Smaller merchants often get lost in the ever-increasing internet noise. And they are also outspent by their bigger rivals when it comes to marketing. But online marketplaces represent a unique global opportunity for smaller merchant growth in their home countries and across borders. But there’s also a huge opportunity to leverage the affiliate channel within these marketplaces.
First, let’s look at the growth of these online marketplaces.
According to Internet Retailer’s latest report, the total worldwide amount for goods transacted on online marketplaces in 2016 grew 21.5 percent to $1.09 trillion. The report, Online Marketplace: A Global Phenomenon, shows that the same marketplaces have grown 51.7 percent since 2014. The study estimates the worldwide value of goods transacted on multi-merchants portals accounted for 44 percent of the $2.44 trillion spent online last year.
In the United States Amazon dominates online retail. In China, it is Alibaba (it accounts for three-quarters of all online spending in the country). Other large online marketplaces include Rakuten (Japan), Jumia (Nigeria), MercadoLibre (Latin America), Flipkart (India), and Lazada (Southeast Asia).
Online Marketplace Benefits
For many smaller merchants, marketplaces are a great place to reach consumers outside of their home/geographic markets. That’s because these online retail giants have the resources to handle the obstacles to selling internationally. They eliminate many of the challenges such as language barriers, customs requirements, logistics, and shipping. For consumer, the appeal is a vast product assortment and convenience unavailable from individual online retailers.
Marketplaces also help global retailers reach U.S. shoppers. Nearly 50 percent of U.S. consumers say they have purchased merchandise online from international retailers. That’s up from 43 percent a year ago, according to a June UPS and comScore Inc. study. And 32 percent say they discovered the retailers on a U.S. marketplace. But the top reason for shopping on marketplaces, according to the study, was finding lower prices from international retailers on U.S. marketplaces.
The Opportunity
Amazon and Alibaba are behemoths. But there are a growing number of smaller marketplaces (think Etsy, Overstock, Newegg) that focus on a particular product mix and they gaining in popularity. These multi-seller portals target both buyers and sellers.
Many of the merchants that sell their wares on marketplaces already have affiliate programs. But, additionally, many of the marketplaces themselves also have their own affiliate programs. Having an affiliate gives not only the marketplace, but its merchants, more exposure to a wider audience. For example, if thousands of affiliates are promoting offers on Overstock, even if your offer isn’t the one being promoted, it heightens the chances that your product may be discovered as visitors search the Overstock site.
“Marketplaces represent a good opportunity for merchants because they have the infrastructure and marketing channels in place to drive significant eCommerce sales volume.” iAffiliate Management CEO, Rick Gardiner, says. “Leveraging marketplace affiliates is a great option for up-and-coming merchants until they are ready to launch their own (direct) affiliate program.”