How to Capitalize on the E-Commerce Boom With a Multi-Marketplace Strategy

Marketplace sales are booming. According to Statista, 63 percent of consumers start their search on Amazon.com, 25 percent on other marketplaces, and only 21 percent on brands’ websites. Consumers trust and prefer marketplaces over brand websites for several reasons, including the availability of fast and free shipping, customer reviews, and easy product comparisons and returns. As a result, marketplaces, including Amazon, comprised 62 percent of global e-commerce sales in 2020, and the number of marketplaces has quadrupled in the last decade.

A recent Shopify study found that merchants that sell in three or more channels can see a 200 percent boost in sales. Consequently, many online retailers see a multi-marketplace strategy as a path to sustainable growth. However, to be truly successful in this increasingly fragmented universe of evolving channels, sellers must carefully align their fulfillment and sales strategies.

In this article, I’ll provide a high-level overview of the factors to consider and pitfalls to avoid when embarking on a multi-marketplace journey. For a deep dive, check out the on-demand webinar How to Boost Sales With a Multi-Marketplace Fulfillment and Sales Strategy.

How to Select the Right Marketplaces for Your SKUs

Many brands and retailers take a spray-and-pray approach, listing all of their products on as many marketplaces as their gut tells them. Unfortunately, this approach often leads to poor sales results and wasted time and effort. Instead, look for marketplaces where your product categories sell well, your prices are competitive, and your margins are acceptable. Then, prioritize creating high-quality listings for only your most popular SKUs — quality trumps quantity.

You can do this with queries, spreadsheets, and great copywriting, but this approach can be labor-intensive and less accurate. So instead, use some of the many tools available for competitive pricing research, market share analysis, and listing automation and optimization.

How to Win the Buy Box and Boost Conversions 

When a consumer searches for a product on a marketplace, an algorithm determines which retailer’s listing wins the Buy Box. One of the top factors in getting this extra visibility is the availability of fast and free shipping. Amazon Prime is one such program, and the Buy Box drives 83 percent of Amazon’s sales. Other marketplace programs like eBay’s Fast ‘N Free and Walmart’s free two-day shipping work similarly.

Each marketplace has different requirements for winning the Buy Box. For example, Amazon Prime requires nationwide one- and two-day delivery. Amazon is further pushing the e-commerce industry as a whole toward a new norm of nationwide one-day delivery. In fact, Amazon, delivered 33 percent holiday ‘19 shipments in just one day. For details on exactly what it takes to win the Buy Box on all of the major marketplaces, check out this multi-marketplace fulfillment webinar.

Offering fast and free shipping is often a less expensive and more effective way to increase the visibility and conversions of your listings than purchasing lots of advertising. For example, free one- and two-day shipping results in a 50 percent sales lift on Amazon and a 40 percent GMV lift on Walmart. In addition, Wish, Wayfair, Overstock, and Target offer higher search rank and up to 10 times more impressions for free two-day shipping. And eBay, Etsy, and Newegg all offer higher search rank for free shipping.

How to Align Your Multi-Marketplace Sales Strategies With Fulfillment

Listing the right products at the right price on the right marketplaces is the last element of a successful multi-marketplace strategy. Before leaping into a new marketplace, carefully evaluate the various fulfillment options and select the one that best meets your multi-marketplace strategy. Let’s look at some of the more popular options.

Use Marketplace-Specific Fulfillment

Amazon, Walmart, Wish, Shopify, Newegg, and Overstock offer fulfillment services for orders placed on their respective marketplaces. Using marketplace fulfillment can be costly and sometimes impossible when targeting multiple channels. For example, it can cost up to twice as much to fulfill non-Amazon orders with Fulfillment by Amazon (FBA), and Walmart doesn’t even permit the use of FBA. Furthermore, sellers must keep sufficient inventory at each marketplace and manage inventory levels and inbounds independently for each. This approach adds up to much higher inventory carrying costs and endless order and inventory management complexity.

Outsource to Multiple Traditional 3PLs

You may already be working with a third-party logistics (3PL) fulfillment provider that typically offers standard order delivery. Unfortunately, standard delivery isn't fast enough to compete with Amazon Prime and the industrywide trend toward nationwide one-day delivery. Nor does it comply with Amazon Seller Fulfilled Prime's (SFP) new rules for third-party retailers, which can put your Prime badge eligibility at risk.

Adopting a nationwide free delivery model may mean you have to engage multiple 3PL warehouses, whose prices and services may vary widely. If you find yourself shopping around for providers, use a 3PL request for proposal (RFP) template to get an apples-to-apples comparison or consider 3PL fulfillment alternatives.

Join an Order Fulfillment Network

A modern and affordable alternative to working with 3PLs is to use a peer-to-peer (P-to-P) e-commerce order fulfillment network. A P-to-P network is comprised of experienced e-commerce sellers who offer up their warehouse space and resources to provide high-quality order fulfillment to other merchants. This model enables members to offer nationwide one- or two-day delivery. As a result, costs are lower than what you get with a traditional 3PL fulfillment company, and service levels are higher.

In short, a multi-marketplace strategy can deliver sustainable growth, but only if you do your research and carefully align your fulfillment and sales strategies. To learn more, check out the on-demand webinar How to Boost Sales With a Multi-Marketplace Fulfillment and Sales Strategy.

Manish Chowdhary is the founder and CEO of Cahoot, a peer-to-peer order fulfillment network where merchants collaborate to increase their sales and margins by offering profitable one-day and two-day free shipping to customers nationwide without spending a penny more than the economical ground shipping.