When the pandemic started, more than a year ago at this point, our client roster leaned into marketplace expansion more than ever before. Aside from Amazon, Instacart and Walmart.com were two of the primary marketplaces of interest. Now these newer online marketplaces have grown and launched their own advertising businesses. We've been very impressed with the results these additional channels are driving and our clients have reaped the benefits. However, that's not to say there weren't some challenges and growing pains along the way. Specifically, managing a product assortment across platforms created a learning curve for our clients. Here we share insight into lessons learned when determining where clients should focus their efforts.
When expanding your brand's footprint, it's important to understand your options. Especially when it comes to getting your products onto an online marketplace. With that said, most marketplaces have first-party and third-party selling options.
Considering two of the major players, Walmart's model is very similar to Amazon. And it has much of the same benefits when using a hybrid model. We're working with more of our clients to use this approach. This makes it easier to adjust product assortment and pricing when selling on multiple marketplaces. Instacart, on the other hand, is heavily dependent on a brand's distribution and relationships with retailers. Regardless of the platform, performance and discoverability will be tied to your brand's distribution and available inventory.
Once your products are on a marketplace, brands usually have the flexibility to remove or add SKUs. That being said, many brands regularly ask themselves which products they should support with advertising, content efforts, and catalog optimizations. When answering this question for our clients, it depends on the size of their assortment. But either way, the key to success is creating a prioritized list of products.
From there, it's important to understand how each marketplace fits into your brand's circumstances. As alluded to, not every marketplace is created equal. And, as a result, brands need to determine which products will perform best across the different marketplaces being considered. This can be done by looking at your assortment on each marketplace and ensuring your brand is flexible and willing to differentiate if needed. When doing so, be sure to focus on what’s selling well as an indicator of what your consumer prefers on each marketplace.
We've found the most success by taking a look at our client's goals and working backward to prioritize products and marketplaces. This process helps set the foundation for future retail readiness and media efforts.
We've briefly touched on how not all products perform at the same level from platform to platform. Some of our clients even create retailer-specific SKUs, particularly those in the grocery and CPG space. While it's not always a simple process, especially for larger brands, it's a great way to avoid being caught up in price matching between retailers. Amazon and Walmart are a great example of how this can happen and drive down the price of a product, potentially causing challenges with retailer profitability. Most marketplace's algorithms are designed to ensure it's offering the lowest price on a specific SKU. Creating a similar version of a product and tweaking it slightly for another marketplace will combat this issue.
If your brand is bought into creating a product assortment with differentiated SKUs, we recommend doing extensive research before production. As mentioned, it’s best to research the category on the marketplace you plan to leverage. Then, understanding the consumer's preferences is secondary. For example, you may find Walmart shoppers are looking for a bulk value option. And, on the other hand, Amazon shoppers are looking for a lower-priced variety pack.
If your brand is considering branching out from Amazon or is in the midst of it, there's a lot that goes into doing so successfully. At Marketplace Strategy, we're dedicated to creating custom plans for each of our clients and their unique situations. Strategies don't always look the same, but each program is tailored to what it takes for each brand to perform on the channels important to them.
If you could use the support of a strategic partner, schedule a free consultation. And, as always, we’re here to answer any questions about Amazon, other marketplaces, and any major digital platform.