Win-Win Partnership Between Brands and Marketplaces

The pandemic has had a tremendous impact on the consumer and their habits. In 2020, the growth of e-commerce in Russia amounted to 58% – more than half of the orders were made by users through marketplaces. Thus, marketplaces have become a key driver of e-commerce growth.

Marketplaces in Russia dominate in terms of the number of user visits among all e-commerce sites. Today their share is more than 60%, and it continues to grow, “eating off” the audience from their own sales channels of manufacturers’ brands (D2C). Marketplaces are also becoming an entry point, a new search aggregator for a large part of the audience. According to statistics, 58% discovered and bought new brands after seeing them for the first time on marketplaces.

The habit of searching for everything on the marketplace becomes so strong that people are looking for even those brands that are not there and never were. Every month, 60,000 IKEA queries appear on OZON.

What is more important for a brand – to invest in knowledge and grow long-term brand equity, including through its D2C channel, or to invest in sales “here and now”, gaining an audience and coverage on marketplaces? Only a small part of all the questions that marketers face today.

At the same time, competition between marketplaces has intensified. Competing with each other, they are looking for new opportunities for cooperation. For example, in October 2021, Britain’s largest retail chain Tesco teamed up with German grocery delivery service Gorillas to launch a 10-minute delivery test. Obviously, no brand will repeat this, at least not today.

In addition to logistics, marketplaces also compete for well-known and strong brands on the shelves, because they are the ones that attract new customers.

Is there a win-win model where both brands and marketplaces can win?

To answer this question, we spoke with representatives of brands and marketplaces and found three areas around which cooperation could develop. Two of them I would call areas of conflict of interest: 1) brand building tools that allow you to stand out on the shelf, and 2) the issue of data, its availability. And the third, the territory of environmental friendliness and responsible consumption, reconciles everyone.

Disputed Territory: Brand Building Tools

Marketplaces and retailers are really developing a pool of branding solutions for manufacturers. For a long time there have been such opportunities as live streams – broadcasts from the brand with the involvement of experts, opinion leaders live, dialogue with the consumer, brand follow – the ability to click the follow button to join the brand community, receive more information about new products and be the first to have privileges.

Russian advertisers are more familiar with content branding tools: brand zones, advanced product cards. Definitely, in Russia branding opportunities will grow rapidly.
Take a look at Amazon, which launched a new interactive ad format in 2021, leveraging the power of its entire ecosystem. Watching movies on Fire TV, listening to podcasts, listening to music or watching favorite players on Twitch, upon contact with an advertising message, the consumer can ask the virtual assistant Alexa to put the item in the cart on Amazon, remind later and put it on the wish-list, or maybe not reap, and buy immediately with Apple Pay.

Amazon Launchpad and Handmade are special programs for attracting niche sellers. Launchpad is a program to support launching startups on Amazon with their products. Handmade is a program for small businesses engaged in a number of crafts: accessories, jewelry, tableware. So far, we do not see such formats being implemented on the Russian market, but this is in the near future. After all, Yandex and Sbermarket are no longer inferior in terms of capabilities to Western ecosystems.

Disputed territory: data availability

Of course, brands rely on the fact that as part of their relationship with marketplaces, data will also reach them. But in reality this is not so. Even data on the impact of advertising campaigns on orders and revenue is not available from all marketplaces or is available, but not on a regular basis, with a time delay. Marketplaces and agencies see growth points here and introduce certain tools to support brands.

For example, Amazon offered Brand Metrics to brands. This tool allows you to evaluate the impact of Amazon advertising campaigns on sales, knowledge and consideration, as well as measure return on engagement.

This year, our agency and Amazon collaborated to create the Audience Galaxy tool, which gives them exclusive access to Amazon audience analytics. Audience Galaxy sees the full picture of user shopping patterns and identifies additional audiences to promote brands on Amazon.

Nevertheless, in the field of working with consumer data, the D2C channel provides brands with fundamentally wider opportunities, namely: personal data of customers, the ability to build attribution models, for example, the impact of the release of a particular TV commercial on a certain TV channel on downloads of a mobile application.

General territory: environmental friendliness

From the point of view of working with data and tools, there are definitely growth points on marketplaces. But the approach to conscious and responsible consumption unites everyone now, as this is part of the strategy of not only the brand, but also the marketplace. On the issue of environmental friendliness and environmental protection, both brands and marketplaces adhere to a single position.

First, we are all responsible for the condition of the planet we live on, and it depends on all of us whether we will breathe clean air. In this case, our customers and marketplaces are convinced that joint efforts are needed in areas such as the development of packaging from recycled or recyclable material; organization of collection points for used items and packaging; organization of logistics with the minimum possible damage to the environment.

Secondly, the source of growth for most businesses is young people, generation Z, who are more concerned about environmental issues than older generations. For this consumer, sustainability is almost a determining factor when choosing both a brand and a marketplace.

This year, British retail chain Tesco, together with startup Sataliya, which uses artificial intelligence to optimize the last mile of delivery, developed an interesting solution: it optimizes delivery in a way that not only saves miles, resources and time, but also minimizes Tesco’s carbon footprint. .

So how can brands and marketplaces enter the win-win partnership model?

Treat this partnership not as a sales channel “here and now”, but as a dynamically growing and very promising communication channel. Use the full range of brand building tools, turn data into insights, look for common growth points.

And it is important for marketplaces to be special, original and attractive to the consumer. And this is possible only in collaboration and partnership with each other!

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