How To Make Marketplaces Work For You

Five Ways That Retailers Can Boost Their Online Sales

Online marketplaces such as Amazon, eBay and have become an important staple for retailers of all sizes, with an estimated 65 percent of online retailers having a presence on at least one marketplace. The number of consumers who us marketplaces as their primary source of online shopping is growing rapidly, but competition is fierce as many sellers struggle to gain visibility on the marketplace and land the coveted “buy box” that has a higher likelihood of leading to a sale.

The challenge for retailers is to determine how to differentiate themselves on marketplaces from those who sell the same products. Simply offering the best price isn’t enough, and there must be a careful strategy in place.


Marketplace optimization (MpO) is a series of techniques designed to help retailers improve their marketplace ranking. MpO becomes important after a customer has already decided on a product. Therefore, MpO is not about optimizing a product. Instead, it’s about optimizing the seller’s ranking. When multiple sellers offer the same item, each marketplace uses proprietary algorithms to determine which sellers to recommend.

The area on a marketplace where recommended sellers are displayed to prospective buyers is often dubbed the “buy box” or “add to cart box.” Because sales are typically much higher for a product in the box versus a product that isn’t – with some retailers reporting up to a six-fold increase in sales when their product lands in the box — there is a stiff competition between merchants to win that box.

This is where MpO comes into play, as it removes the guesswork from this process by conducting a comprehensive review of data to identify poorly performing signals, then recommends corrective actions to increase signal performance, thus creating additional marketplace-referred sales.

Much the same way that search engine optimization (SEO) optimizes a website for search engines, MpO optimizes a seller’s ranking on a marketplace. MpO will become increasingly important for merchants due to a marked shift in consumer buying behavior.

Since more and more consumers are bypassing traditional search engines like Google, choosing instead to go directly to their favorite marketplace to search for products, it follows that MpO will eventually overtake the importance of SEO for online merchants.

Therefore, it won’t matter how well a retailer’s website is optimized for search engines if their products aren’t garnering the proper attention on marketplaces. Optimizing performance on marketplaces will become vital for retailers to remain viable. While there are literally dozens of factors that comprise successful MpO, let’s focus on five of the most important ones.


Minimizing Order Cancellations

The leading cause for order cancellations is due to incorrect inventory. Sellers must display accurate inventory to prevent accidental overselling. Those who advertise products across multiple marketplaces or utilize multiple warehouses but do not have automation software in place to synchronize inventory quickly will have inaccurate inventory, which leads to an increase in overselling.

Human error also plays a role in the number of order cancellations, so implementing shipping software that will track employee shipping errors can be an indispensable tool in lowering order cancellation rates. In the event that overselling does occur, having a backup vendor in place to fulfill an order is key.


Increasing Available Inventory

If inventory is being distributed across multiple marketplaces, increasing the total amount of available inventory will result in a better sell-through. There are numerous possibilities to determine optimal allocation when limited quantities of inventory are available to distribute across multiple marketplaces.

For instance, during busy seasons, sellers may need to pull down their product from a particular marketplace once it reaches a certain threshold to avoid order cancellations. This can be achieved with inventory-allocating software that is configured to recognize sales velocity for a particular product and automatically pull down that product listing as needed. If inventory is low, the automation software can also reserve enough to avoid cancellations.


Performing Dynamic Repricing

Repricing involves going to a marketplace to find other sellers offering the same items for sale and then either matching or beating the sale price, the shipping costs or both. Repricing can be implemented automatically using software or it can be done manually.

There are an infinite amount of strategies for repricing. For example, a seller with a low cancellation rate will only need to match the best price in order to win the buy box. The best repricing systems take into account customer feedback, number of items on order, or overall margins and sales velocity across all marketplaces to make more intelligent repricing decisions and maximize operating revenues.


Improving the Customer Experience

It probably goes without saying that positive customer feedback is vital for seller success. To capitalize on this, sellers should encourage customers to provide feedback. This request can be done manually or by using an integrated CRM tool. If using CRM, it’s important that it be flexible to accommodate the varying guidelines of each marketplace. If negative issues arise, retailers should be proactive and resolve the issues as quickly as possible. Once the issue has been resolved, it is in most cases permissible to request for the feedback score to be updated.


Optimizing Logistics

Retailers need to identify weaknesses and address them expeditiously. Consistently late shipments and expensive shipping costs are areas that can negatively impact a seller’s ranking. Order management software can streamline operations and reduce shipping latency, which is the amount of time after an order is placed until it ships.

It is also important to consider when it makes sense to utilize a fulfillment center to cut down on shipping costs and lower shipment times. Instead of shipping all products from one location, utilizing multiple warehouses and/or fulfillment centers in different geographic locations can reduce expedited shipping. By having more warehouses with inventory, products don’t have to ship as far to reach customers, thus allowing for more competitive shipping.

With consumers flocking to marketplaces in droves, it’s imperative for retailers to have a strategy in place to capitalize on this trend. While the factors outlined in this article are not exhaustive, they provide a good foundation upon which to build.

By correctly implementing the tenets behind MpO, retailers can expect increased time in the buy box, leading to increased product exposure and ultimately increased marketplace sales and more revenue for their business.


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