A marketplace isn’t just a platform—it’s a two-sided business model that allows sellers to cultivate long-lasting relationships with prospects and customers within the same platform.
Established and fast-growing DTC Shopify brands can use an online marketplace to extend their business offering, boost sales, and deliver unparalleled customer experience effectively.
Why Creating a Marketplace Is an Effective Strategy for Shopify Brands
As an established Shopify brand, you may wonder whether opening a marketplace is worth it. After all, customers already know and trust your brand and are loyal to it. And, we would argue, that’s exactly WHY you should create a marketplace. You already have the customer!
First and foremost, let’s talk numbers.
- 47% of global digital purchases happened through online marketplace platforms
- $2.67 trillion was spent globally on the top hundred online marketplaces in 2020
- The top 50 U.S. marketplaces increased their sales by 40% in 2020
- 14% of customers prefer to shop at an online marketplace for a first-time purchase, while 37% prefer making a repeat purchase there
- 63% of the total U.S. eCommerce business is performed via marketplaces
Selling on an online marketplace eliminates the common problems associated with selling DTC. While the former offers you access to millions of consumers, helps you rank higher in the SERPs, and amplifies your sales by using marketplace ads, selling DTC gives you limited exposure and opportunities and you have to deal with difficulties when expanding to newer regions and markets.
More importantly, buyers prefer marketplaces. They like that online marketplaces offer greater convenience, access to a large variety of products/services/brands and vendors, and price confidence—all at a single platform.
In a nutshell, creating a marketplace can be a pivotal step for you to differentiate your brand from your competitors and establish stronger relationships with customers.
Aligning Your Marketplace With the Right Technology Stack
Your choice of technology has major implications when running a marketplace. If you choose the right technology stack, you can accelerate time-to-revenue for your marketplace and remain focused on the more important aspects of your business—your products and services.
For instance, using a tool like Carro to build your online marketplace helps you go live much faster without the common risks associated with marketplaces. So, yes, you’ll have a unique advantage over your competitors. Carro allows you to identify the exact products and experience your customers want to see on your site. You can also test and expand your product catalog without disrupting the buyer journey.
As a result, you can drive your Average Order Value (AOV) and Customer Lifetime Value (CLV) on an automated level, sans the additional stress and effort.
JOI is a popular plant-based platform that empowers customers with clean, whole-food ingredients to promote a healthy lifestyle.
To increase LTV, JOI wanted to launch new products that inspired customers to pair and use their core line of plant-based milk products more creatively. The company realized most of the customers were enjoying their plant-based milk with other high-quality brands like Joolie’s Date Syrups.
Seeing an opportunity, JOI leveraged Carro‘s brand network to build an innovative marketplace where both these products were made available to customers. The biggest advantage? JOI didn’t have to worry about any inventory commitments typically required by a traditional wholesale relationship.
Using Carro, the company launched their marketplace, Friends of JOI, which successfully introduced customers to new products exactly as they planned. It also saw an impressive 11% increase in AOV for carts with Carro products and has since delivered a 6% increase in total sales revenue.
JOI had a brilliant idea: sell products your customers already want. But by choosing a reliable tool like Carro, the company was able to easily build a successful lifestyle marketplace.
3 Best Practices to Build a Successful Marketplace
Below, we’ve listed three best practices to help you launch a successful marketplace.
Integrate the Marketplace Into Your Existing Ecommerce Site
Many business owners assume their marketplace is a URL in itself. News flash: it isn’t.
The marketplace is a model for doing business. So separating your eCommerce site from the marketplace will only make the whole thing counter-productive.
Instead, your marketplace should be a natural extension of your brand universe. This will generate continuity that will assure the sale of the products constituting your basic offer, which your marketplace completes.
If you want to be a successful marketplace operator, you need to earn your customers’ trust.
Customers value transparency when making purchase decisions. Yes, they do love a wide product/service range, convenience, and fair pricing, but these mean nothing to them if customers don’t find you reliable.
Try to maintain transparency from the very beginning. If you plan on involving third-party sellers, make it clear on your website.
Embrace Automation as Much as Possible
Manual processes are prone to errors and often hinder the marketplace’s efficiency and profitability. What’s more, they can degrade customer experience and increase your costs, both of which are highly undesirable.
Luckily, you can guarantee your customers a seamless sales experience by embracing automation. Automation can accelerate the integration and vendor management process, reduce costs, and increase your marketplace’s appeal in the eyes of your target customers.
Talk about killing multiple birds with one stone, right?
Marketplaces Are the Present and the Future
Marketplaces are driving the next generation of eCommerce at lightning speed. Be it Amazon, Alibaba, and Etsy—or traditional retailers like Walmart and Target—everyone is jumping on the marketplace bandwagon.
Customer expectations have also changed. They want wide-ranging product choices, lower prices, rapid fulfillment, and one-stop shopping.
Regardless of whether you’re a DTC brand or a retailer, you should seriously consider opening a marketplace to stay ahead of your competitors. It’s only a matter of time until the brands start launching eCommerce sites to connect and cultivate long-lasting relationships with buyers.
Use Carro to power your marketplace and set yourself up for success. Book a demo to see it live in action.