Choosing Tools for Online Marketplace Optimization
E-commerce is growing rapidly — more than a quarter of the world’s population shops online, and e-commerce sales are expected to account for 18 percent of all retail sales worldwide this year. If your company sells a physical product, you can’t afford to ignore the reach and flexibility of e-commerce marketplaces anymore.
As with any technology, there are complicated factors to consider when building a digital marketplace. You’ll need to track inventory and accounting, conduct research into buying behavior, create long- and short-term strategies, and optimize your prices. There are dozens of tools to choose from for each of these categories — here’s how to choose.
The State of E-Commerce in 2021
The COVID-19 pandemic was especially beneficial to the e-commerce industry while simultaneously serving as a rude awakening to retail-only establishments. While total retail sales climbed just under seven percent, e-commerce sales shot up by 32.4 percent — a nearly 25 percent year-over-year increase in market share.
Companies that transitioned at least partially to an e-commerce model aren’t likely to turn back to retail-only in the years to come. The benefits of online retail are simply too great:
- Much broader reach
- More detailed buyer information for more detailed targeting and analytics
- Faster and more convenient buying process
- Faster response to customer and market demands
As customer confidence rises and behavior continues to shift, retail companies will need to equip themselves with the right tools to successfully run and optimize an online marketplace.
According to Robert Half, 69 percent of American companies with annual revenues under $25 million still use Microsoft Excel as their primary accounting software — down from 78 percent a few years ago, but still too high for the modern digital marketplace.
Excel has almost no business collaboration tools, limited web features compared to the desktop version, and, since it still runs locally, struggles to handle large data sets without significantly dragging down your computer. A cloud-based solution doesn’t have the same problem, since the computing power for advanced calculations is done offsite.
Every e-commerce business is different, but you should be looking for an accounting tool that automatically connects to your retail site so that sales and costs don’t have to be entered manually. It’s also a good idea to look for a tool that integrates accounts receivable, accounts payable, and payroll so you can track your business’ cashflow outside of just retail.
Research and Insight
Creating a great product is only the first step — getting it into the hands of people who want it and can benefit from it is another. You’ll need a tool (or tools) that can help you conduct market research, analyze trends, discover your potential customers’ buying habits, and compare your business to your competitors’. Research might include:
- Keyword research: determining the search terms that your customers use most often to come across your product
- Market trends: observing the rise and fall of specific terms or broad markets. If you sell craft beer and notice a rise in global demand for hard seltzer, you can capitalize on that trend (as many major breweries are now doing).
- Buyer personas: every company has an ideal customer — someone who has a problem you can solve, is ready to solve it, and has the means to purchase your product. Most social media platforms offer extremely sophisticated targeting tools so you can reach out to the exact people who will be most likely to make a purchase.
- Visitor analytics: all of your marketing will route back through your website, so you need to know and if those marketing efforts are working. Analytics tools can tell you where traffic is coming from, who’s browsing, and what they’re looking for on your site.
General Strategy and Growth
Based on your research and insights, you can craft a strategy to broaden your reach and increase your influence across online platforms, but keeping track of and executing that strategy will require careful planning and coordination.
Look for a tool that will help you:
- Find the right platforms and online mediums for your buyers, then implement your strategy across those platforms
- Automate as much of your operations as possible, including repricing, push notifications, chatbots, email marketing, reporting, and more
- Handle customer relationships by routing them to the appropriate resources or starting a service ticket
In a competitive marketplace, pricing has to stay flexible. Price optimization is the process of adjusting your prices on a constant basis to find the perfect balance between profitability and demand, taking into account:
- Customer survey data
- Demographic and psychographic data
- Historic sales data
- Operating costs
- Machine learning outputs
- Subscription lifetime value and churn data (for subscription business models)
Every company’s pricing model will be different — the frequency with which you change your prices will vary significantly, as will the importance of various inputs — but it’s important to find a pricing optimization tool that will help you set prices for your industry and your customer base.
Make Sure Your Tech Stack Communicates
Finally, all of the above tools should be able to talk to one another as seamlessly as possible, without clunky manual data entry or file conversions. You should be able to export reports from your analytics software directly into your pricing software, for example.
If you need help creating an e-commerce tech stack that’s secure, usable, and intuitive, Madison Taylor Technology can help. We’ll examine the unique needs and goals of your company and build a technical solution that’s right for you.
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