Integrating Digital Marketplaces To eCommerce
Here is a perfect example of why eCommerce marketplace integration could be beneficial to the growth of your business. Recently, I was reminded about the power of online marketplaces when I was trying to find a last-minute Halloween costume for my 3-year-old. She had her heart set on being Owlette from PJ Masks but changed it at the last minute to Luna Girl, the supervillain, because "Superheroes are bo-ring!"
My first action was to search for this on Amazon. There were not too many available, and third-party sellers were selling most of them!
An online marketplace is an eCommerce website where multiple third parties provide product or service information. The marketplace operator processes the transaction. Either the marketplace or the third-party seller can fulfill the transaction.
Why Allow Third-Party Sellers on Your Website?
A marketplace helps to extract more revenues from your website.
These are some of the benefits of eCommerce marketplace integration:
- Expand the catalog with new products or filling in gaps in your existing product offerings. This feature proved to be useful while there were shortages during the pandemic.
- Optimize your product mix. You can opt to use third-party sales data to find new product categories.
- Get more revenue from visitors by allowing sellers to advertise.
- Set up a long tail without any of the associated inventory costs by allowing the third-party sellers to offer hard-to-find items
- Create a network effect. Bring more visitors and sellers onto your platform, thus increasing both traffic to the site and the average order value.
- Become a shopping destination for the customer.
Most top eCommerce sites support third-party sellers. Amazon has taken this to another level. Here are some stats:
- In 2020 Q2, 53% of paid units on Amazon sold by third-party sellers
- 2.3 million third-party sellers worldwide
- $53.76 billion revenue in 2019. And this is just Amazon's share of the revenue from third-party sales!
Thus, marketplaces are no-brainers for eCommerce sites.
What Do You Need to Support a Marketplace?
Here are some systems and processes you will need to launch a marketplace.
- Scalable Platform: Cloud infrastructure and platforms help you scale up and down with demand. Pay per use billing and automatic scaling are critical for handling peak traffic and transactions.
- Robust Middleware Layer: This acts as a bridge across the multiple systems that will be required to integrate the external data into your system.
- Published APIs: These help the sellers to onboard themselves. You will need to allow for flexibility to use alternate approaches like FTP and data upload. Headless commerce platforms like Oracle CX Commerce or commercetools will come with a ready set of APIs that make this easier.
- Seller Management System - You can manage the seller profiles as they onboard on to your platform. You will also need to collect the seller ratings from customers and use that for determining seller ranking. This ranking can be used in your product listing logic to surface up the preferred seller listings.
Changes to the existing platform
- PIM (Product Information Management) system helps consolidate and rationalize the product catalog across your offerings and the 3rd party sellers. This rationalization is critical to offer a seamless experience for your customers. You can:
- Integrate new SKUs into existing products
- Add new products into product categories
- Add new product categories
- Pricing - Manage the price per SKU per seller
- Inventory - Manage the inventory per SKU per seller
- Product Listing Logic - You can either integrate the seller products into the product detail page (Amazon model) OR list the products from each seller separately (Etsy model). If you combine the third-party products seamlessly, you will have to publish a clear set of guidelines to prioritize the sellers. This prioritization can be based on the price, inventory, seller ratings, and other such considerations.
- Search - Index the combined product catalog across sellers. The search facets should be updated as the seller and prices change.
- Transactions - Allow a shared cart across sellers. You should calculate the taxes and fees for the entire transaction and process the payment.
- You can offer fulfillment as a service to the sellers. You need to prepare the backend systems and processes to support this.
- If the third-party fulfills the order, then the transaction has to be sent to their systems.
- Customer Service - Customers can be serviced by the marketplace or the seller. You can even offer a hybrid model with different tiers of customer service.
In short, taking advantage of eCommerce marketplace integration for your eCommerce experience brings a lot of benefits to both parties. However, it has to be done in a well-architected platform with a roadmap that will not interrupt your business while it is being developed. Interested in learning more about how to achieve this? Reach out to the team of experts at Object Edge.
And, just in case you were wondering what we did about the costume, we decided to DIY Luna Girl, given the last-minute fulfillment issues and Halloween price hikes. We’re still getting ambushed by a screaming, masked toddler, playing at supervillain: "'Try and stop me, it's a waste of time; 'Cause everything I see will be mine, mine, mine!!!"