Marketplaces have revolutionised eCommerce. With all those goods in one easy to reach place - be it everything you can pretty much think of on Alibaba or Amazon, to specialist or localised marketplaces that help tap into a specific market - marketplaces have taken the ideas of search and discovery and run with them.
They have been a blessing to brands and merchants looking for an easy way to sell – and they have come into their own in recent years as the ideal way to expand sales both domestically and overseas with minimal cost and risk.
In fact, research by Parcelhub in its whitepaper Setting the innovation agenda with proactive delivery finds that 47% of UK mid-market retailers are delivering internationally as well as locally and that, with 55% using Amazon, 47% using eBay and increasingly OnBuy, marketplaces are both a vital selling platform and tool for international growth.
However, such ubiquity has led to commoditisation and fierce competition – and it can be found in spades in delivery.
Traditionally, the delivery part of marketplace eCommerce – all eCommerce in fact – wasn't given much thought. Put it in a box and send it off in the mail or via your courier firm, the cost being added at the point of sale.
Thanks to Amazon Prime, delivery has now become perhaps the key battleground for the buy box: it has instigated an era of free – or seemingly free – and rapid marketplace delivery.
But while speed is a priority, it isn't the only driver of eCommerce and marketplace delivery in 2020 – for retailers, marketplaces and brands there are several interacting elements at play, each dictating what delivery strategy needs to evolve to meet.
More tellingly, how is it going to be paid for?
Speed your goods to me
Only this week Amazon published its quarterly results, reporting that sales are up 21% to $87.4 billion. A big chunk of this growth has come from investment not only in opening up new markets, but from doing so with the lure of one-day delivery.
Part of the reason why marketplaces have been so successful is that they tap into the consumer need for convenience – in terms of choice of goods, choice of delivery and speed of delivery.
Top of this list is speed. Shoppers are no longer satisfied with simply getting their goods, they want to get them ASAP. In fact, research by Wunderman Thompson Commerce finds that a fifth of 6-16 year olds would never buy from a retailer that can't deliver the next day and 83% of children wish their purchases would arrive faster.
The need for speed is entrenched in shoppers' minds and is increasingly becoming a decisive factor when choosing who to buy from when faced with multiple vendors on a marketplace.
The challenge for marketplaces and their vendors is how to deliver at speed. For many there is a very real challenge in order management, making sure stock is available, staff available to process it and carriers on hand to get it to the customer, all within 24 hours.
The cost of making this happen is relatively large. Amazon has invested heavily in its infrastructure to make it happen and is reaping the rewards, but it has deep pockets. For other retailers and marketplaces, the cost has to come from either charging the consumer and losing competitive advantage or in swallowing the cost from margin and hoping that extra sales will leave you neutral.
Cost of convenience
While speed is an imperative with marketplace delivery in 2020, it is just part of a bigger play: convenience. Shoppers want their goods fast, but they also want them where they are going to be best place to get their hands on them.
Deliveries to offices and locations other than the home and made at a specific time have long been the stuff of 'Upcoming trends…' articles. To date not much has happened with that, other than some trials of robots in Manhattan and, of all places, Milton Keynes.
The cost of this, like speed of delivery, is increasingly becoming an issue for retailers and marketplaces. Where a year or so ago, consumers said that they were either prepared to pay more for a one hour delivery slot to their office, or that they would, for free delivery, pick it up from a merchant-specified location, today the expectation is increasingly that they want it where they want it and they want it for free.
The cost to retailers, brands and marketplaces is high. As with speedy delivery, the cost of making this happen has to either be added on to the cost of the goods, making your uncompetitive, or taken out of your margins – again, something no one wants to do in such a difficult market.
Sustaining green credentials
While demanding convenient, fast and free delivery may already seem like a tall order, shoppers are increasingly being driven by issues of sustainability and environmental awareness.
Research commissioned by retail technology expert Conversity of 1,000 consumers found that a majority (51%) aged between 16 and 34 would be more likely to shop with a retailer that has made consistent efforts to be sustainable over one that has not.
This greenness is extending to delivery – in fact, it can often be the very public face of the environmental impact of eCommerce – and that is presenting a massive challenge to the industry.
There are several strategies that delivery is already putting into practice to not improve efficient use of delivery vehicles, such as attempting to get users to accept a delivery slot around the time they want, rather than at a specific time, so that vehicle management can do the most economic route.
However, this flies in the face of the demand for convenience and speed.
Another tack is to use environmentally friendly vehicles. Double decker trucks can transport more goods for a comparable carbon footprint, while electric trucks and even bicycles are all in play to create greener delivery modes.
It is a serious problem that retailers, marketplaces and carriers are all taking very seriously indeed. There are even plans for an underground, maglev-powered delivery system across the UK that would be both fast and clean. Called Magway, it has already raised £1 million in funding to explore its potential.
But as Magway attests, meeting the sustainability challenge in delivery is perhaps the costliest of all these challenges combined. It needs changes to be made to how carriage is run and managed, which can be achieved in the here and now, but is also needs a drastic rethink of the very vehicles used – and that is costly.
Carrier strategy is key
So, what can be done to meet these conflicting and costly challenges? The key to meeting these very 2020 demands on marketplace delivery lies in how to bring all these solutions to these disparate, often incompatible, demands together.
And that means creating a carrier strategy that can give you the fastest, most convenient and most energy efficient way to deliver – at the lowest possible cost.
Having multiple carriers to hand and a carrier management system in place – or working with a third party that can do that – is vital. The only way that retailers and marketplaces are going to be able to match the levels of services and costs from behemoths such as Amazon and Alibaba et al is in trying to create efficiencies within their existing systems.
That means working with multiple carriers and managing that relationship. For starters, working to cooperate with other vendors and shippers can make for a much more efficient use of each delivery truck, making sure that it is full, can do the most efficient routing and can often get goods on the road faster than waiting for a specific carriers specific run.
Similarly, using management software – such as that from Parcelhub – can coordinate an array of delivery options so that, as a marketplace vendor, you can offer the widest range of delivery options at the most effective price, tailored to your product range in a way that exceeds customer expectations.
While this improves delivery efficiency and allows you to compete with the big boys, as well as generating the most efficient cost structure for the vendor, it doesn't answer the question of where that cost comes from. And that is the real poser for 2020.
Burying the cost of delivery into the price of the goods is an accepted strategy, but it can backfire if shoppers buy multiple goods and end up effectively paying the shipping multiple times. Fine if you can pull it off, but increasingly savvy shoppers are starting to resent this.
A single charge for shipping – that moves depending on what kind of shipping the customer chooses – is the obvious and most up-front answer. The challenge then is for the retailer to work out how to make a profit on that charge.
This is why clever management of multiple carriers is the one true trend for the future of marketplace delivery in 2020. It provides a solution to all these other challenges – and done right will also help save the world. What more could you want from your marketplace?
Pexels/Startup Stock Photos
How OnBuy are innovating their delivery strategy
A front-runner in the up-and-coming marketplace world, OnBuy already provide buyers with a viable alternative to the other major marketplaces - and this is just the start of a fantastic journey of growth. OnBuy seek to offer more choice and a better service to both buyers and sellers by putting the power of delivery into sellers' hands.
As one of the fastest-growing marketplaces in the world, OnBuy broke into the crowded marketplace sector with a superior and attractive offering. By providing a fairer, more transparent eCommerce marketplace with competitive selling fees, OnBuy have attracted thousands of online retailers seeking new avenues through which to successfully grow their businesses.
To ensure buyers have the best possible shopping experience, OnBuy have optimised the delivery process from start to finish; OnBuy put the power in sellers' hands to choose the logistics solution that works best for them. OnBuy's partnership with Parcelhub enhances this for sellers: assisted by the OnBuy Fulfilment Network, OnBuy connect their sellers with leading companies like Parcelhub so they can offer buyers the best possible delivery service. Giving sellers choice rather than forcing them to adhere to a single standard fosters the transparency that OnBuy strives for.
This approach directly translates to a far better experience for buyers. They can easily weigh up the product offering from every seller and compare a range of delivery options side-by-side. OnBuy's product pages clearly display the estimated delivery dates and if buyers are happy to pay a little bit more for a faster delivery service, they can. All of this information is made clear to them throughout the buying process, from product pages through to checkout, further reinforcing OnBuy's approach to transparency and continually striving for the best customer experience.
This post was written by Parcelhub, a trusted partner of OnBuy.
Parcelhub is a bespoke multi-carrier delivery management and proactive tracking support solution. Flexible and scalable, its unique portfolio of services integrate seamlessly with marketplaces, eCommerce platforms and order management systems, providing hundreds of multi-channel retailers, global brands and wholesalers with one access point to 20+ carriers and 600+ delivery options.