is running a marketplace right for me?
DESCRIPTION
Is Running a Marketplace Right for Me?The presentation will discuss the growing trend of retailers adding Marketplace functionality to their ECommerce websites, and discuss how to evaluate whether this is right for your business.In particular, the following questions will be discussed in depth:What is a marketplace and what are the business advantages to one?What are the elements of a successful Marketplace launch plan?What are the elements of maintaining and growing a successful Marketplace?Who should not start a marketplace?Having launched and now managing Barnes & Noble's Third-Party Marketplace, combined with 10+ years of experience helping retailers scale their Marketplace businesses, Rick Watson is uniquely qualified to discuss the benefits and pitfalls of building your own marketplace as part of your ECommerce strategy.Presented at 2012 E-Commerce Europe Summit:http://e-commercesummit.com/program/june-6th-day-2TRANSCRIPT
IS RUNNING A MARKETPLACE RIGHT FOR ME?
Rick Watson
June 6, 2012
1
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
OVERVIEW
• What?
• Why?
• How?
• Why Not?
3
WHAT?
4
MARKETPLACE: VIRTUOUS CYCLE
5
Expand Selection
More Buyers
DC WORKFLOW
Customer
Ship
PurchaseSearch / Browse
6
MARKETPLACE WORKFLOW
Customer
Inventory
Feed
Search / Browse Purchase
OrderInformation
Ship
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ENHANCING SELECTIONDC 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
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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
OPTIONS TO CONSIDER
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• Product Posture:
• Promotional
• Non-overlapping
• Fully overlapping
• Seller Posture:
• Closed/Gated
• Open
MARKET LANDSCAPE
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HOW?
12
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
DATA OWNERSHIP
• Right to use, modify, combine, display and retransmit a seller’s data
• Survives contract termination
14
LISTING DATA MODEL
15
Product• SKU• UPC• Title• …
Applies to:• Products/Listings• Orders• Analytics
Listing• Seller• Seller SKU• UPC• Quantity• Condition
SITE MERCHANDISING & PROMOTIONS
• Sellers expect proactive promotion & exposure
• Examples
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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 negotiations.
BUY.COM’S DAILY DEAL
Buy.com also has a daily deals slot for retailers.
SEARS – SHOP BY MARKETPLACE SELLERS
BUYER SUPPORT
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First-LevelFirst-Level
Second-LevelSecond-Level
Buyer Support Organization Seller Support Organization
Seller Support Team
Seller Support Team
Third-Party Merchant
Third-Party Merchant
Customer Request
SAMPLE ORGANIZATIONAL MODEL
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Function Merchandising Team
Marketplace Team Seller Support
Seller Acquisition & Onboarding
Coordination Ownership
Seller Management & Support
Key Accounts Coordination Ownership
Site Merchandising & Promotions
Ownership Coordination
Feature Development Ownership
WORRIES
22
MERCHANDISING ALIGNMENT
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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”
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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
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
SUMMARY
Long-term commitment
Contact Rick Watson at:
• Twitter: @rickwatson
• E-mail: [email protected] / [email protected]
• Web: http://rickwatsonsblog.com/
27
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
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