With a significant amount of retailers’ marketing spend dedicated to attracting new customers, the value of repeat, loyal shoppers cannot be overstated.
Over half (52%) of customers go out of their way to buy from brands they’re loyal to, while 88% of customers recommend brands they trust to others. This makes loyal customers the most valuable marketing tool in a retailers’ arsenal.
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However, earning and maintaining customer loyalty is easier said than done. With the ongoing cost of living crisis continuing to impact consumer spending, and the saturated retail market offering shoppers evermore choice, building customer loyalty is one of the most challenging actions for a retailer to tackle.
Introducing: Online marketplaces
An increasingly popular approach for retailers looking to capture (and retain) loyal customers is to offer more value and convenience by extending their product range through a marketplace or curated range extension strategy.
Until recently, pure marketplaces like eBay and mixed marketplaces like Amazon, which sell a wide-range of products, have dominated the market.
However, the prospect of adopting a marketplace model has proved tempting for high street retailers looking to find new ways to diversify and grow revenue. This is because the model reduces the capital expense of holding 1st-party stock, but it allows them to offer more variety, choice, and convenience to their customers.
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By GlobalDataHere are three ways the online marketplace model can help retailers boost the customer experience:
1. Extended product line equals bigger potential customer base
Marketplaces allow retailers to enhance and diversify their offering, capturing new revenue. As well as enabling retailers to respond fast to changing consumer demands and market trends, marketplaces also afford them the opportunity to explore new categories in a low-risk way.
Extending the product range entices existing customers to shop more regularly, but also attracts new customers who may not have historically considered shopping with a retailer.
For example, Tesco, the UK’s top grocery retailer, has recently broadened its Tesco.com product range to include third-party offerings. This new marketplace strategy lets customers easily add a wider variety of products to their existing grocery carts. The extra items are delivered directly by third-party sellers, making shopping more convenient for customers.
With the marketplace model, customers can purchase from multiple third-party sellers in one transaction, all the while keeping the retailer’s brand ‘front of mind’. The marketplace in turn represents a trusted online shopping destination.
2. Increased customer engagement
Retailers can leverage marketplaces to take their e-commerce business in new directions and grow beyond the limitations of their current operations and infrastructure. They can increase customer engagement, lifetime value and loyalty by creating curated experiences for shoppers that feature complementary partner brands and sellers.
Retailers establish the product data requirements that third-party sellers must adhere to, allowing them to vet the third-party product submissions and maintain control over the consumer experience. This means that when implemented correctly, they have full use of merchandising, personalisation and recommendations tools, which they can use to further increase engagement.
3. Loyalty benefits and promotions
Marketplaces offer retailers new ways to establish and enhance loyalty programmes. Integrating third-party products into existing loyalty programmes enables retailers to unify the commerce experience for their customers. They can become the facilitator of a programme that continues to provide value to these loyal customers, encouraging shoppers to buy while providing access to richer customer data.
For example, Tesco’s Clubcard enables customers to earn Clubcard points for both grocery and extended range purchases, which can then be used for future purchases.
A loyalty programme can also be targeted at sellers or partners, offering gifts, incentives, or other benefits like sales training, to strengthen those relationships and ensure the marketplace remains a preferred sales channel. Retaining the best sellers and partners ensures retailers can continue to deliver the best customer experience for their customers.
Ensuring long-term success
Retailer-operated marketplaces offer a wealth of opportunities where customer loyalty is concerned. However, to assure long-term success, retailers will need to keep in mind some key considerations.
The fastest way for established retailers to develop a marketplace destination is to extend their existing enterprise-grade commerce platform with specialist marketplace software. Seller experience is central to success, so sellers need a suite of integration options to connect their source systems, mapping tools to help onboard their products, and clear reporting and insights to understand their next best action.
To sustain and expand their marketplace, retailers also need to be sure they can pivot fast in response to evolving customer and seller expectations and needs.
Today’s software-as-a-service marketplace platforms provide the enterprise-grade functionality and all-important extensibility retailers will need as their marketplace strategies evolve. Making it easy to dynamically add products, suppliers and new features.
Today’s cutting-edge solutions also capture data insights, making it easy to handle transactions and commissions, manage how connected businesses sell and fulfil orders – including drop-ship sellers – and rollout new revenue models or capabilities to their seller network.
With the right marketplace strategy and technology in play retailers can initiate a future-proofed and scalable marketplace destination that will keep their current customer base loyal, and extend that base to welcome new customers into the fold.
About the author: Luke Hilton is VP of Solution Engineering at Marketplacer, a global technology platform that enables brands, retailers, suppliers, communities, and innovators to build and scale online marketplaces and range extension programmes.
