Marketplaces are a potential portal to worldwide eCommerce, a way for companies to expand their reach without building out internally.
The world has eCommerce fever. Wherever there are PCs and smart devices to place orders, online sales are taking over a new and impressive percentage of all sales. However, to companies just starting out in the online space, all of this activity can seem more hypothetical than real. Learning about the great advantages available overseas and actually accessing them are two radically different things. What companies need are stepping stones into other markets – and online marketplaces can represent those intermediate stops.
The rise of the marketplace model, pioneered by eBay and advanced by Amazon and Wal-Mart, has spread to countries around the world, and companies that strike up good working relationships with these markets can make their goods available in a wide range of countries without the heavy lifting that can accompany a fully launch in a new territory. Charting the progress of the marketplace model shows the opportunity available.
Recode recently zoomed in on one corner of the booming Chinese eCommerce market, noting that luxury clothing brands are making inroads into China, and that they’re using the marketplace model to do so. The source focused on Farfetch, U.K.-based fashion market site, which recently saw an influx of capital from Chinese company JD.com. JD is locked in competition with Alibaba to become dominant in China. Recode added that this struggle is especially relevant to sellers because these two giants have thus far held western hopefuls, such as Amazon, to meager gains in their domestic market.
Farfetch has received $397 million from JD, and the Chinese company has sent its CEO Richard Liu to join the Farfetch board of directors. In turn, JD is 11 percent owned by Walmart, showing that the American chain store brand has aspirations to be a marketplace player around the world. When western companies seek to enter the Chinese market, they’ll have a complex and competitive sales environment waiting for them.
While Amazon’s position in China is tenuous at the moment, that doesn’t mean it’s not putting in an effort. CNN Money recently noted that the eCommerce giant has introduced its sales bonanza, known as Prime Day, to the Chinese market. This is part of an overall global expansion strategy that also includes a focus on another massive international market – India.
According to CNN Money, Amazon’s tactics in India include the expansion of its video service, as well as a specialization in grocery delivery. The company’s primary rival in India is Flipkart, which has made its own expansions in recent years, acquiring smaller companies in the hopes that it can hold its early lead over Amazon. With a marketplace-friendly eCommerce player such as Amazon making moves in the world’s second-most populous nation, this is likely another region that smaller commerce sites can consider selling to via third-party partnerships.
In raw terms of shipments moving between countries, the numbers in a recent UPS report tell a clear story, according to Chain Store Age. The logistics provider’s Alan Gershenhorn explained that while there was once a clear line between international and local sellers, that distinction is disappearing. Companies have become able to ship across borders at rates that people are willing to pay, and this has reshaped the landscape.
Factors that consumers considered when ordering from overseas companies, which sellers should probably look for in any marketplace, included the price of any customs duties or fees, as well as the ability to see the price in a native currency or receive the goods in a timely manner. Consumers are also interested in dealing with sellers that have a good reputation.
A lot can be said for operating in international online marketplaces, whether companies make the connection themselves or work with third-party eCommerce fulfillment partners to expedite the transition. These standardized spaces have become popular in territories with healthy consumer desire and large internet-savvy populations. The potential for profit is clear.
Organizations that use marketplaces as a stepping stone to the world of online commerce can find themselves finally realizing the promise of eCommerce – selling to the world and reaching consumers wherever they live, no matter the distance they have to cross.