Stephanie Frackowiak outlines some of the eCommerce trends she has identified in the industry from gamification to shortening global supply chains.
The first and I think, most interesting of emerging trends is the notion of gamification of some of the newer eCommerce marketplaces, like Depop.
Gamification, of course, isn’t new – it’s a marketing tactic that’s been around for years. Whether it takes the form of bonus points, discounts, loyalty points or coupons, it works on the psychology that human beings are interested in winning. Even if the prize is as small as a badge (digital or real), or simply being top of a scoreboard, it works. Sports brands have done this successfully for a long time, games like Candy Crush, Pokemon Go and Farmville had huge followings because of it.
It’s interesting to see this becoming prevalent in eCommerce in a slightly different way to attract digitally-native customers. Key to the success of a marketplace is the products it chooses, and the audience it acquires. Gamification is a way to attract and retain customers.
eCommerce marketplaces, like all businesses, benefit most from repeat orders from loyal customers. Modern online shoppers are un-moved by traditional incentives such as Air Miles and discount coupons, they aren’t great motivators to buy. Small traders on a marketplace have the opportunity to create and keep customers engaged and loyal with gamification that really resonates. The opportunity on a small scale to engage as an aspirational brand on a marketplace has the potential to create and keep buyers loyal.
There’s an interesting ‘micro-influencer strategy’ that some of the new marketplaces such as StockX are currently embracing. These provide a demonstration that having the right kind of products is not enough – having the ‘right kind of people’ endorse and buy your products is key. Historically celebrities or sports stars were the biggest influencers as they filled the role of personalities and lifestyles to aspire to, but there is now a trend towards individuals that consumers can relate to, acting as influencers in their own right. We see viral content especially on Instagram or TikTok, driven by individuals who represent a strong lifestyle or ideology themselves, for example, eco-warriors, alternative comedians, dancers, plus-size models, etc. Some of the micro-influencer world has come into disrepute as individuals have attempted to monetise their status in clumsy ways by buying followers or being indiscriminate in the brands they promote. Marketplaces taking this route have a difficult task of finding the individuals who will enhance their image and boost their reach.
Fundamentally, for an eCommerce marketplace to be successful, it is not simply a question of dealing with the supply side. The demand side is part of the virtuous cycle of success, so it is vital for marketplaces to ensure customer loyalty, especially as a marketplace is not selling its own brand – it is curating a lot of different brands
Since world governments began to lock down high streets in January 2020, consumers have been moving steadily online. Initially, there was little choice – but as high streets have reopened (albeit with restrictions), many consumers have chosen to continue to shop online.
It is safe to say that eCommerce is set to continue on a path of accelerated growth as a direct result of COVID-19.
One of the key challenges is that eCommerce supply is dependent on securing relationships with vendors and merchants on their platforms since many will sell the same products on multiple marketplace platforms. Demand can fluctuate wildly on the flip of a coin and, unlike physical stores, customers expect the online experience to always deliver what they need when they want it. It is very easy for an online customer to switch to a new marketplace so when everybody loves the products, it’s vital that the marketplace has the right kind of relationship and transparency with their merchants and vendors so they are keeping their customers satisfied.
Woodsford TradeBridge is an international business, and able to fund merchants wherever they are based. This is a great benefit to progressive young marketplaces because a key factor in their growth is the ability of their merchants to scale, wherever they may be.
Europe has an extra twist of complexity. If a marketplace is launched in the United States, the addressable market is far bigger than that of France or of the UK. To operate on a similar scale we need to operate across multiple countries so there are key elements such as cross-border payments, multi-currency, customs and taxes, and international shipping to deal with which can all slow down and impact the customer experience.
Typically, the greatest challenge for a younger, smaller marketplace lies in their ability to fulfil orders. For the marketplace, the potential problem is a shortage of products – and for the merchant or producer, the greatest challenge in having products to deliver is cashflow.
Fulfilment can become a real issue when a traditional bank won’t lend to a new merchant or supplier because they have a short credit history, or they do not meet the bank’s lending criteria.
Alternative lending is required, and this can be provided by a company like TradeBridge, who are experts in both the supply chain and in the eCommerce landscape. As a non-traditional fintech lender, who is a specialist in this space, we can use our experience and the analytics that are available through the marketplace to validate lending decisions.
When it comes to funding marketplace growth, we are able to use our proprietary technology to lend a multiplier of the volume of sales per month and everyone moves forward. We enable scalability.
The global pandemic has put the whole eCommerce system under stress. One of the main reasons that Amazon and Alibaba have remained so successful – even when compared to other marketplaces – is that they have an enormous and resilient infrastructure. And critically, these giants met the buyer-demand more quickly than other vendors, who were often “out of stock”, leaving frustrated customers. People are naturally more inclined to buy from the seller that can deliver more quickly and reliably.
The giant marketplaces enjoy such success not necessarily because they have the best or most exciting platform – the platform, of course, is just the shop window. It is more about the infrastructure these giants have created – huge transport and logistics networks. These unseen areas of eCommerce are what makes the difference between a customer receiving a purchase inside 48 hours or waiting for four weeks.
Additionally, these are truly international companies. Where some smaller marketplaces would struggle to send stock across international borders, these giants have warehouses and a transport and logistic network that is global. They can deliver a purchase from a warehouse that is already in the same jurisdiction.
Much has been made of the effort to make supply chains shorter for the fulfilment of orders. But I believe the more pertinent point is moving the risk point or the point of stress in the entire supply chain. If you want to shorten the supply chain between warehouse and customer, then vendors need to have more stock available sooner and the ability to predict demand with far greater granularity and accuracy. This also means stress on cashflow since vendors will need to manufacture and deliver from factories further ahead of the customer purchase point
The question is how businesses will minimise the risk of a surge in demand that they cannot fulfil, or a sudden drop in demand that will leave them with excess stock.
Of course, proximity is a boon to any supply chain. But moving a factory is not a quick decision. There is an enormous range of factors that would influence a decision to move manufacturing to Europe from China, for example.
In any supply chain, every decision is a trade-off. Rather than shortening the supply chains entirely, I think businesses will seek to strengthen their most important links.
The real emerging trend here is the rise in AI and predictive analytics, which will optimise the placement of stock on the basis of intelligence from a range of data sourcesPredictive analytics works from intelligence gathered on everything from historical sales data to social media. However, the big challenge we all face is that data is only as good as the questions we ask it. Businesses will need to be particularly vigilant in order for this practice, and the use of predictive technologies, to become successfully established.