Defining a product offering strategy for your marketplace is a fundamental and determining pillar of your marketplace’s success. Whether you’re an established player with an existing e-commerce site, or you’re launching from scratch, the key is to build an appropriate product assortment strategy to enhance your current offering. If you already have an e-commerce site or marketplace, start with an internal analysis of what already exists: what are your top-selling references? What sales are generated per product? How much are they growing? Etc. This would be the first step to define the product offering for your marketplace.
Then, whatever your profile, carry out an external analysis by rigorously studying your market, including direct and indirect competition.
Once you’ve gathered this initial essential information, it’s time to define the product offering strategy you’d like to develop for your marketplace. Always bear in mind that the offer should reflect both your marketplace’s value proposition and its price positioning.
3 product assortment strategies to consider for your marketplace offering
Strategy 1: Increase the number of new categories
In this case, you want to enhance the product offering of your marketplace with new categories, to cover the need for new products that customers are looking for. They will now be able to group together various purchases on your site, resulting in a better loyalty rate and an increase in repeat purchases. By broadening the range with new categories, you can also test the appeal of new products with your customers and adapt quickly to changes in the market without having to commit to stock from a supplier.
Be careful, though, that your catalogue is expanded in a way that is consistent with your current offering and meets the needs of your customers. The strategic categories with the products that sell the most and give you a competitive edge are evolving. It is therefore important to be attentive and responsive in order to adapt to the market and your customers, and to avoid major product shortcomings compared to your competitors.
Strategy 2: Expand the number of products in existing categories
You can also decide to develop your offer by concentrating on a category in which you are already positioned and enrich it with more products. This strategy allows you to secure your development while remaining perfectly consistent with your existing offering. By developing products in a strategic category, you assert your position as an expert in the market by offering a cutting-edge, exhaustive range. By meeting your customers’ expectations, you will build up a loyal community of buyers, who will increase their average basket by buying complementary products.
To offer a unique and differentiating product range, selecting products and sellers becomes a strategic choice. It is essential to define which products to keep on your own. Targeting one type of product, for example, makes it easier to structure the need to recruit sales staff and to use the competition to obtain better prices. We advise you to target products that will have a high attachment rate in relation to the core product. This avoids the end customer having too many mixed baskets or high multiple delivery charges. You can then adjust the offer as you go along, based on customer feedback.
Strategy 3: Optimise stock management
The aim of this strategy is to supplement your current range of high-performance products by increasing the stock available to customers, without incurring the costs, since the products are managed by the sales staff. To do this, analyse your top-selling products and find sellers who sell these products. Then define a “buy box” strategy to encourage competition and obtain attractive prices, without cannibalising your own offer.
As well as reducing logistics costs, you can ensure that you always satisfy your customers’ requests for the products that sell best. This can be a wise choice, particularly in times of crisis, when there is a high risk of supplier shortages. Avoiding stock-outs on popular products means improving the customer experience. You’ll be able to ensure optimum availability and diversified or sometimes faster delivery methods. In short, anticipating shortages of your own products, thanks to the products offered by third-party sellers, is a way of fostering customer loyalty and differentiating yourself from the competition.
It’s also possible to opt for a mixed objective by going deeper into one product category and expanding your offering into new categories.
However, these three strategies need to be studied with in-depth expertise. It is important to consider, for example, what the risks are of diluting your own offer, moving away from your brand image, or providing a less qualitative customer experience. At Octopia, our consultants will provide you with personalised advice to help you define the product offering strategy best suited to your marketplace.
What are the next 3 key points to determine for a successful product offering for your marketplace?
Sellers
In the same way that an e-commerce strategy is linked to suppliers, as a marketplace the question of sellers is essential. Almost all launch failures are due to poor anticipation of efforts to source and manage sellers.
Liberal strategy: this consists of letting in all the top sellers on the market and letting them compete with the marketplace’s own offerings. This enables you to offer your customers more attractive prices and more diverse and/or faster delivery methods.
Selective strategy: this involves choosing the level of selectivity you wish to apply to your vendors, using defined criteria:
- Quality: Sales performance: select products that sell well, taking into account customer perceptions. Then pay attention to the number of reviews and their average rating. You will be able to define your minimum threshold for recruiting the salesperson.
- Price competitiveness: Benchmark your main competitors to get price indices. Ask yourself: will the salespeople you want to recruit improve their price competitiveness? You can use tools for dynamic pricing adapted in real time.
- Brands: Perhaps you think that integrating brands rather than distributors will reassure your customers? The disadvantage of having the brand directly is the risk of a monopoly leading to less competition. This will break the logic of obtaining the best prices. It’s also a longer investment than recruiting a salesperson who sells several brands.
Other criteria may also come into play, such as the country of dispatch. If you’d like to find out more about how to source the right salespeople, read our dedicated article.
Product price positioning
Offering all the products your customers want on your marketplace is great. Having them at the best price is even better. The marketplace’s commercial terms with sellers will have a major impact on product prices. It’s important that you analyse the price index of your marketplace’s potential top products VS the competition. This way, you can adapt your terms and conditions to motivate your current sellers to come into line. Your sourcing teams will also appreciate the new and clear guidelines to find better deals.
Logistics
Logistics are an essential pillar of customer satisfaction. They must be anticipated as early as possible in the marketplace project phase. Our study conducted with Ipsos shows that 85% of consumers will never return to a site following a bad delivery experience. There are two logistics options available to you:
- Seller-operated logistics: sellers manage the end-to-end fulfilment of orders placed on your marketplace, in whatever way they choose. This requires little effort on the part of the marketplace. But it does not control the customer experience, since the quality of order processing varies from seller to seller.
- Logistics operated by a professional fulfilment service, such as Octopia Fulfillment: logistics are outsourced to a specialist expert, resulting in greater service reliability and more varied and often faster delivery methods.
To find out more about fulfilment for marketplaces, read our dedicated white paper.
It is also important to anticipate the countries to which marketplace sellers’ products will be shipped. This way, you don’t mar the shopping experience and you can anticipate delivery costs that vary from one country to another. These are strategic questions for players wishing to sell in several countries.
Conclusion
To define your marketplace’s product offering strategy, you can opt for one of three options. You can broaden your offering into new categories, deepen the offering in a category, or optimise your stock management. It’s also possible to establish a crossover strategy, but it’s important to determine your priorities. Setting your strategy will then influence the key points concerning the choice of sellers, price positioning and logistics.
At Octopia, our consultants will work with you to define your offer strategy according to your profile and your ambitions. We work on your criteria and select from among our 15,000 sellers the ones best suited to your needs. Contact us for personalised advice.
Contributors: Laura Vigneron, Nicolas Degroote, Guillaume Bonini
