Do you get the vendors first or do you get your customers. This is often a chicken and egg situation any online marketplace vendor struggle with when they start off. You need variety of vendors to give more choice to your customers. And vendors are reluctant if you have a small customer base.
Lets talk about the egg first . Or rather the chicken . Your buyers. Your customers.
You are not alone. Even Amazon , Etsy , Uber or AirBnB had the same problem when they started their journey as an online marketplace. They have made it. But there are many who have not. However there are lot of learnings which can be weaned from these successful market place model. And some of those learnings can be your guide as you dream to make your online market place model.
Want to know more? Read on
It is not just enough to attract new customers for your online market place. You can do so with some clever tactics of running online advertisements and giving them offers like “1st-time buyers get 25% off ……”. But that does not guarantee stickiness. You have some understanding of the basics of business you would have come across a term Long Term Value or LTV of your customers. It is not just the 1st purchase she makes but all the subsequent purchases that she will make. Plus throw in her influencing capability. She may get more buyers from her network. The other effect that you can see is a declining cost of marketing as your average cost of marketing to customers decrease. As per a study, new customers cost 5 times more to acquire than retaining an existing customer.
This nice and funny illustration from Goof clearifies just that.
And I guess it is no brainer that how it affects your profitability.
Here are some of the cues to take from the biggies and use it in your own way .
Customer 1st philosophy
Make your customer at ease
Amazon is truly a pall bearer for this. Be it user experience, or customer support or return policies it takes care of the way customers would like them too. For me it is always my 1st choice for most of my online purchase.
Especially in your initial days you would want to focus on your first 100 customers and make them rave about you. They will get you 1000 more.
Here is a nice article from Harvard business school on how Amazon, Uber, and Etsy got their first 1000 customers. Pick up the points which are relevant to you.
Make your customer understand …easily and make decisions
Not all pages are created equal. The design of a page and its copy and associated visuals determine how many will buy that product from your page than that of your competitors. Etsy has mastered it. If you go to any of their pages you will see how they describe the product and define the usage or benefits and giving you choices. Completely ‘gettable’ , nothing fuzzy. Also, the way they use their keywords in the copy pushes up their chances to get displayed on the 1st page of Google when people search for a similar product in the world’s number 1 search engine. In fact, Etsy goes one step further to guide it, vendors, with ways to improve their product listing. Read some of the guides like How to Choose Keywords for the product page or How to Shoot pictures for your product, which have enabled their vendors to be successful in their platform.
Did I also say make your platform as many vendors as friendly as possible with the above example? Plugins like WCMP also help you do that https://multivendorx.com/faq
Save your customers from fraud
For online marketplaces like EBay fraud is one of the major risks. To counter that EBay has developed “Trust and Safety Programs’ to deal with online frauds. Though you may not have a structured program like Ebay , but the least you should do is to create an actionable process to vet your vendors. For instance most of the major plugins and products like WCMP has a customisable payment method.
Make data your best friend.
Be it Amazon or Alibaba they rummage through vast amounts of data to understand the buying patterns of the customers as well as their traits. If you know that some your customers who buys decorative lamps at less than 50 dollars , also have a propensity to buy an expensive 500 dollar rug wont it be wonderful? You can target those customers with some offer and increase their LTV.
You may argue that neither you have the infrastructure or resources to do very deep analytics. But you can also do very simple analytics. For instance, if you view the WCMp dashboard it helps the vendors by helping them understand their products and product popularity. Widget like Key performance indicators can help vendors gauge their store sales and orders while a widget like visitors map would be able to let the vendor know which country is his products is popular.
Whew , if you have read till now. Congrats . I can already see ideas swarming in your brain. Here are a few more best practices and ideas that you can consider, gleaned from the successful online market places . Some of them are great in customer retention
- Promotions and Offers – you may think these are done and dusted tactics or strategy. But cross your heart, don’t you want them when you make an online purchase. Just make them good enough that your customers value it without you getting into a debilitating loss <
- Loyalty Programs: Invest in a very basic loyalty program encouraging repeat purchases and referrals. Give them points that can be encashed or run special deals for the loyalty program subscriber. It is easy to set up in the most popular multi-vendor plugin
- Form Habits: As per a study by Duke University 45% of all the choices that we make in a day are because of our habit. Online purchase and browsing included. One of the key components of habit is how easy is it for your customer to complete a purchase. For a product manager, it translates to user interface and user design. Don’t add unnecessary elements in the path to purchase. Make it simple.
- Customer Support: As per a study by American Express, 33% of customers switch to your competitor after just one instance of poor customer service. You may not have the bandwidth to do so, but you can define the process so that the support comes in a timely manner with empathy. Look at our customer support forum …you will know what I mean.
- Social Proofs: Testimonials, reviews, and social proof are sure shot ways to get new customers as well as retaining existing ones. Robert Cialdini eschews social proof as an important component for e-commerce success in his book Influence. But it does not happen unless you plan for it. And ask for it. Have a proactive plan to get your customers to talk about great things about you. Of course, here I am assuming you have a good product or service.
- Learn and Reengineer– You are not the only online marketplace in your niche. If you are then this does not apply. If are not – then why reinvent the wheel? Though in these articles we only talk about the biggies. But you can look around at your competitor and steal a few ideas. Like Amazon handmade was allegedly inspired by Etsy. This meant that Amazon can get more LTV from the or customers who might have gone to Etsy for handcrafted products. But be careful that you don’t get into a copyright infringement.
Let’s stop here. Now you have 4+6 ideas to work on. I will keep adding more either as a separate blog or a continuation. Let me hear from your challenges in customer acquisition and retention. If you have a new idea love to learn from you. If any of the above has not worked do comment below. I will definitely get back to you with my thoughts.