Marketplace - how to properly support sales on shopping platforms?

Marketplace platforms have become an important source of profit for entrepreneurs, enabling them to diversify their revenues and increase product availability. They are now responsible for a significant proportion of online sales in Poland and worldwide. However, sellers must meet the high standards of these platforms, so outsourcing logistics may prove to be a beneficial solution in this case.

Marketplace and its importance in e-commerce

The popularity of marketplaces is growing with the rise of e-commerce in Poland and worldwide. Platforms, where an unlimited number of sellers have access to an unlimited number of buyers, are an important source of profit for entrepreneurs. They can choose to sell exclusively in this way, or use the marketplace to diversify revenues and further increase the availability of its products.

Selling on these types of platforms is happening successfully all over the world. Taking into account indirect sales (exclusively by online sellers), Amazon reigns supreme, but Poland's Allegro also performs impressively, with $9 billion in 2020

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Largest platforms by gross indirect sales volume by country/region, 2020 (USD billion).

Source: GS1 Marketplaces 2022 report: e-commerce leaders [1]

For total gross turnover (combined own sales and online retailers), the world's three largest platforms (Taobao, Tmall and Amazon) claim 60% of the value of sales in 2021 [2] . The dominance of marketplace sales is therefore a fairly widespread phenomenon - so much so that in many countries it is these platforms, rather than Google, that have become the primary source of product information. For many European countries it is Amazon, while in Poland it is Allegro.

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Platforms where consumers are most likely to look for shopping inspiration. Source: iPaper & Epinion 2021, The Behaviour of Online Shoppers Survey 2021 [3]

In the neighbouring German market, out of the five listed largest online shops - the top three places are occupied by marketplace platforms:

• Amazon.de
• Otto.de
• Zalando.de
• MediaMarkt.de
• Lidl.co.uk [4]

Although Amazon leads globally, not in all countries does Jeff Bezos' platform dominate the market. An exceptionally good example of the advantage of a local solution is Allegro, which invariably maintains its leadership in its home market, fending off previous and current attempts at conquest by eBay or Shopee. In 2020, Allegro was the tenth most popular merketplace platform in the world [5] .

(...) by 2027 the share of the marketplace in total online sales could be as high as 60% .

Marketplace platforms in Poland

When asked which marketplace platforms they are or intend to be present on, Polish sellers most often indicate Allegro (83%), as well as Amazon (52%), eBay (26%), Empik (19%) and Ceneo (17%). However, it is worth remembering that consumer preferences are different and the high position of Amazon and eBay among sellers is due to their openness to cross-border sales, mainly in Western Europe. Indeed, both of these platforms enjoy moderate success in Poland.

Importantly, by the end of 2022, marketplace platforms will account for 48% of the total value of online sales in Poland [6] , with Allegro as the leader and AliExpres and Empik on the podium. New players such as Erli.pl are also doing well, although the market has also experienced spectacular falls - in the case of the Shopee platform.

There is some hope of bringing more dynamism to the current situation with the announcement of the reactivation of Wszystko.pl, this time in a new formula open to all sellers. The concept of this platform can certainly be of interest to all current and future users of Comarch products, but success should rather be seen in the value the portal should bring to buyers: security of transactions, efficient and low-cost logistics, unified payments.

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The beginning of the shopping path. From where on the web do consumers start their search for products? Source: Atena Research&Consulting 2022, "How do Poles search for and buy products online? Online shopping paths in Poland 2022"

If, even for today, the e-tailer conducts its main business outside the marketplace, considering sales and its future development in this channel seems to be a necessity in the coming years. According to forecasts prepared by the auditing corporation PWC, by 2027 marketplace share of total online sales could be as high as 60% [7] .

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Source: Report Perspectives for the development of the e-commerce market in Poland 2018-2027, Strategy& - PwC network

Why is selling on the marketplace so attractive?

The popularity of shopping on sales platforms is due to a number of aspects. Among the most important are:

• transaction security - the marketplace operator provides security for buyers through its quality policy, buyer protection programmes or support in possible disputes with sellers
• multiple offers in one place - access to a selection of new and used products, choosing according to price, available quantities or delivery times
• confidence in vendors and products - created mainly through a rating and review mechanism
• fast order processing - Sales platforms favour sellers with the fastest possible shipments and impose ever higher standards on lead times.
• low logistics costs for the end customer - Such an offer is possible mainly thanks to special programmes such as Allegro Smart or Amazon Prime

The consequence of an approach mainly focused on end-customer satisfaction is the extremely high bar set for the standards that sellers on marketplace platforms should meet if they want to stay ahead of the competition. The sellers' terms and conditions quite precisely define the requirements in many aspects of customer service and make exacting demands not only in the area of order processing, but also in communication with the customer.

(...) the high quality and operational requirements when selling on the marketplace are often the most important argument for considering entrusting logistics operations to a professional fulfilment service provider .

Commissions and fees are also not insignificant. Depending on the platform, they range from a few to as much as 20 per cent of the profit charged by the platform for a form of intermediation between client and seller. On top of the base commission, there are also fees for promotions and awards. Therefore, it can be concluded that, although the growing popularity of these platforms has, in a way, encouraged sellers to enter the marketplace model, it is unfortunately not the cheapest form of conducting sales.

In addition to recalculating potential margins and commission costs, the seller must also familiarise himself with all the terms and conditions of the sale, in particular:

• conditions for participation in special programmes - many platforms offer special promotional models (such as Allegro Smart, Amazon Prime), the inclusion of which in the offers can significantly affect the volume of sales
• principles for assessing the quality of sales - platforms also often offer the possibility of obtaining special statuses (e.g. Super Seller), which consist of both measurable parameters (number of offers, volume of sales) and seller ratings.
• delivery methods - required by both customers and the platform itself, usually a minimum of two, e.g. Courier and delivery to a Parcel Machine®.
• imposed lead times - it is not uncommon for platforms to impose pressure to ship on the day of the order or, at the latest, the next working day
• marketing communication restrictions - relate, for example, to the prohibition on adding marketing material or e-mail communication referring to the seller's webshop.
• customer communication - setting a maximum time limit for processing returns, answering buyers' questions, resolving complaints or taking a position in a dispute

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How to sell more effectively on shopping platforms?

Much of the sales standards on the marketplace depend heavily on the e-commerce logistics . An efficient warehouse allows a large number of shipments to be made on the same day. Equally important, trained and properly equipped staff ensure the quality of packaging and securing of goods for dispatch, and warehouse systems supporting picking reduce the risk of complaints due to errors in goods release.

In addition, for intermediate deliveries (e.g. to Amazon's logistics centres), additional operations are required both on the goods (labelling with Amazon codes) and on the delivery (system advising, parcel marking, delivery in time windows). Such high quality and operational requirements when selling on a marketplace are often the most important argument for considering entrusting logistics operations to a professional delivery usług fulfillment .

Fulfillment is a huge support for the marketplace

For shops with a high percentage of sales on the marketplace, outsourcing logistics allows them to maximise the metrics required by these platforms . The professional 3PL service provider - how InPost Fulfillment - guarantees full, systematic product identification, which minimises errors and complaints. Such an operator also ensures appropriate standards for safe and economical packaging of shipments, high scalability of operations and późny cut-off time . At InPost, orders placed on any given day even by 8 p.m. leave the warehouse the same day, significantly increasing the marketplace's required fast shipping rates .

Much of the sales standards on the marketplace depend heavily on e-commerce logistics .

Using the services of InPost Fulfillment , the e-tailer also has access to attractive rates for last mile services: "must have" of Polish e-commerce, i.e. Paczkomat® InPost and InPost Courier. For those who aim to sell effectively on Amazon, InPost's Analysis Department may also prove to be an invaluable support, which supports its customers both in the area of product selection and offer preparation along with entry price strategies, as well as in the subsequent analysis of sales and profitability of operations.

Selling on a marketplace is a demanding process, quite expensive, but at the same time indispensable as part of the presence of product brands and sellers on the e-commerce marketplace. It is worth shifting some of these requirements onto the shoulders of specialists. Logistics is an area that causes operational and cost problems for many sellers, and ceding logistics operations to a fulfilment operator will help mitigate operational risks and optimise cost risks by converting logistics fixed costs into variable costs.