Amazon might be No.1 in US e‑commerce, but how do brands pick the best online retail partner in other markets?
With e-commerce becoming more important every week it’s understandable that consumer product manufacturers and data insight companies are obsessed with Amazon. But, how important is the e-commerce retailer when you are looking at new markets outside the US, where Amazon is no longer an out-and-out leader?
It’s true that in the US the e-commerce behemoth is streets ahead of the competition. According to market research firm eMarketer Amazon raked in an estimated $258.22 billion in retail sales in 2018, and despite emerging challengers, it accounted for some 49.1 percent of all online retail spend in the country, last year.
It’s not to be ignored, but outside the US Amazon isn’t all-conquering – yet. Even in the US, other online retailers are making inroads. Just look at Walmart’s recent results announcement. The retailer said it grew its US e-commerce sales by 43 percent in Q4 2018 – not bad! Walmart’s rapid e-commerce growth was helped by the expansion of its grocery pickup and delivery service, and its efforts to offer a broader assortment on Walmart.com.
However, in many countries across Europe, and massive markets like India and China, Amazon and Walmart are just blips on the e-commerce sales chart. So what does this mean for brands as they ramp up their international e-commerce channel programs?
How to select your next e-commerce retail partner?
We know from the dominance and size of players like Amazon and Walmart in the US, and Alibaba in China with its 60 percent market share, that one or two online retailers can give you access to a significant proportion of a given market. This picture is often replicated on a smaller scale in other markets, even if it isn’t the obvious e-commerce heavyweights that lead the way.
Regardless of whether your brands are new to the e-commerce channel, or you are entering a new e-commerce market, category or country – you need to find the right retailers to give your products the best chance of success.
So, if Amazon isn’t always the answer, who is? Find these local leaders as your starting point, and once you’ve made inroads, you can consider going after the long tail of smaller retailers. You may have a gut instinct about which retailers you would like to collaborate with, but finding the online retail partners that are best for your brand in a particular market is all about data and some basic market research.
Here’s our straightforward four-step market research process for choosing your online retail partners in a new region:
1. Review your target consumer.
Consumer needs are not universally uniform. Demographics and desires vary by market. As part of your e-commerce market entry process, you may need to redefine your target market a little. However, once you understand who your ideal consumer in a given market is, your first piece of market research should be about establishing which retailers and marketing channels best serve these ideal buyers.
- Get a better understanding of local market dynamics, demographics and shopper preferences.
- Prioritize opportunities for distributing market-relevant e-store content, and how to generate positive consumer feedback such as online ratings & reviews.
- Get insights for spending priorities in the digital channel, and define the most influential media to better shape your marketing plans.
2. Which online retailer leads your target category?
Identify the e-commerce sites that play the most significant role in your category, to build your product perception in the new market.
At first glance, most readily available rankings of retailers by market are based on their overall turnover. It might seem obvious, but the biggest retail players in your new market may not serve your category as well as you’d like. You are going to have to do a little bit more digging to determine the local e-commerce ranking of retailers that are relevant to your product categories.
3. Work out the fine detail of your consumers’ path-to-purchase.
Understand the journey taken by your target consumers from the moment they start researching their needs, to the final purchase decision. Given that most of your shoppers are likely to start their shopping mission with a web search, it’s important to know which retailers and what keywords rank highest in organic search for your product categories.
You will also need to keep in mind the impact of third-party content on your brand. Up to 70 percent of content shoppers see, relating to your brand, is delivered by sites you have little or no control over. These could include e-retailers, bloggers, or other portals – sites that will vary significantly by market.
Consider how you can:
- Optimize for Search; more than 78% of shoppers who purchase products above $50 research online prior to the purchase. What are your consumers searching for, and what are they finding?
- Understand the true performance of key search terms, and avoid the adverse impact of sending consumers to negative content.
- Identify third party 'SEO allies' that together with your own website can maximize consumer brand experience in search result pages.
4. Understand your competition
You may have a thorough understanding of your category competitors in the traditional channel, but the same may not apply online. Traditional category leaders may find that the advantages they have built up over years of working with offline retailers no longer exist online, and that a whole new crop of e-commerce aware competitors awaits to challenge them in the e-commerce channel.
- Analyze all products in your categories online – not just traditional offline competitors - to identify the true online competitive set, known and unknown.
- Understand category and competitor-pricing strategies to ensure your offerings are competitive yet profitable.
- Monitor online stores to identify new competitive products and product introductions.
This basic market research will get you going, but, once you are up and running, measurement and monitoring will need to be an ongoing task. You will need to keep daily track of critical e‑commerce KPIs including Availability, Content, Price & Promotions, Search Performance, and Ratings & Reviews, to ensure success in any e‑commerce market.