Marketplace Marketing: Which Products Should You Advertise?
Most e-commerce projects, transforming into marketplaces, cannot determine which merchants to cooperate with and which product categories to upload into the storefront. It hasn't been clear which advertising campaigns to launch to end up with a profit.
The Scallium team has prepared several important recommendations for storefront owners.
What is the difference between "online store marketing" and "marketplace marketing"?
The online store sells goods from its own warehouse or the warehouses of its partner suppliers. The marketplace allows other sellers to register on the online storefront and sell their goods.
There is a clear difference in marketing here. Traditional e-commerce business launches ads for their products, and the marketplace provides them with third-party merchants' products. For the marketplace to launch effective advertising for products, you should calculate the margin considering that you earn a commission above the sold products' original production cost or wholesale cost.
To calculate the margin benefit, the marketplace manager needs to clearly understand its product assortment matrix and know which product categories to load on its online showcase and which product will sell best.
How to calculate the marketplace marketing strategy: three main factors
Let's examine the traditional marketing scheme in the commodity business:
Aligning the analysis with commodity trends,
Deciding on the product matrix,
Uploading products to the website,
Launching an advertising campaign.
According to the Scallium statistics, about 30% of sales are generated by 10 key categories. The remaining 70% is blurred among 800+ product categories.
We consider three main factors of product salability in marketing processes. We advise relying on them when calculating the profit of advertising campaigns.
A rule in the e-commerce business predicates that - the lower the price, then… the higher the demand. The purchasing statistics of global marketplaces (Amazon, Etsy, eBay, etc.) support the fact that goods priced under $35 are better sellers. For a good reason, the most profitable marketplaces distribute newsletters that consistently convert new and loyal consumers by offering different inexpensive goods.
Some consultants recommend marketplaces to focus on selling goods up to $35. Some people would say that there is a low margin and no earnings because the commission on the sale of such goods is negligible. But it is worth remembering that there is no delayed demand for inexpensive categories less than $35. Сonsidering the fact that e-commerce no longer makes money on the first sale, it makes sense - you start working on customer loyalty and his return for the next interaction. You get a quick, inexpensive lead, which you then include in email newsletters and remarketing, selling goods to a client in a more expensive segment. You can grow your LTV this way. And LTV for the marketplace is the most important marketing metric.
Next, you could set up a flow for uploading seasonal products to the online storefront. This needs to be planned at least 2-3 months in advance to prepare product cards with good descriptions and photos.
We recommend using the Google Keyword Tool and Google Trends to get relevant data. Also use the experience of your category managers, who must clearly understand the seasonality of a particular category.
Product card completeness
When you decide on the main categories, you should understand which merchants you need to start working with first. According to our statistics, the conversion of a card directly depends on its content. The more information in the product card, the higher the conversion.
The point is that your product cards should have the maximum number of attributes but a short title.
We recommend taking this factor as a basis - analyze the merchants' content, and those who have good and extended product content, take them on board.
Let's summarize this chapter:
The main pool of assortment on your marketplace should be inexpensive goods. These are stable sales and increasing in LTV.
Next, you should add seasonal products to this assortment. Do year-round analysis with your category managers to plan your product feed uploads.
Pay maximum attention to the product cards' completeness. Choose those merchants who create high-quality content for their goods. A well-organized marketplace could teach their merchants to dynamically present their products to new and loyal consumers.
The main focus of the marketplace marketing strategy
When you have decided on the product matrix, it's time to launch advertising. We propose to divide online marketing strategy into several stages:
Stage 1 — Search Engine Optimization SEO of product content, and launching advertising on Google Shopping. We advise you to give advertising traffic to inexpensive and seasonal products as we described above. Your marketplace will receive statistics about interaction on your online store, and the first leads, so you will be able to move on to the next marketing stage.
Stage 2 — launching re-marketing for an already formed audience and Dynamic Search Ads DSA.
Stage 3 — Search Network with Display Select (SNDS) Google Ads and resulting in broader re-marketing. At this stage, we launch media advertising and repeat the marketing activity.
This is the top-level strategy within which all major marketplaces operate. These are reasonable steps to win back your customers without spending heavily over your budget. Therefore, this is the optimal strategy for online showcases that sell products by third-party sellers.