, everyone across the organisation should treat the marketplace as a business-wide priority with executive sponsorship, employee buy-in and a well-considered strategy.
Here are four actionable tips for designing your marketplace implementation strategy:
1. Secure commitment across the company. Businesses shouldn't treat an enterprise marketplace as an experiment or a siloed IT project. The only way for the marketplace to succeed is for it to be embraced organisation-wide, with no discussion of pilot projects or limited deployments. Most marketplaces that fail restrict the model to a specific category, preventing future stakeholders from offering their input at the start and posing a barrier to company-wide buy-in.
2. Embrace the competition. The most common fear among businesses considering the marketplace model is the idea of bringing on competitive products in core categories. While this fear of cannibalisation is understandable, the reality is that the increased assortment will drive customer loyalty and boost gross merchandise value (GMV) — both of which deliver key benefits to the marketplace operator. Embracing the competition enables marketplaces to expand in new areas, offering products that customers may have wanted previously but weren't available from your brand.
3. Use the marketplace to foster agility. Onboarding marketplace sellers allows businesses to explore potential areas for expansion that would otherwise be too cumbersome. When setting up a marketplace, organisations should continue looking for ways to unlock new growth opportunities. The possibilities are endless: Marketplace operators could add services to augment their product assortment, onboard local sellers to expand internationally or use ethical sourcing to promote corporate social responsibility.
4. Build a dream team. Even category leaders shouldn't have to do it all by themselves. Building an enterprise marketplace enables organisations to work with the best partners in areas like shipping and logistics, procurement and seller aggregation. By partnering with the people and organisations that offer specialised experience and expertise, marketplace operators can rapidly accelerate their business growth. The right partnerships allow businesses to hit the ground running while simultaneously saving money, thereby eliminating the additional cost of building new technology solutions from scratch and avoiding lost revenue from delayed time to market.
The strategic vision for your enterprise marketplace encompasses a series of key business decisions that will ensure the marketplace launches successfully, with a powerful value proposition for a well-defined market. Beyond launch, a clear vision is essential to support the marketplace's continued growth, ensuring that companies set into motion the virtuous cycle of more products, more sellers and more buyers. When launching a marketplace, it's best practice to measure twice and cut only once. These best practices will ensure success and allow the company to remain agile in a rapidly changing eCommerce landscape.
