Is Running a Marketplace Right for Me?
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The document discusses the viability of running a marketplace, covering key aspects such as benefits, workflow, and essential operational considerations. It highlights advantages like expanded product selection, improved unit economics, and lowered inventory risk, while emphasizing the importance of legal terms and seller metrics. The document also outlines organizational models and differentiates between successful and unsuccessful marketplace strategies.
Is Running a Marketplace Right for Me?
- 1. IS RUNNING A MARKETPLACE RIGHT FOR ME? Rick Watson June 6, 2012 1
- 2. A LITTLE ABOUT ME • GM, Marketplace for Barnes & Noble.com • Software / Technology Background • 13 years in ECommerce Industry • Twitter: @rickwatson • Website: http://rickwatsonsblog.com/ 2
- 3. OVERVIEW • What? • Why? • How? • Why Not? 3
- 4. WHAT? 4
- 5. MARKETPLACE: VIRTUOUS CYCLE More Expand Buyers Selection 5
- 6. DC WORKFLOW Ship Search / Browse Purchase Customer 6
- 7. MARKETPLACE WORKFLOW Search / Browse Purchase Customer Inventory Feed Order Information Ship 7
- 8. ENHANCING SELECTION DC Products Dropship Products Marketplace Vendor Type Manufacturers Distributors Online Retailers Vendor Count Hundreds Hundreds /Thousands Thousands/Millions Selection Profile Narrow and Deep Variable Broad and Shallow Gross Margin 40 - 60% ~30% ~12% Inventory Risk High None None Inventory Title Owner Flash Title Seller 8
- 9. WHY CONSIDER A MARKETPLACE? • Expanded pool of products, promotions, pricing, options, availability • Improve unit economics • No cost of goods • Shipping can become a revenue source • Lower inventory risk 9
- 10. OPTIONS TO CONSIDER • Product Posture: • Promotional • Non-overlapping • Fully overlapping • Seller Posture: • Closed/Gated • Open 10
- 11. MARKET LANDSCAPE 11
- 12. HOW? 12
- 13. THE ESSENTIALS • Legal Terms, Taxation, and Data Ownership • Product Creation, Categorization & Cross-Linking • Listing Data Model • Seller Recruitment & Onboarding • Buyer & Seller Service • Site Merchandising & Promotions • Seller Metrics Plan 13
- 14. DATA OWNERSHIP • Right to use, modify, combine, display and retransmit a seller’s data • Survives contract termination 14
- 15. LISTING DATA MODEL Applies to: Product Listing • Products/Listings • SKU • Seller • Orders • UPC • Seller SKU • Analytics • Title • UPC •… • Quantity • Condition 15
- 16. SITE MERCHANDISING & PROMOTIONS • Sellers expect proactive promotion & exposure • Examples 16
- 17. AMAZON – CATEGORY PAGE PROMO SPOT Featured sellers/retailers on AMZ. When buyer clicks on the logo, they are taken to that retailer’s listings on AMZ. AMZ offers this positioning to retailers as part of the contract
- 18. BUY.COM’S DAILY DEAL Buy.com also has a daily deals slot for retailers.
- 19. SEARS – SHOP BY MARKETPLACE SELLERS
- 20. BUYER SUPPORT Buyer Support Organization Seller Support Organization First-Level Customer Request Second-Level Seller Support Team Third-Party Merchant 20
- 21. SAMPLE ORGANIZATIONAL MODEL Function Merchandising Marketplace Team Seller Team Support Seller Acquisition Coordination Ownership & Onboarding Seller Management Key Accounts Coordination Ownership & Support Site Merchandising Ownership Coordination & Promotions Feature Development Ownership 21
- 22. WORRIES 22
- 23. MERCHANDISING ALIGNMENT 23
- 24. ONGOING PRIORITIZATION • A Marketplace puts you in the software business – sellers expect you to execute on some of their ideas • Merchants have choices – why are they with you? • Prefer fewer, long-term resources over larger #s of temporary resources for “launch” 24
- 25. WHAT “NO” LOOKS LIKE • Most projects in perpetual 1.0 stage • Top vs bottom-line focused • Internal teams not easily aligned • Rigid/inflexible systems • No clear differentiated value proposition for merchants • Internal conversations often not data-driven 25
- 26. WHAT “YES” LOOKS LIKE • Clear business owner • Unique customer base • Goal to improve selection & profitability • Willingness to see merchants as customers • Good traffic acquisition strategy • Invest in platform/software over long-term 26
- 27. SUMMARY Long-term commitment Contact Rick Watson at: • Twitter: @rickwatson • E-mail: rwatson@book.com / richard.m.watson@gmail.com • Web: http://rickwatsonsblog.com/ 27
- 28. REFERENCE MATERIAL • How to Build an Online Marketplace • Brian K. Walker, Forrester, May 8, 2012 Why Every Retailer Needs an Online Marketplace • Sucharita Mulpuru, Forrester, May 9, 2012 Company to investigate: • Merchantry / Rakuten: Build marketplace platforms 28
Editor's Notes
- #3: GM of Marketplace @ Barnes & Noble. Joined last year to relaunch our marketplace as a destination for retailers.
- #9: Amazon passed 1.4 million seller accounts in 2007 There is another tier – advertising.
- #12: Amazon (2001) Market Leader “ Deal with the devil” Sears (2010) Poor technology: Pricing can be updated only every 48 hrs. Poor categorization: Anyone can add products Overstock Shut down auctions business Tried independent branding/destination Auction-only model eBay Great for many, but … Others have brand/channel conflict Walmart (2009) Marketplace not open: only 5 retailers present Brand-stigma for high-end retailers Buy.com (2007) Anecdotally 50% of site by units Focused on white-label marketplace strategy also (Best Buy)
- #21: Because these will be different groups, you need to drive information up the chain as much as possible in order to reduce buyer wait times. This requires information, systems, training, awareness.
- #22: Marketplace team should be lean and scale very well. Merchandising team should scale with number of products, promotions, vendors. Seller Relationships team should scale w/ number of buyer & seller support requests.
- #26: Difficult to imagine having data-driven conversations about selection, profitability, promotions, etc.