The process of global expansion has changed significantly over the last 5 years, so much so that eBusiness decision makers are no longer expanding internationally through the traditional method of building several direct-to-consumer websites. These days, many leaders are creating official accounts that act as online storefronts on various marketplaces to further their reach.
The sheer number of these online marketplaces might make it difficult for you to choose where to create a storefront, which is why we at Enform have narrowed down your choices to 5 leading marketplaces that offer compelling reasons for business owners and brand managers to extend their reach through their sites.
In several countries, marketplaces offer plentiful options for brand stores across different categories and represent a huge chunk of all online sales in their respective territories—it’s an opportunity just waiting to be exploited.
Although global online marketplaces are home to thousands of small to medium enterprises selling their wares on these platforms, these marketplaces have increased their options specifically for official brand owners.
Marketplaces are highly appealing today because they:
- Offer instant access to a large audience. These buyers are major hubs for international shoppers. This eliminates the need to build an international customer base from the ground up, as marketplaces already aggregate online shoppers in their territories for you.
- Streamline entry into their international markets. Entry into new international markets has never been easier with global marketplaces. One of the key obstacles that impede the entry of brands into new markets is the cost of building new direct-to-consumer websites solely for a specific region.
Marketplaces solve this problem by offering a smooth, low-cost entry into a foreign market. Furthermore, the top marketplaces have existing relationships with third-party providers that provide customer service or after sales support—something brands no longer have to spend on.
Of course, marketplaces aren’t without their share of challenges. eBusiness leaders should take note of the following:
- Marketplaces might demand that you offer your products at discount prices. Marketplaces often revolve around the concept of offering bargains to shoppers. True enough, eBay’s Fashion Galleries are home to several outlet shops, Rakuten likes to wow shoppers with deals right on their home page, while Tmall has several brands offering extended sale periods on certain special holidays. There’s nothing inherently wrong with this, but for brands looking to sell their products near their retail price, this can be a problem.
- Marketplaces can put a dent on creativity. Some marketplaces like to maintain a level of uniformity across all the brands on their sites, so the rigidity of these templates can mean having less wiggle room to stand out with your storefronts.
- Marketplaces offer limited to no access to customer behavioural data. The top marketplaces share some data with sellers, albeit not as much as you would get if you ran your own e-commerce site. For instance, Tmall shares data on page views for product listings, store traffic, conversions, transaction prices, and more. However, Tmall and other marketplaces fail to offer information on the product paths of customers, which means having no idea on your customers’ browsing behaviour.
The Top 5 Global Marketplaces
Established in 1994, Amazon stands out as the only company featured in this report that handles operates international marketplaces alongside conventional online retail businesses. With the combination of online retail and marketplace offerings, Amazon is easily the dominant online retail player in the United States as well as in a number of international territories.
Outside American and Canada, Amazon drives 85 percent of its revenues from Germany (35% of international revenues), Japan (26%), and the United Kingdom (24%).
Some of the key takeaways from working with Amazon include:
- Amazon brand store reach extends across several countries, including the United States, Canada, the United Kingdom, France, Germany, Italy, Spain, China, Japan, and India. With its global reach and uniform technologies, Amazon presents an attractive and easy option for brands to build official stores across multiple markets.
- Amazon actively reviews brand stores and makes recommendations on improvements. The online retail giant offers brand stores the option to incorporate several features and tools into their systems, which include online video and access to deep product information.
- Another area where Amazon separates itself from other marketplaces is in the kind of customer information it provides to sellers. Instead of receiving data on customer shopping behaviour, brand stores are provided with an Amazon service where the company automatically evaluates for a brand for performance in key areas. The results of this review are placed in a dashboard that compares the seller against rival stores in the same category.
No marketplace discussion is complete without a mention of eBay. Starting out as an online auction site in 1995, eBay has since expanded into one of the largest online marketplaces in the world. At present, the site runs localised customer-to-customer (C2C) marketplaces across 22 countries in North America, Europe, and the Asia Pacific region, with more than half of all its total revenues derived from outside the United States.
Key takeaways to bear in mind entering global markets with eBay include:
- eBay’s brand stores are primarily targeted towards key markets and categories, for now at least. Although the company’s international marketplaces have a wide reach, its enhanced offerings for brand stores are significantly concentrated. It wasn’t until 2011 that eBay created a commission-based brand store serviced named Fashion Gallery in Australia and the United Kingdom; eBay’s localised marketplaces in these regions boast of more than 100 brand stores, with offerings ranging from accessories, apparel, and footwear. Fashion Outlet is a brand store offering in the United States that works the same way.
- eBay provides brands with the option to use its fulfillment options, or to turn to the company’s logistics systems. In addition, brands can also benefit from eBay’s resources when answering inquiries related to Fashion Gallery.
- Brand stores wanting to make an impression on customers will be happy to know that eBay’s brand store offerings are highly customisable, with Fashion Galleries having their own hub of pages to distinguish them from the rest of the marketplace.
- Individual brand stores can be customised according to the desires of managers and owners, who may want to build marketing-heavy pages, or a store that focuses on conventional eCommerce layouts.
Founded in 1999, MercadoLibre is the leading online marketplace in Latin America, operating marketplaces across 12 countries in the region. As of 2013, more than 40 percent in the company’s revenues came from Brazil, while 25 percent came from Argentina. Key markets for the company include Mexico and Venezuela.
Key takeaways for brands expanding on MercadoLibre include:
- While MercadoLibre has operated successful marketplaces in Latin America, the addition of brand stores is a fairly new development. The first brand store emerged in Argentina in June 2013, Brazil the following year, and Mexico earlier this year. The most popular sellers focus on fashion—apparel, footwear, and accessories. Overall, however, MercadoLibre sees a significant percentage of sales coming from computer hardware and electronics.
- MercadoLibre provides localised features for the Latin America segment. For brand owners, the company labels brand offerings to distinguish them apart from regular marketplace vendors. In addition, shoppers can search for products specifically within the brand site. Other localised features include instalment payment schemes, and local payment options.
MercadoLibre also offers an online wallet called MercadoPago, plus the option for customers to pay via local payment centers such as boletos bancáriosin Brazil or Oxxo convenience stores in Mexico.
Established in 1997, Rakuten has grown to become Japan’s dominant eCommerce company, boasting of more than 85 million registered users, and a market share pegged at 30% in the country.
Over the last decade, Rakuten has bolstered its expansion plans by acquiring several international eCommerce and fulfillment companies from all over the world, allowing the company to offer international shipping from its domestic marketplace, as well as launch multiple marketplaces outside of Japan. The company runs marketplaces in the US, UK, Thailand, Taiwan, Spain, Malaysia, Indonesia, Brazil, Germany, France, and Austria.
Brands interested in expanding through Rakuten should take note of the following:
- Rakuten is unique due to how it operates different types of marketplaces, depending on the region their based in. The company brands its marketplaces differently around the world; for instance, in countries like Thailand, France, and the UK, Rakuten operates a co-branded site with the Rakuten name alongside a partner marketplace acquired by the company. On the other hand, marketplaces in the US and Brazil only bear the Rakuten name.
- Offerings for brand stores are available on Rakuten’s flagship site in Japan, as well as other select marketplaces. Still, brand stores are most established in Japan, with Rakuten providing several enhanced brand services such as fulfilment options and customer service solutions—the latter being a major challenge for brands as Japanese customers have some of the world’s highest customer service expectations.
- Localisation is perhaps the most compelling reason for brands to sign up with Rakuten. Brand stores by Reebok and Toys R Us on its flagship store are heavily tailored for the Japanese consumer in terms of site design. Rakuten describes its brand stores as completely blank canvasses, with only a small header on the top marking the store as being under the Rakuten Marketplace.
- Payment options are also localised, with shoppers given the option to pay at convenience stores as well as through a myriad of offline and online options unique to Japan. Other markets see a similar style of localised payment option, such as cash-on-delivery for metropolitan districts in Indonesia, and instalment schemes in Brazil.
Anyone looking to penetrate the Chinese market should take a hard look at Tmall. Operated by Alibaba, Tmall was first launched in 2008 as a separate site from its C2C counterpart Taobao. Today, Tmall caters to shoppers in China, Taiwan, as well as SAR regions Hong Kong and Macau.
Tmall stands out for providing a marketplace experience that guarantees genuine products to customers, and liberal customisation options for brands wanting to control their store’s shopping experience.
The site is the dominant player in China’s B2C eCommerce segment, with estimates of its market share in the country hovering around 50 percent—far beyond any other marketplace in the region.
Brands looking to tap into the Chinese market through Tmall should take note:
- Tmall is a favourite among many global brands selling online in China and surrounding territories. With more than 100,000 brands, around 2,000 of which are international companies, Tmall boasts of an estimated 500 million registered shoppers.
- The variety of brands on Tmall is impressive, ranging from consumer electronic brands like Samsung and Apple, apparel brands such as Nike and Levi’s, as well as a variety of brands in surprising categories like food. In fact, ice cream company Haagen-Dazs sells around 2 million RMB or US$ 325,000 of products on the site every month.
Opportunities for brands to sell their products through online marketplaces are growing quickly, all while the marketplaces themselves are trying to meet the specific demands of their growing clientele. For eBusiness leaders of global brands, here are some key takeaways we at Enform have outlined for you.
- Analyse how marketplaces can match your needs. Some marketplaces allow you to tap into multiple markets, while others enable to really delve deeper in one specific region. Examine your partnership options and see which ones are in line with your global expansion goals and more importantly, your budget.
- Don’t shy away from giving marketplaces your feedback. Let marketplaces know what features and tools are important to your brand. With marketplace solutions evolving as we speak, now’s the best time to let them know what things should be integrated into their offerings for brand vendors.