If, like numerous other retailers and brands, you are looking at online marketplaces as a good way to grow your online sales but don’t know how to go about it, this article’s for you.
But, rather than talk about the channels themselves and the massive opportunities they represent (59% of e-commerce sales come from marketplaces), I’m going to talk about infrastructure. What systems do you need? What’s the best way to connect them? How much is my business going to be disrupted? I know, it sounds quite dry so I’ll throw in a few Amazon jokes along the way to check you’re still awake.
WHAT IS A MARKETPLACE?
In our world, a marketplace is an online sales channel where the transaction takes place on a third party site. If you list products on Google Shopping, the buyer is directed to the seller’s website to make the purchase. This is not a marketplace. On eBay, OnBuy and Fruugo, the sale is already completed before the seller even knows about it. All the payment processing is handled for you, as is the customer acquisition. This is how we define a marketplace.
This simple fact has all kinds of ramifications: you need to format your product data to match the requirements of each channel; you need to be able to receive completed order information and pass it onto your warehouse to fulfil; and you need to be able to confirm back to the marketplace/buyer that an item has been shipped and send a tracking number.
Fig. 1: Middleware integration diagram
Every sales channel, whether it’s a marketplace, comparison shopping site or affiliate network, requires you to send your data in a pre-determined structure: eBay’s titles can be no longer than 80 characters long, Amazon requires a barcode to create new listings, Fruugo want prices excluding VAT. For every site you go on you will need to completely reformat your product data supplying the right category and attribute values.
Businesses tend to solve this problem in different ways.
Option 1 – Throw people at it: The most common solution is to dump your data into a spreadsheet and get someone to go through line by line adjusting the values for every product. Assuming the person in question knows what they are doing, this approach can produce the best results but it is slow, inaccurate and expensive.
It does depend on the size of inventory, if you’ve only got 20 products, creating elaborate descriptions and well-structured titles is more feasible than if you add 200 new products a week.
Option 2 – Ask your IT team to convert your data: coders can create rules to automatically transform your data – turn Charcoal into Black or a size 9 shoe into a European size 42. This type of mapping works well for simple transformations like these but tends to write horrible copy.
In most companies that I’ve worked with, getting time from the IT team is like getting help from Amazon Seller Support – almost impossible. And, even if you do manage to get enough time to generate the right data, the chance are that the requirements will then change and you will need to call on them again to update their mappings.
Option 3 – Use a Data mapping tool: a handful of listing tools like ChannelAdvisor or Intelligent Reach include Business Rule functionality where you can create your data mapping without the need for any coding skills. You may still want to write your titles and descriptions by hand by you can save considerable costs by automating the lion’s share of the work.
There is still a considerable time investment required as you need to learn the requirements of each marketplace, learn how the listing tool works and spend time constructing the rules you want, which needs to be done afresh every time you add a new channel.
Listing platforms with this kind of functionality are almost universally expensive and require long contracts. Fine if you’re an enterprise business but not, perhaps, if you’re a small independent where a large, up-front investment is not an option. There are a handful of data mapping tools like Listabl, that, when combined with a cheaper listing tool can provide that data automation at a fraction of the cost.
Option 4 – Managed Services: agencies that specialise in listing optimisation and channel management are becoming more prevalent. Some like Feedonomics and Listabl have their own technology meaning costs can be kept to a minimum.
This combination of technology and human oversight is ideal. Expensive human intervention is reserved for where it really matters like constructing high performing titles or quality images that attract buyers.
Before we look at your order flow, I promised you some jokes: Why do they bury Amazon Support Staff 20 feet deep after they die? Because deep down they’re really nice people.
Ok, there are a fair few things to consider when it comes to managing orders.
If you are already managing web orders you will likely have a warehouse which has a terminal in it for printing picklists. Perhaps there’s another one the pack bench for printing shipping labels and manifests. Regardless of the set up, you will most likely want your new Marketplace orders to follow the same procedure.
At this point, I think it may be helpful to introduce an imaginary seller for illustrative purposes. Superfly Menswear have been trading through their Shopify website for 2 years and are now looking at adding marketplaces to their sales mix.
From a systems perspective, this is what their infrastructure looks like:
Fig. 2: Superfly existing order flow
Your work isn’t done once the parcel is with the courier. Customers want to know that their shiny new thing is on its way and, depending on the service you use, many couriers are able to provide up to the minute tracking information so you know exactly where the parcel is.
Superfly Menswear have integrated this tracking information with their warehouse management system (WMS) which, in turn sends that information to the website which handles the communications with the customer.
Ok, but now they want to add eBay to the mix. Let’s take a look at what this does to their systems:
Fig. 3: Superfly order flow adding eBay
In this scenario, the listings are being created using the data already stored in the website. This is not trivial as the data needs to be adjusted to fit eBay’s requirements. Perhaps their titles are simply the product name and the type – SuperStretch Skinny Jeans for example. This is a horrible eBay title and will pretty much guarantee no sales so, somewhere along the line, Superfly will need to create a new title for eBay and store it somewhere.
Then there is the Order data. eBay order details need to be captured and stored by the website and sent with the website’s own order data to the warehouse for dispatch. You will typically want these eBay orders to be treated in the same way as your website orders but will want your warehouse to be able to differentiate an eBay order from a website order (more on that later).
Tracking information can follow the same path back until it reaches the website when tracking information for eBay orders goes one way and website orders another.
On the face of it, this integration work is not immensely difficult but many businesses lack the expertise and it does come at a cost and there are a number of things that can catch you out. We’ve already mentioned the challenge of getting your listing data in the right format but here are some other examples that we’ve seen:
- Amazon order numbers are 20 characters long but the website platform or WMS system can’t accept numbers longer than 10 characters so the whole structure of the website database needed to be changed.
- Amazon doesn’t allow sellers to put flyers in boxes that might lure customers to buy from someone else. So, when you run a 10% off promotion which you are including in all deliveries, your team will need a way to exclude Amazon orders from that process.
- You want to use a premium delivery option for Amazon orders to improve your performance metrics but a standard service on everything else. Again, this communication needs to make its way up and down the chain.
HOW SYSTEMS COMMUNICATE
We haven’t had a joke in a while so here’s another one: What do Amazon support staff and UFOs have in common? You hear about them but you never actually see one.
We should briefly talk about the way in which the systems talk to each other. In simple terms there are two ways that systems communicate: flat files (spreadsheets, csv files, text files etc.) and API calls.
When we talk about product data, flat files tend to include everything and, if you want to automate the sending and receiving, are sent using FTP or similar technology (known as a feed). This process is relatively slow and depending on the size of the file, can take a while to process but many website platforms enable users to set up a feed with little technical knowledge.
API (Application Programming Interface) calls generally require technical expertise to set up but are more robust and are typically used to send smaller packets of data. When people talk about systems talking in real-time, they are usually talking about API calls.
So, when you’re integrating systems, you need to decide how you want your systems to talk. I tend to recommend a hybrid approach: flat files are better for general product data because you need to be able to get into them and make changes – adding an eBay category or an Amazon attribute and, you lose little if you only send an update once a day; API calls are better for updating stock quantities – if you sell the last unit of something on your website and also have it listed on Amazon, you need to tell Amazon quickly that the item is no longer available before it can also sell the same item. We refer to this as overselling and it’s a great way to trash your marketplace sales.
OK, so now Superfly want to add Amazon to their channel mix:
Fig. 4: Superfly order flow adding eBay & Amazon
Assuming we’re not taking shortcuts, each time we add a new channel, we need to: set up a new feed; learn a new set of marketplace rules and features; transform our product data afresh; build new API connections; update our processes etc. All the while, our Customer Service team has more and more complexity in their routines. We also have an increased maintenance debt as we now have 3 channels requiring upkeep.
All of the above is usually worthwhile if you are talking about Amazon and eBay where the sales are significant enough to merit the effort but, what if you want to sell on Coolshop or VidaXL? No offence intended towards these marketplaces but the reality is that, while the work required to integrate them (and therefore the cost) is the same, the return is likely to be considerably less.
This is where listing tools like Linnworks and ChannelAdvisor come in. They already integrate with the Marketplaces: creating listings and unifying orders. This enables sellers to build one set of connections instead of multiple.
So, instead of this:
Fig. 5: Superfly order flow adding multiple marketplaces
You have this:
Fig. 6: Superfly order flow adding multiple marketplaces using middleware
Clearly, your approach will depend on your aspirations. If you only want to sell on Amazon, shelling out a monthly fee on a listing tool might be unnecessary. Similarly, if you want to sell overseas, you need to consider translations, logistics, tax and a number of other factors so it’s a good idea to define your goals at the outset because this way, you can tailor your set up to match.