5 minutes to understand why and how to add a marketplace module to you e-commerce site

Marketplace model
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In 2010, La Redoute, a historic player in distance selling (think of the famous eponymous catalogue), accelerated its transformation by launching its e-commerce website and then adding a marketplace module. Today, the total volume of business handled by La Redoute exceeds 1 billion euros, of which ⅓ is generated by the marketplace module!

Like La Redoute, more and more e-merchants are choosing to add a marketplace module to their e-commerce website. In this way, they complete their own offers with offers from third-party sellers. 

While there are many advantages to turning your e-commerce site into a multi-seller site, for this project to be a real success, you must take into account the impact on the user experience, your information system and your organisation.

Creating value by launching your marketplace.

Broaden the depth of your offer.

As an e-merchant, selecting and listing products in your website catalogue takes time and money. Indeed, adding a product to your website implies having to stock it, finance this stock and manage the entire logistics chain. On top of that, you will have to manage the sales you will make with this product in order to avoid stock-outs or overstocking as much as possible, in order to offer the best possible experience to your user-customers. 

Thanks to the marketplace and its multi-seller dimension, you can quickly, and at low cost, expand the range of products you want to offer to your customers. Each seller in your marketplace manages the addition of their products to your platform, their stock, their orders and their deliveries. And even the after-sales service!

The marketplace model also allows you to present yourself as a reference site in your sector by offering a large number of brands in each category on your site. This makes it more likely that customers will make all their purchases on your site. 

Let’s continue with the example of La Redoute. The customer who shops on the La Redoute website will have access not only to a wide choice of clothing categories (trousers, dresses, sportswear, underwear, shoes, etc.) but also between La Redoute’s own offer and the third-party offer of major brands (Mango, Adidas, Levis, Ralph Lauren, Etam, etc.)

Optimise your operating costs.

As mentioned earlier, in a marketplace model, the third party sellers are directly responsible for publishing/managing their catalogue, shipping their products and providing after-sales service. The marketplace only acts as a trusted third party in the sales process. 

This allows you to reduce your storage and logistics costs in relation to the number of items on your site while taking a commission on each sale (one of the marketplace’s business models).

In the event of questions about a product offered for sale by a third-party seller or an order, the seller answers the customer directly. The same applies to disputes: the customer first contacts the seller and its customer service department to reach an agreement. The marketplace only gets involved if it is difficult to resolve the dispute. 

Another option for optimising your marketplace costs is to offer new services to your sellers. This is what Amazon Fulfilment does by offering its sellers space to rent in its warehouses. If you have a logistical infrastructure, you can offer it to your customers and take responsibility for storing and shipping their products in exchange for a fee for this service. This is a good way to make use of underused assets such as empty storage space. 

Test your customers’ appetite for new product families.

Opening your site to third-party sellers also allows you to test your customers’ appetite for new product families. The marketplace allows you to test, without heavy investment, the interest of your customers for certain product families that are not available in your own offer, but for which you wish to measure the interest of the market. A life-size test in a way!

For example, when it was launched, Mano Mano (formerly Mon Echelle) had its own offer exclusively focused on DIY. Very quickly, the furniture category of the marketplace achieved a lot of sales, which encouraged Mano Mano to create this new product family in its catalogue 

The same goes for La Redoute, which through its own offer “La Redoute Intérieur” only offered decoration and furnishing products for the interior. The marketplace has enabled it to open up a new family of garden and outdoor products offered by third-party sellers. Sales in this segment have exploded, leading La redoute to create its own garden and outdoor products. 

Focus on high margin products.

The marketplace can also allow you to focus on the products that bring you the most margin. Certain product families (such as ‘grey goods’ (TV, sounf, hifi)), are a must on your website to keep your customers happy. But sometimes, as an e-merchant, you may not be able to order them in large enough quantities to benefit from really good prices from your suppliers. With a marketplace module, you can decide to reserve the management of this family of products to your third-party sellers, who will have better prices to offer. 

Let’s keep our example of La Redoute. As La Redoute did not have sufficiently high sales volumes of ‘grey products’ (TV, sound, and hifi) to hope to obtain good prices from their suppliers, they decided to stop selling these products themselves and to leave this family of products to the marketplace sellers alone. 

Securing the internationalisation of your online sales website.

Opening your e-commerce website abroad represents a real risk for brands. Indeed, consumption methods can be different from one country to another, not to mention the merchandising of the site, and even less the management of payments, currencies, as well as the calculation of international delivery costs and customs duties.

Adding a marketplace module to your website that is open to third-party sellers can help you to accelerate your international presence by relying on local sellers, who will remove the hidden costs of your international e-commerce sales. 

Take into account the impact on the user experience, the information system and the organisation. 

Although the marketplace model has many advantages, it is important to take into consideration some factors in order to make your project a real success.

Provide a clear and seamless user experience.

The user experience or UX is key in a shopping journey. It is important to be able to offer a fluid user experience that avoids your customer having to “live” the segmentation between your own e-commerce offer and that of third-party sellers. This fluidity is achieved through a multi-seller shopping cart, a clear process for managing disputes and returns. Some retailer marketplaces with a physical sales network offer in-store returns, which makes the customer experience even more fluid. 

In short, to successfully add a marketplace module, it is imperative to be clear about who is selling and delivering the product. This will allow your customers to understand why the service linked to certain products (offered by third-party sellers) is different from the one you usually offer as an e-merchant on your own offer (delivery costs and times, payment methods, etc.)

Selecting, onboarding and supporting your third-party sellers.

It is extremely important to select your third-party sellers carefully. Indeed, by selling on your marketplace, they become full representatives of your brand. This is why you need to select trusted sellers who share your brand values. It can also be interesting to accelerate the recruitment of third-party sellers by addressing sellers who already have a culture of selling via the digital channel. You also need to adapt your organisation to dedicate teams to this onboarding and think about the best way to optimise it (automating certain tasks) and to lead it. 

In order to guarantee a good level of service on your marketplace, it is important to educate them and see them as partners. This will require account managers in your organisation who will manage a pool of sellers.  This way you can help the seller to develop his/her turnover and to implement corrective actions in case of recurrent problems. 

Equip your marketplace with a centralised catalogue

It is also essential to set up a centralised catalogue and a product presentation charter on your site in order to guarantee perfect homogeneity and to facilitate search actions. Remember that by opening your site to third-party sellers, you no longer have complete control over the content of your site. Also, don’t be tempted to overemphasise your own offer to the detriment of your third-party sellers. 

You must give visibility to the other sellers on your site. If they don’t have enough visibility or if the sales are not sufficient for them, they will stop selling on your platform. And the added value created by your marketplace module will fade away. 

Optimiser l’impact sur votre système d’information. 

Even if you already have an operational information system to manage your e-commerce website, the addition of a marketplace module requires its evolution, in particular with the implementation of an OMS (order management system) that allows you to process multi-seller orders, as well as a marketplace middle-office, which will allow your sellers to manage their orders from a dedicated space. Our advice on this point is to spend some time on your target architecture, trying to use process modelling and/or flow orchestration tools that will reduce the costs of adapting your information system.

Do not neglect change management !

Adding a marketplace module to your e-commerce website is above all a transformation project. On the one hand, because you are adding a business model (the marketplace model) to your own offer (purchase -> resale). On the other hand, by introducing a multi-seller offer you have to adapt your organisation. You will need to develop your teams or bring in new skills to help your sellers get onboarded and support them (account manager) in developing their business on your marketplace. By testing your customers’ appetite for new product families, you may have to deal with certain families exclusively in third-party offers and stop operating your own offer. More generally, this type of transformation project also requires a great deal of education about what a marketplace is, both internally, for your teams, and externally, for your sellers and their buyers. In short, change management is a key success factor. 

In conclusion, adding a marketplace module to your e-commerce website is more than just a technical issue, it is a real transformation project. It is therefore a strategic project for your organisation that must be conducted with thought, rigour and perfect execution. To carry it out successfully, you need to select the right partners who will be able to support you in the framing of your project as well as in its construction and implementation (support for example on the targeting and onboarding of sellers). 

Choosing a partner like Marjory will allow you to accelerate your time-to-market, to reduce the technical and organisational impacts. Our process driven approach and our ability to quickly connect all the e-commerce / marketplace bricks on the market (custo bricks or saas bricks) will allow you to succeed in this transformation. In addition, you will benefit from the professional services of our experts, who have worked on similar issues for major brands (La Redoute, Auchan, Leroy Merlin, Accor, etc.)

Do you have a marketplace project? Contact Axelle!

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