6 Challenges To Tackle When Creating an Ecommerce Marketplace

6 Challenges To Tackle When Creating an Ecommerce Marketplace

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The way we shop today has changed a lot in the past decade. New technologies and connectivity have led us to a new age where consumers are set into “always on” mode. We search and share information as we go and make purchase decision much faster than we did before.

Customers look for frictionless shopping experience through various devices at their disposal and the promise of personalization of shopping cycle has become ever truer. We have the technology and the price for it has been improving with time.

However, although the technology provides us with new ways of solving them, the challenges we meet even today in the e-commerce industry are the same. Let’s elaborate.

Market Analysis – Product Sourcing and Placement

This is a continuous endeavor and challenge to tackle when running an ecommerce marketplace.

At any point in your ecommerce marketplace website development, you should have a steady source of products whether it comes from partnerships with retailers and manufacturers or third-party ecommerce platforms and drop shippers.

For the prelaunch of an ecommerce marketplace, you need to have a solid product base ready. You may well decide the product base based on market niche, partnerships or third party resources.

Over time, you will be working on your product inventory optimization and product base adaptation as you gather insight from your in-depth ecommerce marketplace analytics. This data can be layered in from different dimensions and sources and should give you the answer to these questions:

  • What product is in demand?
  • Why is it in demand?
  • Where should I place it and how?

The key takeaway here is that you don’t limit yourself to the same products over and over again.

Common Problems with Product Placing

Product information import and maintenance are possibly the single largest problem faced by enterprise-level ecommerce today. It’s not uncommon that retailer’s product base changes at least once every year.

When shopping in a brick-n-mortar store, the customer can see the product, feel it, ask for information right there and read its packaging.

In order to provide the same experience online for the customer, the retailer must provide at least one photo, short product description, its variants in shape, color and size and a list of product specifications.

Now, let’s imagine a perfect scenario where it takes you no more than 5 minutes to get all of this ready. If your store has a product base with over 10000 products it would take you around 800+ hours just to get your catalog up and running.

At 100000 products, you’d need three people working the full year, no holidays, eight hours straight a day. Now add the annual mix by the retailer and your head will definitely spin.

The Solution

You need to choose an enterprise level ecommerce platform that comes with its own import/export feature and an application programming interface (API). With the import/export feature, you can use an excel or csv file to upload product information to save time.

Furthermore, the API can be integrated with your PIM system and/or ERP so it can continuously feed product information right into your ecommerce platform without the need of any manual data input.

Buyer Personas – Segmentation and Development

Running a huge ecommerce marketplace requires a lot of customer segmentation and persona development. A buyer persona is a fictionalized representation of your ideal customer. It helps you tailor a better experience for the users, product placing and synchronize messaging across different channels.

Common Problems with Persona Segmentation

Customer segmentation and persona development is no simple task for an ecommerce marketplace. Having a huge product base split in a significant number of categories with additional filtering available to the user won’t ensure a profit.

Some marketplaces go beyond twenty different buyer personas, which is hard to scale, optimize and maintain. But, these are huge marketplaces with vast logistics that handle big data and are able to make predictions about customer and market behavior.

The Solution

Keep in mind that it’s always better to choose up to four buyer personas, max. Else, you may burn your marketing and acquisition budget. Use your website and ecommerce analytics to track down patterns in users’ demography, behavior, and interests.

Create audience segments based on these patterns and validate your assumptions. You can refine your segmentation with specific type surveys with targeted groups and feed this info into your CRM.

This will greatly benefit your customer engagement with those specific audience segments and will allow you to build more personalized experiences, ensuring lower bounce and cart abandonment rate.

Acquisition Channels – Choice and Optimization

It’s most often that customers engage with your marketplace via more than one marketing channel and you may no longer rely on a single acquisition channel to drive sales and conversions.

It takes from seven to thirteen touches before you turn your lead (potential customer) to “sales ready”. In his journey from first awareness of your marketed product to the point of closed sale and beyond, the customer will go through different channels on different device types.

With buyer personas defined and set, you now have an insight on audience behavior and their channel interactions. You should be able to determine channels that give most last hit interaction conversions on your ecommerce store and define the most promising ones.

You should start out with no more than two acquisition channels to optimize for because it’s easy for you to spill out your budget by creating leaky funnels.

Common Pitfalls with the Acquisition

It’s not uncommon that businesses burn their acquisition budget by investing in non-optimized funnels on various acquisition channels. This mainly happens because the decision is driven by the volume of potential traffic that can be acquired without previously confirming that the target audience is there in the first place.

And after a while, the budget invested reaches a scope when it becomes impossible to cut the losses – you came this far, you can’t stop now and lose money.

The Solution

The key takeaway here is that each acquisition channel works in correlation with others you employ but it requires individual optimization in order to market your product efficiently and effectively.

Before opting for a specific acquisition channel, you need to be at least somewhat sure that your target audience is there. Create a channel-specific marketing campaign that targets a specific customer persona, run it with a small budget and track CTR and CR via your ecommerce and website analytics.

You can further reduce customer acquisition cost and try to refine your channel testing by running several campaigns and A/B/n and multivariate tests to confirm the effect and ROI of the same.

Sales Cycle and Conversion Optimization

As already discussed, your users go through several touches before closing a sale. They engage through different channels via various device types. This creates friction in their customer journey and can cause confusion and extend their user journey.

You need to set triggers to measure interactions and visualize their behavior flow throughout the sales cycle. By setting a universal key performance indicator (KPI) on each checkpoint of the cycle, you can isolate specific paths that may cause confusion and cause them to drop-off.

If you can identify and isolate a specific part of their journey and tie it to a step, page, web element or requirement for its competition, you can make specific changes to personalize their experience. With A/B/n and multivariate testing, you can test your assumptions and tailor better experiences to ensure optimal sales cycle.

Common Problems with the Sales Cycle

Possibly the biggest problem with the sales cycle in ecommerce is the non-existing human connection with the customer at the point of making a sales decision. When shopping in brick-n-mortar stores, a customer may seek an advice from a salesman, ask for some product and/or retailer-specific question there and then that the customer may not find online or doesn’t have internet access to look it up.

This is a critical moment of making a sale and if the customer is left cold, it may take a while before he comes close to making a purchase decision again.

The Solution

You can choose from a number of customer touch points to improve user interaction such as Chatbots, ticketing systems, VOIP customer support systems, etc., that can all be merged and fed into your CRM. This will enable you to be in the ‘here and now’ with the customer and provide additional, real-time support when required.

You can never optimize with a one-size-fits-all funnel and expect that customers will land on the same starting point. By enabling additional support, you will create shortcuts to the user journey and engage your potential customers.

This opens up new potential sales funnels as you can personalize your offer and/or offer a more suitable product to the potential customer.

Keep in mind that all of the above require investment in infrastructure, technology stacks and a huge amount of testing to be implemented properly – as it is with everything that requires integration in an enterprise level ecommerce.

A simple thing as an FAQ page can provide significant results and shorten the customer’s sales cycle so you should definitely start out with that first.

Customer Retention

Your ecommerce marketplace cannot rely on the constant acquisition of new customers. Although it’s always fun to find and convert new customers, it costs far more than to retain an existing one.

You need to continuously build trust and earn loyalty with your customers and that requires a shift of focus from acquiring new customers to personalizing experiences and solving problems of your existing customer base.

There are ways in which you can calculate your customer retention and provide insight into further optimization of customer lifetime value (CLV).

Common Problems with Customer Retention

It’s not uncommon that large ecommerce has problems with retaining customers. When working with thousands of products and vast traffic, it becomes hard to scale and optimize.

A vast majority of customers are probably there for a single visit only – whether they make a purchase or not. Customer retention usually plummets because of trust issues, delays in communication or simply lack of continuous customer engagement.

It’s difficult to build trust when the only type of communication between you and them happens behind the screen, oftentimes automated. Customers enjoy assistance not only before but both during and after the sale is completed.

The Solution

The key takeaway here is that your sales cycle doesn’t end with conversion or product purchase. Your customer continues to engage with the product purchased. Not only you may engage him/her in making more purchases later on, but may as well become a future referral point or be given an opportunity to advocate your products online.

A good practice for ensuring customer retention comes from email marketing – offer mail subscriptions to your monthly or semi-monthly newsletters and engage both your existing and potential customers with new deals, discounts and updates to your product base.

Allow referral program and reward systems to build long-term relationships with customers and improve their engagement.

Partnership, Technologies, and Growth

When running a full-scale ecommerce marketplace and are aiming for growth, one of the biggest problems is predicting the future. With booming tech and promising developments in AI and NLP, markets are ever more subjected to disruption and change.

To ensure continuous growth and stable development, you need to seek out long-term partnerships with agencies that can follow through your development cycle and organization needs.

Common Problems when Aiming for Growth

We live in the age of constant acquisitions and mergers where department coherency is disrupted by poor documentation or differences in framework and methodology. In an enterprise-level ecommerce, scalability is often a problem.

Most small sized online ecommerce marketplaces don’t have a clear goal and a KPI aimed for enterprise-level growth. They battle with the ‘here and now’ and work on situational problems that emerge.

When they break the first market filter and traffic comes pouring in, tons of problems emerge. The volume of the analytics sample increases and issues that impact scalability and efficiency become visible from that point on.

In an enterprise-level ecommerce, these problems may be too expensive or nearly impossible to fix at that stage of growth. Establishing a new partnership or making a switch to a new technology stack and infrastructure will leave a significant scar on your budget and may cause distrust with your existing customer base.

101 Actionable Tips to Run an Ecommerce Marketplace

The Solution

It’s always advisable to go with a steady partnership with agencies that can cover most acquisition, sales, and development processes from the start and grow with your organization and marketplace.

So for any serious ecommerce platform to evolve, adapt and overcome in their target market, you should make a thorough research and look for a web company that will follow your web project through every stage of its development.

Just keep in mind that a portfolio won’t suffice. Many web agencies list their portfolio items even if they did a single action/campaign for the client. The best indicator of a successful web agency is their methodology and work processes – you should always look for one that has their displayed and open-sourced online.

Here you can see the ins and outs of the project and agency works displayed and decide whether or not it would be a fit for you.

Final words

The biggest challenges we see today in the ecommerce platform development don’t differ much from what we had a decade ago. However, by taking on a customer-centered approach and visualizing their shopping cycle (whilst keeping in mind that it doesn’t end with a purchase) and making a shift in focus on its retention will help you tackle any challenge you might face in your ecommerce platform development and growth.

With a well-developed methodology to analyze, isolate and solve parts of their journey while placing the customer in focus, you would be able to quickly develop, test and launch any new feature or functionality to shorten the sales cycle and ensure continuous retention and revenue growth.

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