How to win at e-commerce product Pricing- Part 1
It’s not easy to set up your eCommerce product Pricing. If you overprice your things, people will leave your business and go to one of your competitors. On the other hand, if you price your goods too low, you may not be able to sustain your firm. Not to mention the possibility that customers will believe your product is of poor quality, which is not ideal!
It’s all about striking the perfect balance between the two outcomes when it comes to pricing your products, but that’s easier said than done.
Fortunately for you, there are a few things you can do to try to discover your ideal price, and we’ll go through them all in this blog post.
Are you eager to learn more about eCommerce Product Pricing? Great. Let’s get started with how to win at your eCommerce product Pricing – part 1!
Understanding Your Target Market for your eCommerce product pricing
You must examine how much clients are willing to spend before you set your eCommerce product Pricing. This entails conducting market research and product keyword research. By the end, you should have a better idea of how much your buyers are prepared to pay for your goods.
So, first and foremost, go to your competitors’ online businesses and use their e-commerce product Pricing as a starting point. You can either match or over/undercut these costs now that you have this knowledge.
When analyzing competitors, you should strive to create accurate like-for-like comparisons between their price and yours. This entails comparing your net costs to theirs, rather than merely the price of the products on their website. This information can be discovered (or at least estimated) by looking through published data and public sources such as industry whitepapers, corporation records, financial reports, and so on.
You can also do the following to gather more market research:
- Send out informal surveys to your audience via email by providing hypothetical product descriptions and asking what price range they would be willing to pay for them.
- Keep up to date with industry news regarding trends in consumer shopping habits, consumer buying preferences, and industry innovations.
- Hire a third-party consulting firm to gather market research data on your behalf.
In addition to all the above, you could also break down your customers into smaller groups and analyze them. Are they cost-conscious? Are they after something of exceptional quality? Does status make a difference to them?
You can use this information to guide your product pricing strategy once you have a better understanding of which category the majority of your customers fall into.
It’s Not Just your eCommerce product pricing That Matters—It’s Your ability to be discoverable.
You read that correctly.
Sales are not driven solely by the price of your products. Instead, your ability to drive traffic and market yourself as a brand is what drives sales. This entails developing and implementing a sales strategy. So, if you don’t already have one, you should get one.
Invest time in learning how to effectively market yourself online. Split test your strategies and keep an eye on what works best with your target audience. This is just as important as correctly pricing your products!
Pick the Best Ecommerce Product Pricing Technique for Your Business
There are numerous eCommerce product Pricing techniques available, so be sure to investigate them all and select the best one for your company. However, we must emphasize that there is no one-size-fits-all formula that applies to all products and markets.
Here are a few pricing models for products that you could use.
THE COST-PLUS E-COMMERCE PRODUCT PRICING MODEL
The cost-plus eCommerce product Pricing model necessitates that you add a percentage markup to your breakeven costs (which are your direct product material costs, labor costs, overhead costs for the business, etc.).
This percentage varies depending on the products you sell, your niche, and your business model. As a result, you’ll need to rely on your experience as well as industry norms to determine an appropriate markup for your products.
However, you should be aware that the cost-plus pricing model has limitations. Its main disadvantage is that it assumes you will sell all of your units. As a result, if you do not sell all of your merchandise, your profit will be lower than you calculated.
THE VALUE-BASED E-COMMERCE PRODUCT PRICING MODEL
This model functions similarly, but your profit margin is determined by the value customers place on your products. So, in order to use this eCommerce product Pricing model, you must first understand your market’s perception of the value of your products.
Consumers judge the worth of a product based on a variety of factors such as availability, exclusivity, quality, performance, innovativeness, added value to their lives, and so on. These are just a few examples; consider what your target audience values and how your products measure up to their expectations.
So, while a cost-plus product pricing model may suggest that you price your products at a 20% profit margin if you know that your target market would pay a price that earns you a 35% profit margin because of the value it provides, you could price your products value-based rather than cost-plus.
To begin, if you choose this product pricing model, you should compare your products to those of your competitors to see what consumers are willing to pay for what is already on the market.
Why Bother Calculating your eCommerce Breakeven Analysis?
The main reason for conducting a breakeven analysis is to determine how long it will take to turn a profit. This calculation can also be used to calculate profit and loss over different time periods. As a result, you’ll have a better understanding of how changing your product price affects your profit.
Furthermore, breakeven analysis is an excellent figure to show investors. You can easily use and display this data to demonstrate how profitable your company is (or will be).
How Do I Calculate My eCommerce Breakeven Point?
There’s a simple formula you can use to find out your breakeven point. It is:
Profit = P(X) – VC(X) – TFC
- P is your selling price (what you charge your customers)
- X is the number of units you’ve sold
- VC stands for variable costs
- TFC stands for total fixed cost
Whereas, to calculate your Contribution Margin (the incremental profit generated when you sell an additional unit beyond the breakeven point), use the following formula::
Contribution Margin = P(X) – VC(X)
Accurately Working Out Your eCommerce store Costs
By accurately calculating your costs, we mean taking into account all of the expenses you incur to get your product to market. This includes the following:
- Direct Payments: This is a type of variable cost. It is the money you have invested in developing your product (s).
- Variable costs: These expenses will rise as you sell more products. Materials, packaging, marketing, and so on.
- Fixed costs: are overheads that remain constant regardless of how many sales you make. Domain Name, utilities, hosting, and so on.
Let’s take a closer look at these three different costs:
DIRECT PAYMENTS
When you order your products from a wholesaler or a dropshipping company, calculating the cost of each unit is much easier. It’s simply the cost of each product from your supplier!
However, if you want to make your own products, you’ll need to do more research. For example, how much does it cost to buy all of the materials needed to make one unit? This is in addition to the time you spend developing your product.
Your time is priceless. Period. Always keep this in mind when calculating your direct payments.
Are you unsure how to calculate the worth of your time? First, decide how much you want to earn per hour, then divide that figure by the number of products you can produce per hour.
FIXED COSTS
As previously stated, fixed costs are expenses that remain constant regardless of what or how much you sell. It’s tempting to push this figure to the side and try to forget about it but don’t.
You must set a goal of covering these expenses through sales, which, as previously stated, requires conducting a breakeven analysis.
Your fixed costs do not include inventory. However, it does cover all of your one-time start-up costs as well as your monthly fixed expenses. As an example:
- Your company’s registration
- Your web domain name
- Your logos and images (if you’re hiring a graphic designer)
- Your copywriting and content creation (again, if you outsource these tasks)
- Your website theme (if you choose a premium theme)
- Costs of advertising and selling
- Any website apps and plugins that are paid for
- Any business software that you use to help manage and automate your operations
- Any costs associated with borrowing money, such as business loans, should be considered.
- Your paycheck
- Capital for future growth
Other examples of fixed costs exist, but you get the idea.
My best advice is to make a spreadsheet that includes all of your monthly expenses. This ensures that you account for all of your fixed costs.
VARIABLE COSTS
Again, as previously stated, your variable costs include:
- The product cost
- Your inventory
- Your delivery
- Delivery from your supplier to you
If you are not drop-shipping your products, you will need to have your suppliers or wholesalers ship them to you or a third-party fulfillment company that you have hired.
In either case, you must consider the cost of having your inventory shipped to the correct location. You must contact your supplier directly to determine your shipping cost per unit.
Other variable costs to be aware of are:
Import Duty Tax: If you want to reach a global audience, you’ll need to be aware of the import duty tax that comes with shipping internationally. Don’t worry if you’re not sure what that is! You can use a duty calculator to help you figure out these numbers.
Credit Card Fees: Depending on the payment gateway you choose, you may be charged credit card fees. These are typically around 3 – 3.6 percent plus $0.30, but as previously stated, this is dependent on your credit card processor, so check their rates and factor those figures into your variable costs.
Don’t Forget to Consider Other Factors that will affect your e-commerce product pricing
Don’t make the mistake of overlooking other factors that influence your profit margin. As an example:
- VAT (Value Added Tax)
- Differences in consumer trends and disposable income exist across regions.
Whether you need available cash flow in case some of your customers pay late, or in increments (if applicable to your type of business), all of the above factors must be considered to ensure healthy cash flow
Be Prepared to Make a Change
Remember that your eCommerce product Pricing isn’t set in stone; you can change your mind and try something new. Just because you launch a product at a certain price doesn’t mean you have to keep it at that price indefinitely. Your prices, like the majority of other aspects of your business, will evolve.
So, be open to changing your product prices; there are a number of factors that could affect the price of your merchandise. For example, changes in:
- Your expenditures
- Demand from customers
- Your competitors’ success
This entails keeping a close eye on your expenses and thoroughly understanding your customers’ purchasing habits. This greatly aids you in staying on top of your pricing game.
Decide on a Profit Margin for your e-commerce product pricing
Remember those variable costs we mentioned earlier? Go figure out that figure. This total is critical for incorporating profit into your eCommerce product Pricing.
There are two factors to consider when determining how much profit margin you want to make:
It is not only your variable costs that must be covered. You must also make enough sales to cover your fixed expenses.
You want to make sure that your product price still reflects the going market rate after you’ve added your profit margin to your expenses.
These two factors will help you decide on the percentage of profit you want to make.
Product Profit Margin = (Selling Price – Product Cost) /Selling Price
It is entirely up to you how much profit you make on each unit sold. However, keep in mind that the price of your products is what keeps your business afloat. It goes without saying that growing and scaling your business will be difficult if you are losing money or barely breaking even.
When to Raise or Lower Your eCommerce product pricing
As previously stated, you must constantly test new prices, promotions, and product bundles. This is the only way to determine the best price for your products. However, whenever you change your pricing, make sure to track and record your sales. This is the only way to determine which price yields the highest conversion rate.
If you raise your prices too far, you’ll know you’ve gone too far when your customers stop buying from you, and they’ll stop buying from you fast.
Keep an eye on the competition as well. If you notice that they’ve begun charging more for similar products to yours, there’s a good chance that your increased price will be in line with industry norms.
Whatever you do, don’t raise your product prices overnight. This may turn off potential customers and keep them from returning to your store. Instead of implementing a sudden increase, create a gradual plan. This should take a year or two years. This method is far less likely to turn off customers.
Alternatively, if you believe you have overpriced your merchandise for your ideal demographic, you may need to lower your prices. If this has happened to you, try running a discounted promotion to see if it affects your conversion rates. Alternatively, consider providing a free giveaway to customers in order to get them to try your product.
Ready to Start Pricing Your Products?
LISTEN TO YOUR CLIENTS
By listening to your customers, we mean soliciting and analyzing customer feedback on your pricing. This not only gives you a better understanding of the current state of your pricing but also helps you build a stronger relationship with your existing customers. After all, everyone wants to believe that their voice is being heard.
BUDGETING IS ESSENTIAL.
Budget your business expenses a few months ahead of time so that you can tailor your pricing plan to your specific needs. Examine your sales data to get an idea of how many products you’ll sell in a given time frame.
This will also give you a good idea of what is already profitable. Spend some time analyzing the profitability of your current products. This way, you’ll know what you should do more of (sourcing similar products and marketing them the same way). More importantly, you can stop selling items that aren’t converting and are costing you money.
If your prices are too high and customers aren’t biting, you may need to consider sourcing a similar product for a lower price elsewhere (without compromising on quality). This may require some trial and error, but it may be worthwhile in the end.
I hope that after reading this article, you have a better understanding of how to price your products. The main takeaway from this article is to price your products carefully in order to build a long-term business. It really is that simple! After you’ve mastered that, make sure to keep monitoring, analyzing, and tweaking your product pricing strategy to ensure you’ve fully optimized the cost of your products.
E-commerce Searchandising – 3 steps to success in search
The phrase “searchandising” is a relatively new one, coined to coincide with the rapid advancement of eCommerce search solutions. This article explains what advanced search merchandising is, why it’s important, and how to make more money with it.
Consider owning a brick-and-mortar retail store for a moment. You’ve got some lingering inventory that has to be moved soon, and you’re not afraid to slap on some discounts and make the things more visible to customers right when they walk in.
This is referred to as merchandising in the retail industry.
Every time we go shopping, we’re surrounded by merchandising. We are enticed to spend by beautiful displays and vibrant, colorful sales announcements. Is it possible to apply the same approach to internet use?
Many elements of the traditional buying experience are replicated on eCommerce websites. They frequently employ eye-catching image carousels or huge call-to-action buttons to promote sales. Those banners and buttons, on the other hand, are useless when it comes to browsing a website for a certain product. Search merchandising (searchandizing) on the other hand, can.
What Is Search Merchandising (Searchandising)?
Search merchandising refers to the ability to customize the search results on your eCommerce site to meet the parameters you specify. Not only can you ensure that the results are relevant, but you can also ensure that they highlight the things you want people to see and act on, such as trending products, seasonal items, related products with better profit margins, and so on, by employing clever searchandizing tactics.
Searchandising is the result of combining search and merchandising.
OR
Searchandising is a relatively new phrase that combines the notions of on-site search and product merchandising. It isn’t yet a widely accepted concept among retail experts. Fundamentally, searchandising entails combining traditional search techniques – such as faceted search and navigation, autocomplete, recommended products, recent searches, related queries, and so on – with behavioral data and automation to create seamless, personalized, unique, and highly profitable product search experiences.
At its most basic level, it entails manually establishing boost-and-bury rules depending on margin, arrival data, stock availability, or some other factor. Does this ring a bell? The vast majority of retailers reside in this area.
In addition to the boost-and-bury criteria, it includes behavior data and employs sophisticated machine learning algorithms to intelligently categorize products based on relevancy, popularity, and personal taste.
Why Is e-commerce Searchandising Important?
Nowadays, almost no retailer can deny the necessity of a well-designed and well-optimized eCommerce site search solution. Users demand natural buying experiences, and one of the primary success elements in eCommerce is presenting them with appropriate results. But there’s a difference between providing people with only relevant results and providing them with relevant results that you want them to buy.
How Does Search Merchandising Work?
Online merchants may merchandise their search results to favor trendy products, seasonal things, and products with larger profit margins — while still remaining relevant — just like traditional retailers do to sell stock or highlight sales.
For each shop, there is no “one size fits all” approach, which is why it is essential to work with your site search provider to customize your results so that they may be customized according to the criteria you specify. Your eCommerce search, like many other aspects of running an online business, isn’t set up with a “one and done” technique. As the system learns from your and others’ input, it must be monitored and adjusted.
It’s advisable to contact your search platform provider with a merchandising strategy in mind. You may determine which algorithms make the most sense from a commercial standpoint by working together. Seasonality, patterns, and other considerations should all be factored into your search merchandising approach. Then you’ll be able to import these unique algorithms into your site search while keeping an eye on the results and making adjustments as needed.
Automated Searchanding = Self-Optimised Search Merchandising
Automated Searchanding refers to the transition from manual, labor-intensive on-site search merchandising to a fully automated approach. Real-time ranking and re-ranking of search results (and category listings) to reflect new information, such as:
The relationship between products and their similarities: this leads to more relevant results that are automatically generated. Related Searches
- New items, campaigns, stockouts, and other business rules and logic
- Data from CRM (past purchases, user profile info, etc.)
- Clicks, add-to-cart, and purchase information
- Synonyms and new words
Three Steps To Execute Advanced eCommerce Searchandising Process:
- Knowing the business’s general functions and aims can help you better align your search results with the key indicators that matter most to you.
- Defining ranking/merchandising variables – When conducting a search, specific results come into play. The number of sales in a given time, product availability, profit margin, click-through rate, discount %, seasonality, product release date, item stock, and so on are all common data points integrated into the algorithms.
- Implementing relevant algorithms and tracking performance — Once the appropriate algorithms have been created, it’s time to integrate them into the system and track their performance, looking for places where they may be improved.
Search vs. search and discovery: what’s the difference?
Customers use e-commerce search when they know exactly what they want—for example, a “denim distressed low cut jeans in Trinidad”—and the e-commerce search engine Or google finds it, or at least tries to find it.
When e-commerce was first being started, this connection worked well. On any particular e-commerce site, there weren’t many goods to choose from, and the experiences were mainly transactional: either your desired purchase was there or it wasn’t. However, as the amount of data and the number of products available online increased tremendously, e-commerce search became more complex for businesses to master and more tedious for customers to traverse.
The Process of Effective Ecommerce Searchandising
In searchandising, there are three key golden guidelines.
- Understand the fundamental priorities and objectives of your company. This will assist you in deciding between the several search engine marketing tactics accessible – many of which we discuss in this article – and their potential benefits for your company.
- Prepare your key performance indicators (KPIs). You should know what metrics you want to use to measure your success or failure, just like you should know what metrics you want to use to measure your success or failure with any other business decision. Click-through rate, conversion rate, and average order value are all factors to consider when using searchandising. However, knowing your profit margins, inventory, and availability will help you better define which products and offers to highlight.
- Implement, keep a tight eye on it, monitor it, and fine-tune it. Keep an eye on how the rules you’ve set are working out, and fine-tune your strategy as you go. Include searchandising analytics and decisions in your regular meetings and brainstorming sessions, and set aside time to switch things up.
Summary
Search engine optimization isn’t difficult if you know what you’re doing and why you’re doing it.
If you’re seeking search engine optimization tactics that help boost your conversion rates, these are the major takeaways from this article:
- Personalize: Pay attention not only to your users’ geography and demographics but also to their past and activity. Give them what they desire, and focus their attention in a way that is beneficial to them.
- Use Search Rules instead of relying on the algorithm to make decisions for you. You have a company strategy, financial flow, inventory to consider, marketing campaigns planned, and upcoming holidays to consider. Make your own guidelines based on these, then modify the outcomes just enough to get the most out of your services.
- Product Recommendations: Don’t be afraid to propose similar or discounted items. Put them in bundles or packages if necessary, but remember that while you don’t want to be bothersome, you must be a salesperson. Define what to recommend and when to promote it to your consumers.
- Run Search Campaigns: In addition to your regular sales and marketing campaigns, think of new ways to upsell or cross-sell directly on your search result pages.
- Track Data & Measure Outcomes: After you’ve established the rules, start observing how they’re being implemented. If they don’t work, try another. Always make judgments based on the data on your dashboards, not on your gut feelings. Decisions based on data are the ones that will help you scale your company.
10 ecommerce checkout best practices
The money is in your online checkout process. Consider that for a moment. Before entering the checkout funnel, random visitors exit the site. Buyers that are eager to complete their order come here.
Any tiny change to your checkout UX has a direct influence on the amount of money your business makes.
“How do we get more customers to walk through our checkout flow and finish purchases?” is the question. The strategies you use will vary depending on your site, but the concepts for determining the answer are constant. In this article 10 e-commerce checkout best practices Ocey Phillips will guide you to having a better e-commerce website.
What Is An Ecommerce Checkout Flow?
The process of purchasing things from a shopping cart is known as the e-commerce checkout flow. An online consumer will seek to finalize their purchase after adding an item to their digital cart. The user must input details such as delivery options, make a payment, fill out a form, and sign in or register for a guest checkout to get to the end. These steps make up your checkout flow.
These steps in your checkout flow, on the other hand, must be optimized for user experience. For example, some people may choose to utilize a specific payment method or maybe in a hurry and unable to sign up for your website, in which case a guest checkout can be useful. Your checkout flow is the sequence of events that occur during a customer’s purchasing process.
You’ll convert your customers using our e-commerce checkout flow. Buyers with intent will proceed to your checkout flow to complete their purchase; however, if it is not optimized, they may abandon it. Any tiny design flaw can result in a big loss of profits, yet small design enhancements, such as CTA buttons, can improve user experience and increase online sales.
Why e-commerce checkout matters
The e-commerce checkout process is the last step in a customer’s digital journey. This is the point at which consumers must decide whether to complete the purchase or depart, which is why they frequently question if it is worthwhile to spend the money. When it comes to online purchasing, any annoyance or distraction can cause people to second-guess their decision and walk away. The lack of return guarantees, unexpectedly large shipping costs, and a lengthy checkout process are among the most common reasons for checkout abandonment.
What e-commerce checkout abandonment is and why it matters to you
Developing a fantastic customer experience to boost your conversion rate is the key to creating the greatest e-commerce checkout for customers. Focus on lowering your checkout abandonment rate for the best outcomes, as consumers who leave have a big influence on your bottom line.
When customers abandon the payment process after it has begun, this is known as checkout abandonment. These consumers represent a loss of revenue for your company because you spent money on marketing, operations, and development to get them to this point. It’s always a good idea to work on lowering your checkout abandonment rate.
To figure out where clients are leaving your sales funnel, understand the difference between checkout and cart abandonment.
You’ll be able to recognize why clients are departing once you’ve grasped this.
Why customers abandon the e-commerce checkout process
The truth is that people quit checkout for a variety of reasons. It differs by industry, audience, and even from one consumer to the next. Customers, on the other hand, have a variety of reasons for not paying.
Here are some examples to get you thinking about why clients might leave:
- Additional fees (taxes, shipping costs, etc.) applied at the moment of payment dissuade customers and cause them to second-guess the purchase’s value.
- Forced account creation: requiring users to create an account in order to advance places a barrier in their way. This slows them down and, in some cases, prevents them from purchasing.
- Complex processes Convenience is the name of the game when it comes to internet buying. It’s a complicated, time-consuming process. Provide a quick checkout experience to clients to lessen the chances of them abandoning their purchase.
- Shipping options and methods are limited: The eCommerce experience is incomplete without delivery. Customers desire a variety of shipping methods and delivery alternatives that are tailored to their needs.
- Concerns about safety: Customers expect the system to be secure whenever they enter billing, shipping, or personal information. When feasible, display security badges and provide clients with a safe shopping experience.
- Lack of payment options: Customers like to pay in their preferred manner whenever possible. They may not be able to finalize the transaction if one is not accessible.
- Errors and performance issues: Customers want a smooth, quick experience. Small difficulties are acceptable, but persistent website or app performance issues, such as delayed checkout load times and crashes, will drive customers away.
What are the standard e-commerce checkout process steps?
On an e-commerce store, the checkout process is a set of actions that a consumer takes to purchase the items in their shopping basket. This comprises each step a consumer takes to complete the checkout process. A smooth, frictionless user experience is what an ideal checkout sequence will provide.
A customer’s normal checkout procedure is as follows:
billing information > shipping information > shipment method > order preview > payment > confirmation
Because you’ll download what you’ve purchased, you won’t need to provide delivery information or a shipment method for digital products and goods. Physical products will necessitate the insertion of shipping information and procedures. You may need to optimize the checkout process depending on the store.
Whether it’s a single-page checkout, a multi-page checkout, or a more intricate checkout process, all checkouts follow the same basic processes. The 7 important processes in any online checkout are listed below:
1. Begin the checkout process.
When a consumer leaves their shopping cart to proceed to checkout, checkout begins. A call to action button, usually labeled “Checkout,” “Buy Now,” or something similar is used to do this. Once a consumer has chosen this option, they will proceed to the checkout process.
2. Login or register (optional)
Allow the customer to check out without having to create an account. Enforcing account creation functions as a roadblock in the checkout process, deterring customers from making a purchase. If users are returning customers, provide them the option to log in.
3. Information regarding billing
Choosing a payment option and inputting billing information are both required steps in every checkout. Billing details should be one of the last phases of the checkout process, and form fields should be intuitively constructed to fit all essential billing information.
4. Information regarding shipping
Getting products delivered to your door is one of the most appealing aspects of eCommerce. Collect shipping information using a simplified set of form fields, if possible. Create a checkbox with the pre-checked option “Shipping address same as billing address.”
5. Shipping & Delivery methods
It’s a good idea to request the shipping method when buyers provide their shipping information. Collecting these bits of information together will make it easier for your customer. Provide as much diversity in shipping ways as possible so that customers can select the delivery mode that suits them best.
6. Check out the order in advance
Many checkouts allow customers to preview their order once they’ve filled out their information. Display as much relevant data as possible, such as order subtotals, taxes, delivery fees, and final cost.
You should also add product information like quantity, item name, and a brief description. Make information available to the customer for reference throughout the checkout process if at all possible.
7. Verification of payment
The final step on the ‘preview order’ screen is usually to confirm the transaction and complete the payment. Because it completes the deal, this call to action should be conspicuous. This is the end of your funnel, and you should take advantage of consumers who have made it this far to close the deal.
Why you’re losing sales & people are ditching your e-commerce checkout flow
Customers quit checkout for a variety of reasons, many of which are shared by all e-commerce sites. Some will be more relevant to you and your company than others, and some will have less of an influence.
- Extra additional charges – Unexpected or unexpected prices introduced at the moment of checkout nearly always dissuade customers, or at the very least force them to second-guess their decision.
- Forced account creation – Forcing customers to create an account or register with their store adds additional steps to the checkout process, and in certain situations, turns away a potential visitor or one-time customer.
- Non-inclusive shipping options and pricing — Customers who arrive at the checkout only to discover that their desired shipment method is unavailable or too expensive may change their minds and abandon their order.
- Overly complicated checkout – Customers want a quick checkout experience, and they frequently shop online for convenience. Customers expect ease, speed, and convenience from online transactions, and an overly convoluted checkout experience fails to provide.
- Errors and crashes – While minor hiccups are to be expected, major performance issues, errors, and crashes cause people to lose faith in your service and seek one that offers a better user experience and interface.
- Security and protection – Any e-commerce platform must have a safe and secure checkout process.
- Performance and load times – Your service’s overall performance has a huge impact on whether or not people trust your e-commerce business. It’s critical to keep your checkout pages’ load speeds short and quick in order to retain customers interested in making purchases on your platform.
- Inadequate payment alternatives — One of the most common reasons customers abandon checkout is a lack of payment options. Customers want to pay with their preferred way, yet they may only be able to pay with particular methods in some instances. Your conversions will be lower if you have fewer selections accessible.
Best practices to nail the ecommerce checkout flow Design
It’s a big difference between understanding why customers abandon checkout and preventing them from doing so. To effectively develop a checkout flow that targets — and solves — these challenges, you must first understand the causes of abandonment. This will allow you to work toward checkout optimization.
I’ve divided these best practices into three categories to help you tackle the problems straight on:
- Streamlining the checkout procedure
- Inventing new techniques to entice shoppers
- How do you keep consumers from departing at the last minute?
How to make the checkout process faster
Online buyers want a quick, easy, and seamless experience that saves them time and effort. Customers must be able to check out quickly and efficiently in order for this to be achievable. This includes the time it takes for a page to load, the number of steps it takes, and how difficult it is to navigate the sites on a mobile device.
Here are some tips for speeding up your checkout process:
1. Simplify, simplify, and simplify some more
Customers seeking an online purchasing experience want it to be simple and convenient. To provide them this, keep your checkout process as simple as possible, removing any superfluous steps, lowering the number of form fields, and saving customers valuable time. Customers will be more likely to convert if you make the entire checkout process as straightforward as possible.
2. Offer guest checkout
One of the worst things you can do is force a consumer to create an account or register at the moment of purchase. When a buyer is about to finish a transaction, it poses an impediment for them. Instead, allow clients to check out as a guest on your e-commerce site, making it more accessible to all customers, particularly first-time visitors. This also helps individuals who just want to get through the checkout procedure quickly.
3. Autofill addresses and validate in real-time
Integrate a software application that automatically fills in and validates addresses as they are entered. This will not only make checkout faster and easier for customers, but it will also ensure that the address information they enter is correct. This saves you time confirming an address and eliminates any uncertainty about the billing or shipping address.
4. Allow social sign-in
Allowing users to connect via their social media accounts might help make the process faster and easier if you require — or prefer — customers to sign up or register for your service. This allows them to connect an account that already confirms and verifies their personal information, rather than creating an account and entering their personal information.
Creating an ideal checkout page entails thinking about everything from the beginning to the finish of the process. Design and development is a never-ending process, and you’ll want to make changes as they become necessary to improve the design.
You’ll improve the design of your checkout page over time to reduce checkout abandonment and increase sales.
The following are some recommended practices for creating your e-commerce store to encourage customers to complete the checkout process:
5. Indicate checkout progress
Use a progress indicator to let clients know where they are in the checkout process. Customers can see how far they’ve come and what stages they’ll face next, guiding them through the process. This simplifies the checkout process and gives the consumer an estimate of how long it will take to complete.
6. Prioritize mobile user experiences
The bulk of e-commerce shoppers now purchase on their smartphones and tablets. It’s critical to develop and design your mobile UX to be as seamless and smooth as possible in order to captivate this audience. When it comes to checkout development, use best practices and create a responsive design so that customers get the same experience on all devices.
7. Summarize cart contents and order details
Show a complete overview of all order details, including product, payment, and shipping details. Allowing clients to check their orders before confirming payment is critical for providing them with a complete image of the order. If at all feasible, you should display this throughout the checkout process, but it is a must before a consumer completes their payment.
8. Guide users through order forms using micro-copy
The short descriptions (in a tiny font) that assist explain what each form field demands is known as microcopy. You can use this microcopy to give the customer more information at various phases of the checkout process. Customers will find it easier to follow along if you provide them with the information they require at the precise time they require it.
9. Make your value clear to visitors
Remind them of the value you offer, whether it’s the exclusivity of your product or service or the personal touch your service provides. Remind customers of the value they will receive from this purchase on a regular basis to encourage them to finish the transaction in your store.
10. Test, review, adapt, repeat
Perfecting your checkout is a continuous effort, and you should incorporate analyses and changes into your product development process on a frequent basis. Track statistics on a regular basis, evaluate your site’s performance, track the impact of your campaigns and upgrades, and enhance your product with each iteration.
Your checkout process isn’t the only component of your sales funnel that needs to be optimized on a regular basis, but it is one of the most important parts of the process that is sometimes forgotten.
The process of improving conversion rates is never-ending. Develop ideas, make a change, then test the impact on sales. Continue on. Eventually, you’ll realize that optimization isn’t just entertaining and educational; it may also pay off handsomely in terms of return on investment.
Request a free e-commerce inspection and I’ll review your website (including your check-out process!) if you’re searching for improved results from your website but don’t know where to start. Then search for places where you may improve.
Ecommerce personalization: 5 steps to success
eCommerce has been searching for the holy grail of personalization for a long time: a consistent, cross-channel experience that adapts to customer wants and goals in real-time.
These technologies have arrived, which is fantastic news for eCommerce.
The bad news is that because there are so many of these tools, each of which offers varying levels of personalization, it’s difficult to know what building individualized user experiences in eCommerce entails and how to do it. Join me as I break down e-commerce personalization: 5 steps to success.
What is eCommerce Personalization?
eCommerce personalization is the practice of dynamically displaying content, product recommendations, and specific offers on eCommerce sites based on prior actions, browsing activity, purchase history, demographics, and other personal information.
Personalization is becoming increasingly crucial for retailers looking to enhance not only engagement, but also repeat purchases, revenue, and conversion.
It can take various forms, including personalized product recommendations on a retailer’s homepage or product detail page, cart abandonment marketing emails, and onboarding quizzes that give customers a personalized showroom of items, among other things.
Personalization Starts with Data Collection
It’s critical to build the foundation of personalization: data collecting, before we go on to the practical deployment of a customized experience.
Data collection is the foundation for personalizing any step in your consumers’ journey, from discovery to purchase and repeat purchase.
The following are important data collecting points for e-commerce personalization:
- Geolocation.
- Type of device.
- Time zone.
- Items abandoned in shopping carts.
- Recently viewed products.
- Wish list.
- Past purchases.
- Frequency of visiting the web store.
- Purchasing frequency.
- Average order volume.
- Social media interactions with the company.
- Traffic.
- On-site interactions (category and product page visits).
- Email.
- Personal Data.
- Paid Media Pixels (both social and search).
- Purchases.
- Search.
- Pricing.
It is also vital to understand:
- What data points to track.
- Who you are tracking.
- When you track data – which most often is in real-time.
- How you track i.e. the tools and platforms to use.
Artificial intelligence and machine learning power all best-in-class personalization technologies, which track on-site and customer data points in real-time and then give a unique individualized experience to each site visitor (whether window shoppers or customers).
After you’ve set up the infrastructure to collect data in real-time swiftly and reliably, the next step is to develop a personalization plan tailored to your specific demands and company size.
The size of your customer base, the number of sales your store generates, and the methods you use to execute personalization will all influence your personalized shopping approach.
eCommerce Personalization Technologies and Tactics
When it comes to personalization, one of the biggest challenges that digital businesses confront is that there is no single approach that defines it, and each type of technology has its own set of constraints.
Personalization isn’t defined by a single strategy.
It’s not as straightforward as saying, “We performed an A/B test, and now we’re personalized.”
There are numerous technologies to consider, and developing your personalization roadmap necessitates developing your own recipe for how much, or how little, you will rely on each.
The table below lists some of the most frequent strategies employed in both B2C and B2B eCommerce, with each technology falling somewhere along the personalization spectrum. Combining these technologies to create a holistic intelligence around user intent is the way to go.
To bring your visitors to their current goal, you must first understand them and then adapt your experience to them on every level that these technologies provide.
Real-time personalization necessitates observing how a visitor’s conduct differs or aligns with their regular behavior, determining their present goal based on their own behavior and that of similar users, and utilizing insights from all levels of technology to assist them in achieving this goal.
[Personalization Tactic #1]: Understanding Audience:
Personalization begins with a thorough understanding of each customer’s requirements. To meet that need, you’ll need a combination of the correct technology and the know-how to apply it.
You may compile indications from how they joined your site to establish why they came to you, whether it’s a new visitor or a returning customer. You can reduce their customer journey and improve their experience if you recognize their goal right away.
Did they come via a social media advertisement? Did they use a search engine to look for a certain product or service? Did they find you through a news story?
[Personalization Tactic #2]: Understanding of Personalized Search
The lack of tailored search is a major opportunity, as people who use search convert at 1.8 times the rate of the average visitor.
On any website, the search box is the most valuable real estate. Unfortunately, many of today’s search features may create more harm than good by focusing on keywords rather than the meaning of those words in context.
It’s not easy to conduct a search. Accurate search results might be difficult to come by due to spelling errors, the use of broad phrases, and variances in how people describe the same goods. It’s the difference between dumb and clever search on a practical level. Most marketing tools still only look for words, which is a surefire way to fail.
A customer looking for a “cheap black laptop” is most likely looking for a black, low-cost PC. A keyword search, on the other hand, might return a page of low-cost black laptop accessories.
An intelligent, semantic search, on the other hand, considers the words in context, exactly like a human sales clerk would.
[Personalization Tactic #3]: Targeting & Profiling
You can virtually accompany your visitors as they peruse your site, similar to how a car salesman might stroll around a showroom with a customer.
A competent salesman picks up indications along the road about what kind of automobile matches his customers, what color they prefer, how much they can spend, and how quickly they want the vehicle. Knowing the inventory at the dealership, he may then show them a vehicle that meets their requirements.
You can employ a similar strategy online, and you can even use a technique that vehicle sellers can’t: you can remain completely invisible while doing so. Allowing machine learning to process all of that data and compare it against your inventory in real-time is critical to making this work.
Not only can machine learning guide people at breakneck rates, but it can also provide possibilities that a person might overlook by analyzing trends in the visitor’s previous activity or connecting them with a group of purchasers who have similar qualities. Your system may even discover totally new client categories that your team was unaware of.
[Personalization Tactic #4]: 1:1 Personalization
1:1 personalization in eCommerce is effective when you have a large amount of data about your clients and can use that data to drastically alter the products you offer them. Rapid data collecting and analysis, cross-channel deployment, and machine learning optimization are all required. Due to a lack of data, 1:1 personalization might be difficult for the vast majority of businesses.
Marketers and merchandisers may leverage this deep level of data to enable 1:1 personalization through search, browse, layout, and content with the correct personalization solutions.
How to Get Started with Ecommerce Personalization
[Step 1] Decide where and how you want to tailor your site for your visitors. This selection should also be based on where personalization will have the most impact on revenue.
[Step 2] Research the many eCommerce personalization technologies and tools available and choose a couple to get started with.
[Step three] Make sure the project has enough resources. Determine who will be in charge of the project and how the results will be measured.
[Step 4] Establish a long-term personalization strategy and methodology.
[Phase 5] Begin segmenting and personalizing your website. Determine which parts of your site would benefit the most from personalization.
[Section 6] Maintain a close eye on the outcomes of your strategy. Wherever possible, improve the process.
[Step 7] Once you’re satisfied with your plan, start scaling it across channels.
Because there are so many products and each one needs to be shown to the correct client, on-site customization is critical for every Ecommerce firm. Otherwise, the goods inventory will remain intact without ever reaching the individual who requires it.
Instead of delivering a single, broad experience across the whole product range, Ecommerce Personalization enables each consumer to have a unique, personalized experience based on their preferences and needs.
On-site personalization will play a huge role in the future of eCommerce, and without it, eCommerce businesses may fail to know and comprehend what their customers really want.
3 Types of ecommerce marketplaces: pros & cons
There are numerous ecommerce marketplaces available nowadays. They can be classified based on the type of customer, core focus, industry, and other factors. In this blog post, 3 types of ecommerce marketplaces we present the most thorough categorization you’ve ever seen. Enjoy!
Ecommerce Marketplaces by target audience
When it comes to target audiences, marketplaces are divided into three categories: business-to-business (B2B), business-to-customer (B2C), and peer-to-peer (P2P), also known as customer-to-customer (C2C). Let’s take a closer look at each category to understand its concept, business models, and prevalent problems.
Business-to-business ecommerce marketplaces
A business-to-business marketplace is a website where wholesale providers sell their products or services in bulk to buyers. This form of marketplace is typically run by a third party, which allows firms to use it on advantageous terms. The following are some of the advantages of using a marketplace for sellers:
- Capacity to distribute items and services to a larger number of clients.
- Wider sales channels
- No need to build their own ecommerce platform
- Start selling right away
- No large initial commitment
The goal of an online B2B marketplace is to automate the selling and buying process, improve customer experience, and increase financial transparency. Alibaba, Made-in-China, Amazon, and eWorldTrade are among the most popular B2B marketplaces.
Let’s take a look at how these online marketplaces make money.
Business models of B2B ecommerce marketplaces
A B2B marketplace operates as a middleman between suppliers and buyers, leaving just a few monetization options. Let’s have a look at the three B2B marketplace business models.
#1 Commission-based business model
Because it easily adapts to varied industries, this is perhaps the most popular model for all marketplaces. It is based on charging a commission for every transaction that occurs on the marketplace, as the name implies. The major benefit for marketplace owners is that this is the most profitable method. All of the value that moves through the marketplace is distributed to the marketplace. This business strategy is used by well-known marketplaces like Alibaba and Fiverr as their primary source of revenue. The commission-based model is scalable and, more crucially, ideal for marketplaces with low transaction volumes.
#2 Subscription business model
A membership or subscription model is focused on charging sellers a monthly or annual fee for access to a certain set of marketplace features. This strategy is best suited for high-volume marketplaces where customers are likely to make recurring purchases. The subscription income model is well-exemplified by Labelcorner, a fashion B2B marketplace. It offers sellers a variety of subscription options based on the quantity of products they sell, the features they require, and the prominence they desire in search results.
#3 Listing fee business model
Some B2C marketplaces, such as Etsy, charge a fee for listing products in addition to charging commission on each sale. It costs $0.20 to list an item on Etsy. There are also premium listings, such as those seen on Craigslist, where sellers pay for increased visibility and a higher search rating.
Challenges of building a B2B ecommerce marketplace
Lack of a recognizable brand
It’s difficult to break into the market as a newcomer. The majority of marketplaces lack brand recognition and identity. All existing marketplaces, on the other hand, began some time ago and overcome this obstacle. It’s difficult to discover the proper solution, but we believe that people are the most important factor. You may cope with the bad notion of a new marketplace by focusing all of your attention on users. Define your target market, identify their pain spots, and provide a solution to their issue. People will adore your product even if it is new if you do this.
Lack of faith or trust
Orders on a B2B e-commerce platform typically range from thousands to millions of dollars. The first question that arises in the minds of entrepreneurs is whether or not this marketplace is a secure location to sell and buy. New B2B markets should make a concerted effort to establish their legitimacy. Here are four ways that B2B marketplaces can take to improve their credibility:
- When users register, thoroughly verify them.
- Require legal documentation and licenses from providers.
- Create a review and rating system to ensure that only the most trustworthy providers are chosen.
- Customers will feel protected if you provide them with shipping and return policies, as well as a money-back guarantee.
Business-to-customer ecommerce marketplaces
There are two sorts of users in the B2C marketplace model: businesses and customers. Businesses sell their products and services directly to customers rather than to other businesses in this approach. Many B2C marketplaces serve as one-stop shops where customers may browse for a wide range of products. There are numerous well-known B2C marketplaces because this model is one of the most popular nowadays. AliExpress, for example, is a massive online B2C marketplace with hundreds of suppliers selling anything from clothing to automobiles. Booking.com is an online travel marketplace that connects hoteliers with tourists and offers a diverse range of accommodations.
Business models of B2C Ecommerce marketplaces
#1 Business Model: Subscription
The subscription or membership model is used in B2C markets to charge providers a fee while keeping the marketplace free for users. This concept can be a good starting point for marketplaces that want to charge commissions in the future but can’t handle transactions right now. Venu, for example, is an Airbnb-style marketplace for event facilities that began with a membership basis. They converted to a commission model after they had verified their business idea and built an invoicing system.
#2 Commission-based business model
Booking.com is a B2C travel platform where commission is the primary source of revenue, accounting for roughly 74% of total revenue. This marketplace works with hotels and property owners, charging between 10% and 30% on each transaction. Each transaction on Booking.com is charged a fee ranging from 10% to 30%.
#3 Listing fee business model
Some B2C marketplaces, such as Etsy, charge a fee for listing products in addition to charging commission on each sale. It costs $0.20 to list an item on Etsy. There are also premium listings, such as those seen on Craigslist, where sellers pay for increased visibility and a higher search rating.
Challenges of building a B2C ecommerce marketplace
High levels of competitiveness
The B2C marketplace area is dominated by behemoths like eBay, AliExpress, and Booking.com, all of which are difficult to compete with. These firms have held their positions for a long time, making it extremely difficult for startups to obtain a competitive advantage. Nothing, however, is impossible. It’s possible that the solution will focus on a specific niche. You boost your chances of success by focusing on a specific specialization. A niche is a group of customers who have similar requirements, preferences, and problems. A thorough examination of a target group for a B2C marketplace can aid entrepreneurs in developing the best marketing approach and gaining a competitive advantage.
Pricing issues in B2C
Customers’ purchasing decisions are influenced by a variety of factors. However, one of the most critical factors is price. As a result, developing a suitable pricing system is critical. Many B2C marketplaces have difficulty determining prices that are favorable to both sellers and customers. To create an efficient pricing structure for a B2C marketplace, we recommend taking the following steps:
- Learn about the market, your target audience, and your competition.
- Determine the amount of product and service demand.
- Set expectations for the market (what your customers expect to pay for)
- Price differences are offered (different prices for different levels of products and services)
- Prices should be reviewed on a frequent basis.
- Only raise prices when there is a deficiency.
Peer-to-peer ecommerce marketplaces
Individuals with comparable wants, likes, and incomes can share items and services through a peer-to-peer (P2P) or customer-to-customer (C2C) marketplace. This type of marketplace works on the following principle: peers can trade things (like on Etsy) or services (like on Uber or Airbnb) for money or other goods and services. P2P marketplaces are a facet of the sharing economy, allowing people to make the most of their resources by renting rather than buying. The most essential aspect of this type of marketplace is that one person can be a consumer today and a service provider tomorrow. The P2P model features a shorter sales cycle and average length of relationship compared to the B2B and B2C models.
Let’s learn more about this marketplace type and how P2P marketplaces usually make money.
Business models of P2P ecommerce marketplaces
Paid promotions are number one.
By paying a charge to the marketplace, users can promote their goods or services. This strategy is ideal for product-focused P2P marketplaces where the customer’s focus is on the product rather than the vendor. There are three types of paid promotions:
- Vendor profiles that are sponsored
- Products and services highlighted
- Promotional items in the cart/at the checkout
#2 Advertisements
With this model, third parties can post ads to promote their products and services on the marketplace. There are several advertising models P2P marketplaces can use:
- Cost per impression (CPI)
- Cost per click or pay per click (CPC/PPC)
- Cost per period (daily, weekly, monthly)
Challenges of building a P2P ecommerce marketplace
The market does not provide a solution to a real problem.
Many markets fail because they do not address the real issues that their target users are facing. Why should people utilize a marketplace if it doesn’t answer a specific problem? Conduct rigorous market research, define your target audience and their demands, and validate your business idea using tools like the Lean Canvas or Business Model Canvas before starting your marketplace. These procedures will assist you in selecting the best plan and avoiding failure.
A focus that is too broad
Another typical issue with P2P marketplaces is that they offer an excessively large choice of products and services. When you’re starting from scratch with a marketplace, it’s best to focus on a vertical market in a certain geographic area. Lyft, for example, focuses solely on one service — rides – and has been a huge success since its inception. TaskRabbit, on the other hand, began with a horizontal strategy and eventually struggled with scaling. When marketplace owners select a niche, they may put their concept to the test before going global, reducing risk.
Ecommerce Marketplaces by focus
Vertical marketplaces
Vertical marketplaces, as the name implies, are focused on a certain region or niche. Rather than selling everything to everyone, they focus on a specific set of services and products. Having a niche-specific website allows you to stand out from the crowd, provide higher-quality products and services, and boost personalization. Etsy is the most well-known example of a vertical marketplace. Craft supplies, as well as handmade and vintage items, are the core of this platform. Only genuine sneakers are sold on the StockX marketplace.
Horizontal marketplaces
A horizontal marketplace, on the other hand, sells products and services from a variety of industries to a variety of clients in numerous locations. This form of marketplace is referred to as a one-stop shop because it caters to a variety of customer needs in one location. It’s similar to walking around a mall with a lot of stores, but it’s all done online. The most well-known marketplaces, such as eBay, AliExpress, and Amazon, are horizontal and provide a wide range of products.
Ecommerce Marketplaces by management approach
Unmanaged
Unmanaged markets are typically peer-to-peer, with customers contemplating purchases based on ratings and reviews. Background checks, quality assurance, and feedback analysis are not investments made by the marketplace owners. In general, the lower the fees, the less a marketplace manages on its own. Unmanaged marketplaces include Fiverr, eBay, and Etsy.
Lightly managed
Uber, Airbnb, and Grubhub, for example, put some effort into quality control and background checks. These investments are being made by Airbnb for customer service and user verification. Uber’s expenditures include driver verification and ratings.
Fully managed
Sellers’ entire sales process is covered by fully controlled marketplaces. For example, Opendoor, a real estate platform, acquires houses from sellers and resells them. The only thing left for sellers to do is accept the offer. Fully managed markets have a lot greater charge, but the service quality and customer experience are also much better.
Unmanaged – Peer-to-peer transactions; trust comes from reviews and ratings; lowest transaction fees
Lightly managed – Protection and guarantees for users; accurate content; technology tools
Fully managed – Operator mediates transactions; marketplace handles the whole process; superior customer experience
The bottom line
The trend in marketplace development is to focus on a single niche. High competition and a lack of brand identification plague new marketplaces, causing the majority of them to fail. New marketplaces that solve actual problems for target groups, on the other hand, are in high demand.
#1 Guide to building a successful online marketplace in the Caribbean
You’ve arrived at the start of your adventure as a marketplace entrepreneur!
This guide’s goal is to assist you in getting started on your trip and moving forward one step at a time. The iterative method will help you maximize learning, save costs, and ensure that your idea is set up for success from the start.
The marketplace building process is a lot more comprehensive than one might think, so let’s dive into the #1 guide to building an online marketplace in the Caribbean.
What is an online marketplace?
An e-commerce site that connects merchants and customers is known as an online marketplace. It’s also known as an electronic marketplace, and the website owner is in charge of all transactions. Companies utilize internet marketplaces to connect with clients interested in buying their goods and services.
A website or app that supports shopping from a variety of sources is known as an online marketplace. The marketplace’s operator does not own any inventory; instead, their job is to show other people’s goods to users and enable transactions.
Guide to creating an online marketplace one step at a time.
People often look at amazon & run and say “hey I want to build the next amazon in the Caribbean”. It’s not that easy, given the size of our markets and the ability to do cross boarder commerce in a way that makes sense to the end customer. That means that building a successful marketplace in the Caribbean is a lot more difficult in the region than it will be in other parts of the world.
It takes time to set up an online marketplace. In a nutshell, here are the steps:
- Find a strong marketplace idea & flesh it out (ensure you are solving a problem & that problem is a pain point for enough people).
- Do market research to find out market needs & Product demands (you may be trying to solve a problem for you alone)
- Select a marketplace business model, Operational model, Pricing models, Revenue models & Digital strategy (That all works together)
- Solve the disintermediation problem for all your models (This will break your marketplace before it even starts)
- Value, finding the right balance of value for mercahants, customers & the marketplace
- Create your Minimum Viable Platform (MVP) (your marketplace MVP that will get useful feedback that you can use to iterate).
- Build your demand & supply models (Finding the right balance between the chicken & egg problem)
- Begin selling to your first consumers on your marketplace.
- Keep track of your essential metrics & analytics to help you expand your business.
You’ll learn about business strategy as well as a deep dive into how successful marketplace websites work from the inside out if you keep following my blogs as I am to bring local context to how marketplaces can work.
How do online marketplaces work?
Online marketplaces do not have to keep track of inventories, logistics, photos, or product descriptions, but they can delegate this responsibility to sellers. Sellers, on the other hand, receive their own location where they can manage orders and offer their wares. Buyers have electronic access to suppliers’ inventory, and real-time information on the products being presented to customers is updated on a regular basis. So, how do these online marketplaces generate revenue? Continue reading to learn more:
- Options for Earnings
- Subscription-based model: One of the most common business models is the subscription-based approach. A regular price is charged for the supplier’s access to the platform in this monetization model. Suppliers can use this revenue model to find new clients or obtain access to potential clients or partners. However, you must guarantee that your vendors receive sufficient value to keep their subscriptions active.
- Sign-up fees: In this arrangement, sellers pay a one-time cost when they apply to sell on your marketplace platform, often known as sign-up or registration fees. No complicated payment methods are required because the sellers pay you upfront. You can motivate vendors by stressing the benefits and offering early bird rewards.
- Commission model: When a vendor makes a sale, you charge them a fixed fee or a percentage of the sale as commission. Each conversion may be charged by the platform to both the vendor and the buyer. Unlike subscription-based models, the charge appears to be acceptable in this case because the parties operate for free and only pay when they receive some benefit from using the platform.
- Product listing fees: Product listing fees are a typical marketplace business concept among two-sided marketplace platforms. When your vendors put their products for sale, you charge them a fixed or variable sum in this approach. While there are several methods for calculating product listing fees, you must make it as simple as possible for the seller to pay the fees. This would inspire them to add additional products to their catalog.
- Mixed models: You can choose the revenue model that best matches your market, depending on your industry. You shouldn’t, however, take a “one size fits all” strategy. You can use multiple models at the same time. You can generate many revenue streams by merging numerous models. Some of the largest online marketplace participants, such as Amazon, have successfully integrated numerous models.
Types of ecommerce online marketplaces
Online marketplaces are classified according to their industry, focus, and target audience. We’ll go through each one individually and explain how the Multi Vendor Marketplace Module can assist you in creating your own marketplace.
Online Marketplace based on Core-Focus:
Based on emphasis segments, there are two types of online marketplaces: those that provide only one type of service or sell only one category of products, and those that serve as a hub for many services in a number of niches.
Vertical Marketplace
A marketplace that focuses on a specific sort of service rather than diving into a pond full of fish. Consider Etsy, which began as a small marketplace for people to sell goods and has grown into a giant.
Horizontal Marketplace
A marketplace is an internet platform where you may locate a variety of services or items. Consider a shopping mall where you can locate all of your favorite brands and items under one roof. A horizontal marketplace is an online eCommerce marketplace such as Caribshopper.
Global Marketplace
Global markets are locations where you may buy and sell anything. You’ll have a larger inventory, and buyers will have more selections, regardless of the distance between buyers and sellers. Purchasing from a worldwide marketplace is similar to shopping at a mall; you’ll find everything you need all in one spot. The most well-known example in this area is eBay.
A major feasible classification for the online marketplace occurs on the verticals they are offering:
Product-based online marketplace
This type of online marketplace focuses on product sales. Product-based marketplaces, such as Amazon and Flipkart, exist. Product-based marketplaces make money through commissions and subscriptions. They have the authority to levy delivery costs as well.
Service-based online marketplace
A website where service providers can post and deliver services such as personal care, cleaning, plumbing, appliance repair, pest control, graphic design, and so on.
The Urban Company, Fiverr, and Upwork are popular service-based online marketplaces that offer a wide range of services across hundreds of categories.
Booking or rental online marketplace
There’s a good chance you’ve heard of a booking or rental business that offers an online marketplace. The most common websites for booking or renting Marketplace are Ola, Uber, booking.com, and MakeMyTrip.
Marketplace based on the platform
Mobile Commerce
A platform or an online marketplace for the purchase or sale of goods and services through wireless handheld devices or mobile phone
eCommerce
A two-party site, e.g. seller – shopper, company owner – investor, etc.
Marketplaces on the basis of Customer Type:
B2B – an online marketplace for the exchange of goods or services between companies or two business merchants
B2C – an online marketplace for the transaction from the merchant to customer for goods or services
C2C– an online platform for the transaction between customers for goods or services
Examining several sorts of markets and deciding which one is best for your company is a crucial decision. You’ll be dedicating a portion of your revenues to growing a new audience, which is something you’ll be doing on a regular basis.
When you’ve located a market that interests you, learn more about the items and businesses that thrive there. It doesn’t imply it won’t work out if your products don’t match, but it’s something to think about.
Benefits of online marketplaces
You are not obligated to do anything just because everyone else is. Every business will not benefit from selling on an online marketplace for various reasons. It does, however, have some advantages that make it a viable alternative for some organizations.
- Improved visibility: Placing your products in a virtual high-traffic marketplace increases their visibility. Customers will be directed to your website or physical store as a result of this.
- Better management: As a seller, you won’t have to waste time and money building and managing your own e-commerce website or app. The market will take care of it for you. You can concentrate on controlling your inventory rather than getting distracted by non-essential issues.
- Low startup expenses: Using online marketplaces to promote and sell products can help small firms keep their expenditures under control.
- Ease of use: As the worldwide internet penetration rate rises, customers will find online markets to be more convenient than their offline equivalents.
The near future
Online marketplaces dominate the internet, providing a perfect meeting place for consumers and sellers. You can create the optimal conditions for customers to shop and businesses to promote by using the proper revenue model.
Amazon and Walmart, for example, are hybrid markets that sell both their own products and those from other companies. They also operate as a marketplace for buyers and sellers, allowing a wider range of products to be sold. Because of their experience, technological capabilities, and nearly limitless resources, these behemoths give other competitors a run for their money. Marketplaces must eliminate friction in both buying and selling to encourage participation, show trust in all transactions to encourage involvement, and provide efficiency and distinctive value to consumers in order to exist. Those who are unable to do so will see their market share dwindle.
Online Marketplaces: 10 tips to guide your idea to success
Do you have a solid business concept in mind? Are you ready to launch your own online marketplace? But hold on a second, have you validated your marketplace company concept yet? Don’t be concerned. We’ve got your back!
Before you establish your own website or app, you must first validate your marketplace business idea. You must ensure that your concept is properly implemented, with the end result being a viable and legitimate marketplace. No matter how much money you spend into developing a profitable app, if it is not in the best interests of the users, all of your efforts will be for naught.
So here is the first step to learning about your idea, let’s take a dive into Online Marketplaces: 10 tips to guide your idea.
How to generate your online marketplace idea?
Solve A Problem
The fact that most online markets do not solve an issue is one of the key reasons for their failure. Most young businesses launch an online marketplace too soon and fail to expand their customer base. In Trinidad & Tobago only there are 34 online marketplaces all of which actually follow the same model.
Entrepreneurs have been influenced by the Sharing Economy to feel that sharing any asset would be a smart concept for a marketplace. The majority of them fail to consider whether the approach solves any issues. It’s critical that your marketplace addresses a market pain point or unmet need. It’s also critical in a marketplace business that the solution caters to both the vendors and the customers.
Is It Better To Go Big Or Small?
Another decision that entrepreneurs must make is whether to launch a horizontal or vertical marketplace. A horizontal marketplace, such as Yelp, brings together a variety of categories. A vertical marketplace like Airbnb focuses on tackling a specific problem: some people have spare rooms in their homes, whereas most guests require temporary lodging and a pleasant experience.
Entrepreneurs should aim for a vertical platform because they demand strong knowledge of a single sector or solution. Niche marketplaces have a competitive edge, but they require extensive market research because they involve causing behavioral changes. Marketplaces that are local copies of global players lack the novelty but still do good as the entrepreneurs have more knowledge about the local community than global players.
How to Validate your online marketplace idea?
Once you’ve decided on the problem to tackle and the technique to take, you’ll need to put your plan to the test. When you discuss an idea with a few individuals, it sounds fantastic, but the fate of a marketplace ultimately depends on whether the market is friendly to the idea.
1) Does your online marketplace provide a solution to an issue?
This is the first step in validating your marketplace concept, and it’s probably the only one you’ll have to keep asking yourself. It makes little sense to embark on the process of developing an online marketplace unless you have a need to solve. Many online marketplaces (about 40%) shut down during the first six months of operation because they were unable to handle any issues. There was no problem to solve in certain circumstances.
- Make a list of all your assumptions about the situation in order to acquire an honest answer to this question. Every single one of them.
- Ask a few folks, the more the merrier, whether they are dealing with a similar problem.
- Inquire about their current approach to the problem.
- Check online to see if your target market has any existing solutions.
If not, double-check that your solution addresses all of the problems. Also, if there is one, see if your solution adds any value to it.
2) Does the Online Marketplace Have a Market?
Before launching any product, you must determine whether or not there is a market for it. Calculating the total addressable market is an important metric (TAM). In basic terms, it is the total money you will earn if all of your product’s users in your target market use it. The smaller the TAM, the more niche your market is. It becomes easier to qualify your marketplace idea once you have the TAM.
Because a marketplace is a two-sided market, you must consider both groups of customers. If just one of them has a market, the marketplace is doomed to fail. Talking to people is one technique to find out if there is a market. Interviewing potential clients will help you figure out if your solution has a market.
3) Is it true that people are looking for solutions?
We often overlook the fact that people are looking for solutions in our entrepreneurial zeal. There may be an existing problem in your market, but it will never work out unless people believe it is causing enough inconvenience to warrant looking for solutions.
Search engine searches in your target market might help you figure out if individuals are looking for answers. Google and other search engines provide platforms for analyzing search queries. You can be guaranteed that there will be a demand for your marketplace if you have a complete list of users looking for solutions. Interviewing people is another option, which is more traditional.
4) Would People Be Willing To Pay For An Online Marketplace?
One of the final steps in the validation process is to determine whether or not people will pay for the online marketplace. The majority of individuals, particularly friends and family, believe that every concept is fantastic. However, if you ask them if they would pay for the solution, the majority will answer no. Only if you have a collection of clients who provide transactional value to the online marketplace will it be profitable.
5) The ‘Chicken & Egg’ problem (online marketplaces)
One of the most serious issues that online markets face is that both merchants and customers are influenced by one another. Customers will not visit the marketplace if there are no quality seller options, and quality sellers will not put their products and services on your marketplace if there are no customers. As a result, there is frequently a supply and demand imbalance in the marketplace. It’s challenging for a rising market to figure out how to solve this conundrum.
Aside from that, there are a few other problems that new online marketplaces encounter.
- Providing a positive client experience.
- Providing excellent customer service is a must.
- Creating and maintaining relationships with both suppliers and customers.
- Data about customers and sellers is kept safe.
How to validate your online marketplace Assumptions?
6. Market Research:
You must undertake complete market research before investing in any marketplace notion. This comprises researching possible competitors and their performance, as well as your target demographic and current market trends. The goal of this study is to determine the viability of your platform in today’s more difficult markets.
So, as you’re doing your market research, be sure to ask the following questions:
- Who do you want to reach out to?
- What is the present state of the market?
- Isn’t there already a marketplace for this?
- How is my concept superior to the competition’s?
- Why would customers and providers opt for a different provider?
- What happened to the other marketplaces that did not last or are not successful?
7.The Canvas of the Market
It’s time to write down your thoughts when you’ve completed your market research. The next phase is to develop a business model that considers both customers and providers’ value propositions, distribution channels, and income sources. If you divide your research insights into a fixed template that addresses the following: problem, solution, key metrics, distribution routes, customer segmentation, cost structure, and revenue streams, creating a marketplace canvas can be relatively simple. Remember that the concept will only work if you concentrate on both customers and providers at the same time.
This canvas will aid in the organization of your thoughts by providing an outline of what you intend to accomplish. Acting on a notion reduces the chance of failure and allows you to determine whether the concept is worth pursuing. Here are some of the questions to consider when you create the marketplace canvas for your marketplace concept.
- How effective have you been at resolving the issue?
- What is the consumer and provider value proposition?
- For customers and providers, how effective is the distribution channel?
- Is the cost structure feasible for both customers and providers?
8.Talk to your target market; obtain feedback from customers and vendors.
It’s critical to talk to your target audience and possible providers after you’ve created your marketplace canvas. When it comes to determining the viability of a business, their opinion on your platform is most important. To learn about shopper preferences, speak with someone in the same business or distribute an online questionnaire. This is crucial if you need to know how frequently and under what conditions they are willing to switch.
The interviews may also assist you in identifying some of the most recent market trends or crucial categories. This will eventually assist you in including the most relevant features that target the appropriate consumer base at the appropriate moment. Here are some examples of probable customer and provider queries. Remember that you can only pitch your idea to suppliers and customers after you’ve assessed how they react to current offerings.
Questions for prospective clients include:
- How do you assess the current state of the online marketplace?
- What types of brands/services would be most beneficial to you?
- Which e-commerce platform do you prefer?
- What distinguishes it from the competition?
9.Analysis, Benchmarking &.Risk Assessment
It is not a simple task to design a platform. While a marketplace canvas can help you determine whether or not to pursue your marketplace company concept, there are numerous additional canvases that can assist you in creating the right platform. A thorough examination of the following paintings will aid you in gaining a clear understanding of the market you are about to enter.
Ecosystem Canvas offers a broad perspective on the brand new environment and industries, assisting you in comprehending the new scenario.
Motivation Matrix: Several motivation factors are distilled into six core types: incentive, achievement, social, acceptance, fear, power, and growth. Any business takes actions triggered by several motivation factors that are distilled into six core types: incentive, achievement, social, acceptance, fear, power, and growth. Businesses forecast how a user will interact with the platform based on all of these incentive variables.
Minimum Viable Product (MVP): “A minimum viable product is a version of a new product that allows a team to gather the most amount of validated learning about customers with the least amount of effort.” — Ries, Eric
Using these frameworks to identify the platform’s benefits and drawbacks can be time-consuming, but it will pay off in the long term.
10.Create a minimum viable product (MVP) (Minimum Viable Product)
As the name implies, the goal is to provide a product with enough functionality to please early adopters. A subset of potential consumers is shown the app with essential functionality (and nothing more) and asked to test it. They then recommend enhancements for future development. Your assumptions will be validated by their reaction to the app’s performance. You may test your idea, design, features, user flow, and most crucially, the expectations of both users and vendors with an MVP.
An MVP can help you in the following ways:
- You may test, develop, and optimize your concept by visualizing it.
- Assists you in deciding on the best company model.
- It assists you in comprehending user and vendor requirements.
- Identifying the project’s shortcomings and flaws
Before you start developing anything, write down all of your assumptions about the problem, value proposition, business model, and distribution channels, and test them with consumer interviews and search data. Some of your initial assumptions are very likely to have been proven incorrect. On the other side, you now have access to previously unavailable knowledge, which provides you with new opportunities.
You should have a clear sense of your users’ true problems and viable solutions after going through this procedure. You should be much closer to finding a solution that fits the problem.
Or book a call with OCEY PHILLIPS to get all your marketplace needs solved.
6 tips for ecommerce content marketing success
Content without strategy is just words, images, and videos thrown into the ether, becoming part of the general background noise and doing nothing particular for the business in question, except making some content developers happier and richer.
How to do product keyword research (Part 1)
Table of Contents
Introduction
Before starting an ecommerce store, it is important to have a product idea that you think will be profitable. Having the wrong products can not only lead to losses but also set up your business for failure in the future as well.
When creating and designing new products, make sure they are tested based on their profitability before building them out further or setting prices etc., as otherwise there could be significant consequences such as financial loss if these mistakes aren’t caught early enough!
So let’s dive into how to do product keyword research for ecommerce.
Understanding your product and the market opportunities
When you’re choosing what products to sell, there are two main categories—specificity and commoditization. Commoditized goods have few features that set them apart from similar items; they can be sold at lower prices because of their popularity. Niche products instead highlight one or more unique traits in order to stand out among competitors’ offerings, so the price tends to be higher for these types compared with commodities available elsewhere on the market.
If you choose to sell white t-shirts, for example, they are a commodity product. They’re not different than other t-shirts available from somewhere else—and most people will buy based on price.
If you’re going to compete on price, this isn’t a bad option. Walmart and Amazon thrive on selling these kinds of basic commodity products at discounted prices.
But for most eCommerce store owners, this isn’t a wise decision. Amazon and Walmart have the benefit of scale. Multi-billion-dollar companies can afford to make a few cents of each purchase. But for almost anyone else, this is a surefire way to end up broke.
Instead, develop a niche product.
If commodities are basically identical from one seller to the next, niche products are the opposite—different with each seller. This means they can charge a higher price. That’s the value of a niche product. Because you’re selling something unique, consumers don’t buy on price (at least, not to the same degree).
As a result, you can charge far more—and make a decent profit.
With that in mind, how can you find a great niche product? There are as many methods as eCommerce store owners, but we’ll focus on what’s been proven to work the best.
How to find great product ideas ?
SEO tools can help you analyze the market and demand of your product. They provide helpful data for products, but when starting out it’s overwhelming so here are a few tools to save you from tedious work!
Google Trends
The Google Trends website by Google analyzes the demand for products and top search inquiries in a given area. In order to estimate how often people use certain words, you can put that word into their search bar at google.com/trends. For instance, if you want to check which product is most popularly searched across different areas or dialects, all you have to do is type “clothes” into your local trends tab on the site’s homepage!
Ubersuggest
This free online tool is great for content writers, bloggers, and marketers. It can help them find new ideas to write about or what users are searching for in regards to a given topic.
Features include:
- backlink data
- rank tracking
- site audit reports
Answer the Public
Answer the Public is a great tool that helps uncover what people worldwide are curious about and going through. It’s also intuitive as you can simply enter your keyword on their homepage to understand precisely what people are asking. Answer The Public might be helpful too as another resource for finding keywords, which could come in handy when doing research or optimizing content online.
Identify or create products that solve a problem
Start off by thinking of the problems you experience on a regular basis. You can also ask friends, acquaintances, or complete strangers this as well!
You’ll find a mountain of products that solve common problems.
The ideal problem-solving product is usually so simple you’ll wonder why you didn’t think of it before.
That’s a great place to be because it means people with the same problem are asking why they don’t already own what you’re selling.
What about products you’re already passionate about?
Not all products solve problems. Some items are just inherently interesting to a small group of people. The more knowledge you have about a niche, the faster you can bring a product to market. You’ll shave hours, weeks—even months off your research if it’s a product you already use.
The more knowledge you have about a niche, the faster you can bring a product to market. You’ll shave hours, weeks—even months off your research if it’s a product you already use.
What about products you and friends love or hate
To start, write down products you use on a regular basis. Beside each one, write down all the problems you can think of with the product—these could be minor inconveniences or huge flaws in their design. Learning what makes a product unique is an easy way to create your own niche for yourself and provide customers with exactly what they need instead of competing against every other eCommerce store online!
Alternatively, you could also write down some things you wish the product had that it doesn’t currently have.
Finally, write down all the ways you feel that you could improve the product.
- Is it the design?
- Its packaging?
- Its functional?
Many of the best and most innovative companies were founded on the desire to either improve on existing products or to fill a gap that in the market.
Study what Google recommends
First, use Google’s search suggestions to find what’s popular now. Start by typing in a word associated with your niche. Then check the Google suggested results.
Conclusion
In order to find a new product, start by looking around you. Ask people about their interests and learn what they would be interested in buying! You can also look into the internet world using keyword research – understanding which searches are popular with your competitors will provide some insight on where hidden gems lie. Lastly, online trends give you an idea of current day favorites based off search queries; these may lead you down the path towards success if carefully observed!
To start, consumer and B2B marketplaces will give you the answers you need to learn what people are eager to buy. Product reviews and consumer reports can provide helpful feedback on product categories to explore, but social forums and communities may be even better for that starting point as well.
Headless Commerce| 5 use cases & benefits for growth
When it comes to ecommerce, the topic of headless commerce is one that has been gaining a lot of traction. Headless Commerce refers to an architecture where you can create and manage your entire business experience without having to worry about managing any front-end code or design.
