Selling via the online marketplaces with the greatest reach such as Amazon, Zalando, and About You is a “must” for fashion and lifestyle brands today, since they enable rapid access to millions of customers in the European markets. For many companies, they have become the only option for growth in their online business. Until now, however, there have been few studies on the factors for success or the challenges of selling in the marketplace. Which marketplaces are interesting for a brand and what product range should the company offer? “Driving Growth on Marketplaces” is the new strategy guide from Arvato Supply Chain Solutions together with the consultancy Digital Spike. It has been developed specifically for fashion and lifestyle brands to provide answers to these two key questions and beyond.
“The marketplace business of our customers is booming,” says Michael Peters, Vice President Business Development at Arvato Supply Chain Solutions. “However, when it comes to IT integration, order management, and logistics, marketplaces pose challenges that brands must master.” Given this situation, Arvato and Digital Spike have analyzed European online platforms and developed recommendations from their findings. One thing is clear: The more planning brands undertake to develop their marketplace business, the higher their growth rates. “Marketplaces are becoming more demanding and complex,” explains Dr. Felix Kreyer, the founder and President of Digital Spike. “In view of this development and the increasing competition in marketplaces, brands must optimize their management of this sales channel to continue to be successful in the future.”
Success factors in online marketplaces
Due to the vast and fragmented nature of the European marketplace, the first step is to decide in which countries and on what platform the brand products should be sold. For this reason, eight of the most important European marketplaces and their peculiarities were analyzed in the strategy guide. If a marketplace appears to be a reasonable option as a sales platform for a brand, the company must clearly define its goals in order to select the suitable product range for the channel. This is the only way brands can retain a certain degree of independence and direct access to their customers through their own channels. The goal is to safeguard the profitability of the marketplace business, which is only possible with complete cost transparency. Ultimately, profitability must be calculated for every single sale; looking at average indicators is no longer sufficient as the smallest changes in single parameters can have an enormous effect on the result. This can mean that individual marketplace orders are simply no longer profitable. The guide explains this concept clearly through example calculations.
Since brand companies can choose among various options for establishing integration and fulfilment in a market-compatible way, relevant examples have been presented and compared. At first glance it may appear that a particular marketplace service offering is the easiest way to reach the objective; it may, however, be well worth the effort for the brand to keep certain tasks in-house or collaborate with specialized service providers. Ultimately, there is not just one lone goal to safeguard uniform, synchronized, centrally held information that is always current. It’s just as important to ensure continual product availability and professional logistics to guarantee rapid order delivery. To successfully master such challenges, brand companies must create the necessary internal conditions and also find a suitable organizational structure to support it. The study therefore also presents different organizational models and lists the competencies that are necessary to run the business successfully.
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