There’s no denying that omnichannel models are the future of eCommerce because of the massive number of quality-of-life improvements they present. It’s a ruthless environment: your business needs to be available to customers through as many channels as possible, or they’ll find another one that is and won’t look back.
The omnichannel revolution comes with one challenge. When you focus on expanding your eCommerce ecosystem in various directions, the offering itself can easily be left behind. Twenty products offered through ten different channels are, in the end, still only twenty products.
Introducing a marketplace business model to your eCommerce ecosystem is emerging as an answer to this conundrum, allowing you to seamlessly grow your offering without the usual downsides such as expanding the physical inventory. Here’s how to do it the right way by leveraging the VTEX platform.
Why marketplaces are the future of omnichannel eCommerce
When thinking about online marketplaces, most people picture platforms such as eBay, Etsy, and Allegro. They’re the traditional model of a marketplace, emphasizing the plurality of vendors. You can usually buy the exact same product from multiple sellers, who compete against each other by leveraging different prices, descriptions, reviews, and more. In a way, the platform is secondary – you’re buying on eBay, but from a specific vendor.
On the other hand, platforms like Amazon disguise the fact that they’re marketplaces. You need to dig quite deep to check whether you’re buying from Amazon itself or a third party, and the order is only processed and fulfilled by Amazon. There’s a good reason for this – in most cases, it simply doesn’t matter. The entire flow and your experience are exactly the same, and if anything goes wrong with the order, you contact Amazon customer support, not the actual seller.
This type of marketplace has become increasingly popular in recent years, and there are several reasons why more and more businesses are including them in their omnichannel strategies:
1. Scalability and variety
By bringing multiple sellers under one platform, marketplaces can quickly expand product catalogs without buying and managing inventory directly. The main vendor whose brand fronts the marketplace becomes just a middleman who passes orders on and provides customer support. All the storage, logistics, and shipping are handled by the end vendor.
Both parties win in this type of arrangement. The vendor receives exposure that would otherwise be impossible, and the marketplace owner can count on faster growth and increased customer retention due to the wider range of products available.
2. Revenue diversification
Implementing the marketplace model enables the brand to generate revenue from new sources. Depending on the specific business model they create, these can be:
- Commissions, such as a flat percentage of each sale of third-party products.
- Subscription fees, for instance, a certain amount for each product that’s displayed on the marketplace per month.
- One-time listing fees when new products are added.
- Advertising, both in the traditional sense of banners and the likes, but also contextually, for instance, by promoting certain products in search results.
3. Improved customer experience
Marketplaces are also the ideal solutions for customers. They provide visitors with diverse product options, competitive pricing, and the convenience of purchasing from multiple sellers in a single transaction. What otherwise would need to be several separate orders from various stores becomes a single purchase.
Why we choose VTEX for building modern marketplaces
If you’re anything like our usual client, you’re probably thinking something along the lines of, “This all sounds great, but prohibitively complex and expensive to build.” This is where VTEX comes in. It’s a unified commerce software-as-a-service (SaaS) solution, which means that straight out of the box, it comes with three distinct modules:
- Standard B2C and B2B eCommerce functionalities, just like those you’d find in any other market leading solution.
- A marketplace system.
- An order management system (OMS) that brings together and seamlessly processes orders from various channels, such as the main eCommerce, the marketplace, physical stores, and more, utilizing the omnichannel model.
For you as an eCommerce owner, access to the complete unified commerce ecosystem right from the start can be a game changer. It can mean savings of thousands of hours in development time and proportionally large amounts of money. Simply put, VTEX enables a smooth implementation of a marketplace business model to the omnichannel strategy. What once was reserved only for the biggest players around is now accessible to businesses of any scale.
Implementing marketplaces into omnichannel strategies the right way
As you can clearly see, adding a marketplace into your omnichannel strategy can be a transformative step for your business. However, as with any innovative project, it requires careful planning and execution to achieve the desired results. Below are some best practices, tips, and tricks to ensure your marketplace delivers maximum value while seamlessly integrating into your broader omnichannel strategy.
1. Leverage the VTEX OMS for seamless operations
The OMS is the backbone of any successful omnichannel strategy, and VTEX’s OMS is particularly robust. This system is crucial for connecting all your sales channels. Your main eCommerce site, third-party marketplace, physical stores, and social commerce can become a unified ecosystem.
Here’s why the OMS is so essential:
Real-time inventory synchronization
Proper inventory synchronization is critical when introducing a marketplace into the omnichannel mix because you’re now dealing with multiple sellers and diverse stock levels. It’s easy for inaccurate data to slip in and cause headaches for you and frustration for the customer.
The OMS ensures that all sales channels reflect accurate and up-to-date inventory. It tracks inventory in real time, which prevents overselling and ensures consistent data and customer experiences across channels.
Unified order processing
When using the OMS to its full potential, it doesn’t matter if an order originates from your eCommerce site, the marketplace, or a physical store. The OMS consolidates these orders into a single system that’s easy to understand and process. This allows for centralized tracking and management, which in turn makes it easier to meet delivery expectations, handle returns, and resolve issues.
Flexible fulfillment options
VTEX’s OMS supports various fulfillment models, such as ship-from-store, click-and-collect, and dropshipping. This allows you to optimize costs and delivery times based on customer location and available stock. For example, why ship an order from your central warehouse when the same product is also available in one of your physical stores that’s much closer to the delivery address? The OMS can pick up on this opportunity and ensure that the most efficient method is always chosen.
Image source: VTEX promotional materials
In marketplaces, this flexibility can extend to third-party sellers and their workflows. The OMS allows them to manage their own fulfillment behind the scenes while providing a unified user experience for the customers.
Pro tip: Use VTEX’s advanced OMS features to set custom rules for order routing and fulfillment prioritization that align with your business priorities. For instance, you can prioritize shipping that’s the cheapest, fastest, or most eco-friendly. Different product types or vendors might even have different sets of priorities.
Sebastian Szczepański, eCommerce Engineering Director
2. Ensure consistent customer experience across channels
One of the main challenges of adding a marketplace to an omnichannel strategy is maintaining a consistent customer experience across all touchpoints. There’s a fine balance to strike here. On the one hand, you want to give vendors some freedom in aspects like product descriptions and fulfillment times and adapt to the unique characteristics of each touchpoint. On the other hand, you need to preserve certain key elements of the overall look and feel.
Coming back to the Amazon example, you might be buying from Amazon or a third party, on desktop website or one of the niche storefronts, but there’s never any doubt that you’re shopping at Amazon. VTEX allows you to achieve precisely this outcome. You’re free to customize the customer journey while ensuring that key elements remain uniform regardless of where the purchase takes place.
Unified checkout experience
Even when customers purchase from multiple sellers, VTEX allows for a single seamless checkout process. This reduces friction and enhances customer satisfaction, which is critical in omnichannel setups where customers might jump between different platforms.
Branding and personalization
Ensure that your marketplace feels like a cohesive part of your brand. With VTEX, you can maintain consistent branding so that the marketplace becomes a seamless extension of your primary eCommerce and other channels. At the same time, personalize the shopping experience based on customer data collected across all channels.
Pro tip: VTEX’s native capabilities provide powerful mechanisms to personalize promotions and content based on the customer’s purchase history, location, or the specific channel they’re interacting with. Take your time to explore them and experiment with different setups to maximize your conversion rate.
Sebastian Szczepański, eCommerce Engineering Director
3. Optimize marketplace onboarding and seller management
The success of your marketplace depends heavily on the quality and diversity of the sellers you onboard. When adopting the Amazon-style model, you can’t take a hands-off approach toward sellers – it’s your brand’s reputation that’s at stake.
VTEX simplifies the process with tools designed to make seller onboarding quick and frictionless. These functionalities will enable you to attract and retain high-quality vendors.
Streamlined onboarding
VTEX’s onboarding process starts with an intuitive registration system that guides sellers step-by-step through creating their profiles. The process is fully automated and allows sellers to provide essential information, set up payment methods, and configure shipping options without the need for manual support from your team. This reduces onboarding time and minimizes administrative overhead. You, as the administrator, are free to focus on attracting more sellers and growing the marketplace.
Guided product listing and catalog management
Once sellers are registered, the next step is getting their products listed. VTEX offers guided product listing tools that make it easy for sellers to upload and manage their product catalogs. The platform supports bulk uploads via CSV files, direct API integrations, and manual entry to ensure that sellers of all technical levels can get their products online quickly.
Performance monitoring and governance
One of the challenges of running a marketplace is to ensure that all sellers adhere to your platform’s rules and regulations. VTEX simplifies this with automated compliance and governance checks during onboarding and throughout a seller’s lifecycle. The system automatically verifies business information, reviews product listings for adherence to marketplace standards, and ensures that all sellers meet legal and regulatory requirements.
Pro tip: You can set up customized approval processes that automatically flag or block sellers and products that don’t meet your criteria. This allows you to maintain control over the quality and consistency of your marketplace without slowing down the onboarding process.
Sebastian Szczepański, eCommerce Engineering Director
4. Ensure seamless integration of multiple sales channels
Marketplaces don’t operate in a vacuum. They often overlap with other sales channels:
- Direct-to-customer sites, including the primary eCommerce site.
- Social media commerce.
- Web and mobile apps.
- Brick-and-mortar stores.
Image source: VTEX promotional materials
VTEX’s omnichannel capabilities let you integrate marketplace operations with these channels. Customers can fluidly move between them while maintaining a consistent experience, while on your end, the data flows seamlessly.
This improves the customer journey and creates new cross-selling opportunities. Imagine that based on your analytics, you conclude that customers tend to make larger, more “serious” purchases on your primary platform and smaller, impulsive ones through social media commerce. You can then use the behavior and order history of a given customer on one of the channels and create a cross-selling strategy for other channels that fit into the previously observed pattern.
Product catalog and search capabilities
Nearly all of us have visited a marketplace with a poorly managed catalog and its consequences: search results not making any sense, duplicated products, nonsensical automated translations, and so on. In many cases, it’s an instant quit moment. This is why product data consistency and search accuracy should be your top priority when multiple sellers contribute to your marketplace.
VTEX comes with centralized catalog management while offering the flexibility to maintain distinct product listings for each seller, enabling you to easily implement well-structured categorization, optimize search algorithms, and introduce smart filtering options.
Pro tip: When integrating multiple sales channels, having a centralized view of your inventory across all touchpoints is key to optimizing the customer experience. With VTEX’s OMS, you can offer flexible fulfillment options, like allowing customers to buy online, pick up in-store (BOPIS) or reserve products in-store and complete the purchase through your marketplace.
Sebastian Szczepański, eCommerce Engineering Director
5. Continuously monitor and optimize omnichannel performance
Adding a marketplace to your omnichannel strategy naturally results in huge amounts of data requiring ongoing monitoring. This might seem overwhelming at first, but you’ll soon learn that data is the ace up your sleeve when it comes to optimizing your business. Used to its full potential, it will provide you with invaluable insights on the strengths and weak links of your omnichannel setup.
VTEX comes with a comprehensive analytics dashboard that allows you to track key performance indicators (KPIs) across all channels and enable data-driven decision-making.
Cross-channel analytics
As we touched on in the previous point, VTEX’s dashboard offers insights into the following aspects:
- Customer behavior, including purchase patterns, browsing history, and average order value.
- Sales performance, such as revenue growth by channel, conversion rates, and best-selling products across different platforms.
- Operational efficiency across all your sales channels, including inventory levels, order fulfillment speed, and return rates.
- Marketing effectiveness, helping you track which campaigns drive the most conversions and which channels offer the best return on ad spend (ROAS).
- Product performance, which offers insights into low or high-margin items, product sell-through rates, and trends in demand by season or region.
- Customer engagement metrics, including loyalty program activity, repeat purchase rates, and customer lifetime value (CLV).
This allows you to quickly identify opportunities for optimization. If your conversion rates aren’t satisfactory, you might want to adjust pricing strategies. On the other hand, when many visitors leave right after using the search function, it might indicate that they don’t find what they’re looking for, and you should consider refining product assortments.
Pro tip: Continuously test and iterate on your marketplace’s user experience, product offerings, and promotional strategies. VTEX makes it easy to run A/B tests across different segments and channels, helping you optimize the customer journey at every touchpoint.
Sebastian Szczepański, eCommerce Engineering Director
Introducing a marketplace to omnichannel eCommerce has never been easier
Adding a marketplace business model to your omnichannel strategy with VTEX is a sure way to scale your product offerings and unlock new revenue streams. Enhanced customer satisfaction is the natural result – who would say no to a wider product catalog while maintaining a seamless experience?
VTEX’s out-of-the-box OMS and marketplace functionalities enable businesses of all sizes to capitalize on this opportunity. With streamlined seller management and the ability to optimize every touchpoint, you can build a future-ready eCommerce ecosystem that responds to all the needs of today’s demanding customers.
Of course, these are just a few of our most important insights. There’s much more to a project of this caliber than we can fit even in the most detailed article. If you’re thinking about introducing a marketplace into your eCommerce ecosystem, get in touch with our experts, and let’s talk about the nitty-gritty of your unique setup and optimal solutions.
Published September 10, 2024
