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How to optimize your marketplace fulfillment

Digital marketplaces are thriving, and now is the time to carve out your place.

Online retail was one of the few winners when Covid-19 pushed everyone into a physically distanced, digitalized world.

McKinsey noted that 40% of all consumers had already increased their online shopping only six months into the pandemic. [1]

The US e-commerce penetration levels lept ten years ahead in only three months. [2] This hasn’t dropped off. As of 2021, e-commerce sales have soared to an all-time high. [3]

This growth is global and comes from all demographics. Around 150 million people who’ve never shopped online before are now e-commerce buyers. And at this point, 84% of all global consumers have shopped online since Covid-19. [3]

There’s also far less brand loyalty, with 75% of consumers switching up their shopping habits and 73% consistently trying new brands. [4]

Digital marketplaces have emerged as winners, in part because these recognizable platforms offer buyers a particular trust factor and added convenience. And partly because traditional retailers were out-of-stock and had poor delivery capabilities. [5] Overall, online marketplace sales jumped by 24.1% in 2020.

That’s probably why competition on these platforms also skyrocketed. Anyone looking to capitalize off this black swan opportunity moment is online with an omnichannel presence.

That means big multinational brands and small indie players are battling it out.

This is the time to pursue growth aggressively, and online marketplaces are where you want to be.

But profiting in this hyper-competitive environment means your marketplace management strategy needs to be at its best.

What Matters in Marketplace Management?

First, understand the online buyer’s mindset. Facebook found that online buyers make decisions based on convenience, customization, and delivery capabilities right now. [6]

That’s because your buyers are concerned about economic instability and supply chain issues. (Even if their situation is delicate.) Social distancing wasn’t the only reason people flocked online in 2020. Consumers needed to find alternatives to out-of-stock physical retailers.

They care about pricing, reliability (in-stock inventory), and quickly receiving what they ordered.

White toe consulting firms [7] and digital upstarts [3] agree that fulfillment brings the edge.

In the end, winning in today’s digital marketplaces comes down to optimizing your logistics and fulfillment.



1. Prioritize Your Seller Rating

A high seller rating keeps the marketplace on your side. It’s the difference between showing up on the first page of results and being found 15 pages down.

Fall far down enough, and you risk being booted off the platform. This makes it a primary concern in any marketplace management strategy.

Your seller rating is based on:

  • Your responsiveness to customers
  • How quickly do you ship products out
  • If you confirm your shipments promptly
  • How many orders do you have to cancel (out of stock issues, etc.)
  • How often do you refuse to give a refund and the customer gets it from their financial institution
  • If your orders are delivered promptly and in good condition
  • The feedback customers give you.

Seller ratings revolve around you giving customers the most satisfying post-purchase experience possible.

This all depends on optimizing your marketplace fulfillment process.

You’ll need to prioritize your inventory management, keep quality product listings, streamline your orders, package well, deliver promptly, and keep a close eye on all your platforms. 

Getting your fulfillment and logistics right keeps both customers and platforms happy.

2. Optimize Your Product Listings

Your product listings do more than draw in browsing shoppers. These listings prime them for their experience with you. 

Once you’ve gained their attention, you need to set the right expectations for what they’ll receive and how. Your listing should also include any extended return or warranty policies.

One thing this will do is prevent product misunderstandings which can quickly tank your ratings. It will also help smooth out any potential fulfillment difficulties.

This is also an area where you need to stay agile and responsive. Keep a close eye on all your listings and actively manage them.

Be ready to make product listing changes if you see any copycat sellers. In addition, you should maintain the capabilities to implement flash sales or discounts in response to market changes.

3. Control Your Inventory

Shoppers flocked to online marketplaces when physical retailers went out of stock and could not manage their inventory competently.

Don’t make those mistakes online.

Your seller rating will take a severe hit if you need to cancel orders due to inventory mismanagement. And going out of stock will cause your listings to drop.

If you’re selling products across multiple markets, make sure to synchronize your inventory in real-time. This will help you avoid errors like listing unavailable products or selling the same item twice.

You may want to brace yourself against supply chain friction by setting higher stock re-order limits.

If you want to take your inventory management further, plug it into your other business intelligence tools. This will give you more analytics, predictive control, and demand forecasting capabilities.

4. Leverage Your Logistics Service

With serious business spend going towards online fulfillment, logistics providers are beginning to include more value-added services.

Whether you’re using marketplace fulfillment or third-party logistics services, do whatever you can to take full advantage of these heavyweights.

Whichever service provider you choose, make sure you can offer it fast and free. [3]

Third-Party Logistics Services

The logistics sector has matured enough to provide specialized online fulfillment services, with many focusing on specific marketplaces.

Value-added services include one- or two-day shipping, cross-border management, and inventory intelligence. These services also give you the chance to use your own branded packaging.

Some third-party logistics providers will operate with lower inventory storage fees than FBA, allowing you to offer free shipping with more of a profit margin.

Fulfilled by the Market

Using FBA or another dominant market’s fulfillment services should guarantee that you meet their high delivery standards.

Instead, you’ll need to take care of a few other issues. The main ones are guaranteeing your product’s authenticity and delivering a memorable experience.

Always avoid commingling. Do the extra work of creating SKUs and UPC barcodes for every item you sell. Then, advertise this on your product listing.

Online markets have developed a reputation for fraud. The average shopper doesn’t understand how marketplaces operate and often believes that all items are blended.

Letting shoppers know that your items have not been commingled will help alleviate these concerns. In addition, it’s an easy way to stand out from other listings.

Amazon used to be the only actual marketplace fulfillment provider, but it now has growing competition from Walmart and Shopify. [8]

This forced Amazon to improve its marketplace, mainly by cleaning up counterfeit goods. [9] If these improvements are sustained, both buyers and sellers will benefit.

Delivering a memorable experience will mainly come through branded packaging.

5. Differentiate Your Packaging

Packaging may be your brand’s best chance to differentiate itself from marketplace copycats while demonstrating values that connect with today’s customers.

72% of shoppers want sustainable packaging. This means minimal, reusable, recyclable, and ideally zero-waste.

These customers are willing to pay slightly more for this and more likely to shop with you again. [3]

6. Profit from Returns

Returns are a normal part of the way people shop online. Many items are purchased to be examined in person, then sent back. [3]

Your fulfillment logistics needs to be optimized to handle returns correctly. This means a fulfillment system that can automate the process or a third-party reverse logistics provider.

When possible, returns should be resold through avenues such as Amazon’s used item market, eBay, or e-commerce liquidation solutions. [10]

Anywhere from 30%-40% of all online purchases end up being returned. [11] [3]

That’s a big slice of your revenue. Optimizing your returns logistics will turn this cost center into a new value generator.

Optimized Marketplace Management

Putting all your fulfillment optimization strategies into action can be tricky even more so when you have several marketplaces to manage.

But to win out against any marketplace competition, you need the resilience of an omnichannel presence, along with speed, agility, flexible operations, predictive planning capabilities. [12]

McKinsey sees tech as providing the edge here, recommending that all retailers become technology-first operations. [7]

Your first step is to centralize your marketplace management, with all your activities and real-time data consolidated into one place.

An integrator tool, like E-Tailize, connects all your marketplaces and business intelligence tools and serves as your controlling hub. This protects you against errors like running out of stock or selling the same item twice.

Once you’ve synchronized your data and tools, you can scale up your omnichannel operations, expanding into as many marketplaces as you like.

There’s a massive e-commerce tailwind right now, which is set to last for at least five more years. This is once in a lifetime growth opportunity.

But if you want to maximize your profits, remain competitive, and pursue all the growth you want, you’ll first need assistance from a fulfillment optimization tool that gives you complete visibility and control over all your selling locations. 

Sources

[1] “Moving Past Friend or Foe: How to Win with Digital Marketplaces,” McKinsey, 18 June 2020. [Online]. Available: https://www.mckinsey.com/industries/retail/our-insights/moving-past-friend-or-foe-how-to-win-with-digital-marketplaces. [Accessed August 2021].

[2] McKinsey, “Five Fifty The Quickening,” [Online]. Available: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/five-fifty-the-quickening. [Accessed August 2021].

[3] “The Future of Ecommerce,” Shopify, 2021. [Online]. Available: https://enterprise.plus.shopify.com/rs/932-KRM-548/images/Shopify_Future_of_Commerce.pdf. [Accessed August 2021].

[4] McKinsey, “The great consumer shift: Ten charts that show how US shopping behavior is changing,” 4 August 2020. [Online]. Available: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-great-consumer-shift-ten-charts-that-show-how-us-shopping-behavior-is-changing. [Accessed August 2021].

[5] Digital Commerce 360, “Global Marketplace Sales,” August 2021. [Online]. Available: https://www.digitalcommerce360.com/article/global-marketplace-sales/. [Accessed August 2021].

[6] “Facebook IQ | The Future of Shopping Has Come Early,” 29 October 2020. [Online]. Available: https://www.facebook.com/business/news/insights/the-future-of-shopping-has-come-early-perspectives-from-the-industry. [Accessed August 2021].

[7] McKinsey, “Future of retail operations: Winning in a digital era,” January 2020. [Online]. Available: https://www.mckinsey.com/~/media/McKinsey/Industries/Retail/Our%20Insights/Future%20of%20retail%20operations%20Winning%20in%20a%20digital%20era/McK_Retail-Ops-2020_FullIssue-RGB-hyperlinks-011620.pdf. [Accessed August 2021].

[8] Motley Fool, “Walmart’s Tapping Shopify Sellers to Compete With Amazon,” 16 June 2020. [Online]. Available: https://www.fool.com/investing/2020/06/16/walmarts-tapping-shopify-sellers-to-compete-with-a.aspx. [Accessed August 2021].

[9] Reuters, “How the pandemic helped Walmart battle Amazon Marketplace for sellers,” 14 April 2021. [Online]. Available: https://www.reuters.com/business/retail-consumer/how-pandemic-helped-walmart-battle-amazon-marketplace-sellers-2021-04-14/. [Accessed August 2021].

[10] Modern Retail, “‘A record year’: Liquidators and resellers are poised to profit from the online return rush,” 6 January 2021. [Online]. Available: https://www.modernretail.co/retailers/liquidators-and-resellers-are-poised-to-profit-from-the-online-return-rush/. [Accessed August 2021].

[11] CNBC, “The costly journey of returned goods means big business for some,” 13 December 2018. [Online]. Available: https://www.cnbc.com/2018/12/13/returned-goods-are-a-problem-for-retailers-resellers-are-cashing-in.html. [Accessed August 2021].

[12] “Retailers Plan to Invest in Supply Chain Resilience,” Bain, 20 October 2020. [Online]. Available: https://www.bain.com/insights/its-time-to-build-resilience-into-retail-and-consumer-goods-supply-chains/. [Accessed August 2021].

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