Seller Monetization Strategies: A Marketplace’s Key To Success

OnlineSales.ai Blog

Over the years, e-commerce marketplaces have gained incredible power as platforms that bridge the gap between buyers and sellers. They have changed the way goods and services are found, priced and made available to shoppers.

Maintaining an e-commerce marketplace is like maintaining a complex machine in the most optimized fashion. Advertising dollars can definitely drive traffic to your marketplace but ensuring balanced sales volume spread across a majority of your vendors can become a formidable challenge.

Guess what! On an average, less than 10% of traffic on a multi-vendor marketplace converts to a sale.

That’s right! What this effectively means is that 90% of the audience is window shopping and every marketplace needs to find direct & indirect ways of utilizing this pool of potential intents.

If you really think about it, a marketplace is a perfect confluence of shoppers, intent and merchandise. This opens up a whole new opportunity of creating hooks and engagements that can help increase order values of existing shoppers and push the needle in converting new ones.

Such a strategy leaves all parties happy with your sellers getting more sales, shoppers buying more and your marketplace increasing overall revenues.

From a Seller Monetization & Marketing strategy point of view, this is the core thought that grows into different products and solutions that can be implemented by marketplaces.

Usually, marketplaces generate revenue in the following ways:

  1. Commission on sales from sellers.
  2. Providing value-added services like storage, logistics, payment gateway, etc.
  3. Low paying and generalized ad networks across ad slots on the marketplace.
  4. Listing fees or monthly membership fees from sellers.

To be honest, while the above models have been tried and tested, they don’t really make the best use of the potential data of shoppers, their intent and sellers product coverage that a marketplace has available. While this may add to linear growth and exponentially increase revenues, newer and smarter models need to be adopted.

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One such revenue channel is creating native ad inventory or Sponsored Product Ads on your marketplace itself.

Different kinds of native ads your marketplace should power via such ad inventory are:

  1. Best-Sellers or Top Trending Products
  2. Category-wise Top Selling Products
  3. Featured Recommendations/ Personalization
  4. User-Based Remarketing Products
  5. Complementary or Add-on Products

According to Forrester Research analyst Sucharita Mulpuru : Product recommendations are responsible for an average of 10-30% of eCommerce site revenues.

When it comes to sellers, what can be seen in recent trends is that an increasing number of sellers are trying to find newer ways to boost sales on marketplaces.

Sellers today understand that simply listing products on a marketplace does not create a lot of visibility for them. Its critical that they have tools which can help them gain visibility in front of relevant shoppers online and drive more ‘purchasing traffic’ to their listings.

Furthermore, in respect to Customer Acquisition Cost (CAC) and Net Margins, many of us in the e-commerce space are well aware that marketplaces usually see high CACs which lead to wafer-thin Net Margins.

Both these metrics play an important role to keep marketplace economics on track. Thus, it is even more essential to find ways to stabilize CAC’s which would translate into better margins.

In such a scenario, implementing a seller monetization solution increases conversion rates not only for returning buyers but also converts new shoppers.

As a result, additional sales from the existing audience brings down CAC’s considerably. And to add a cherry on the cake, this increase in sales volume in turn improves the Net Margins for marketplaces.

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A marketplace seller monetization solution should work at two levels:

The first level works within your marketplace where sellers can optimize the traffic already present on your marketplace website.

The second, helps sellers nudge intent driven traffic back to the website.

Native Ads or Sponsored Product Ads

Sellers should be enabled to launch Native Product Ads or Sponsored Product Ads across your marketplace pages and listings to target audiences within your marketplace environment itself.

This will help sellers in increasing their catalog visibility and reaching high intent shoppers from within your marketplaces’ existing pool of traffic.

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By doing so, your marketplace creates a new revenue channel which is profitable right from day 1. Here, your marketplace can not just monetize its ad listing space but also optimize it.

Buyers, on the other hand, should receive personalized product recommendations based on what they are looking for, the category they are browsing and their purchase history among other factors. This results in higher conversion rates from the existing pool of traffic on your marketplace.

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Such a solution not only works as a value-added service to your sellers but also helps shoppers find personalized and relevant products. These Product Ads look and feel exactly like your marketplace’s own organic listings.

Did you know? According to a research by McKinsy, an astounding 35% of Amazon’s revenue is generated by its recommendation engine.

Paid Channel Ads on Google and Facebook

Enabling sellers to launch campaigns on paid CPC channels is the second level at which a seller monetization solution should work.

Here, marketing automation should take care of generating keywords, creating ad copies, deciding placements, setting bids, the frequency of ads, etc. On the other hand, AI-driven insights should ideally help optimize ad spends, targetings, etc. Thus delivering great returns for every penny of ad spend.

And when all of this can be done in just a few clicks, even the sellers who are new to digital marketing can take up this solution with ease.

Seller sponsored ads across Google + Facebook helps sellers and your marketplace to drive new relevant traffic from paid channels back to your marketplace website.

This essentially increases the sellers’ reach beyond your marketplaces native traffic to a wider intent driven audience online.

Your marketplace thus has an entire seller base which shoulders its marketing costs while driving new shoppers to the website.

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Providing a seller monetization solution necessitates creating additional experience such as campaign/ad manager platform for the add-on services provided to the seller.

Ideally, a great monetization solution should already have such a platform or interface as a part and parcel of its offering. Such an experience works best from within your marketplaces seller center because:

  1. It ensures a seamless experience for the sellers.
  2. Ease of handling for non-tech-savvy sellers.
  3. No additional effort required from the marketplace to build a custom experience.

Did you know? 23% of sellers list seamless seller center experience and availability of add-on tools as deciding factors for listing on marketplaces.

In a nutshell, apart from just increasing sales, a seller monetization solution can provide your marketplace with the following benefits:

  1. Drive newer intent based traffic from paid channels back to your marketplace without additional marketing costs.
  2. Increase conversion rates for new shoppers as well as repeat buyers.
  3. This increase in conversion rates drives more revenue further increasing your marketplaces margins.
  4. Serves as an additional and important marketplace offering to the sellers.
  5. Increase in seller revenues as a result of higher conversion rates from highly intent driven shoppers.
  6. Overall, seller longevity is improved for your marketplace.
  7. For the buyer, personalized ads make their experience a lot more immersive.
  8. Cross-channel targeting ensures increased Share-of-Voice capture from potential shoppers.
  9. Up-selling and cross-selling powered by the native ads solutions results in a greater buyer Lifetime Value (LTV).

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Now, when it comes to actually selecting and implementing a seller monetization solution, a solution which is automated, AI-powered and self-serve allows your marketplace to implement and power additional revenue channels in just a few clicks.

Barring a few last mile integrations, your marketplace need not flex much muscle as all the heavy lifting is done by the solution. Thus, a solution which empowers your marketplace and your sellers, requiring only minimal effort from your marketplace team, is the right pick here!

How can we help?

Monetize by OnlineSales.ai, a complete e-commerce marketing solution can be natively integrated with any marketplace within 2-3 weeks. It’s an AI-driven solution for marketplaces globally to offer seamless cross-channel marketing solutions to its sellers on a single platform.

To learn more about Monetize and how it can help your sellers, write to us on hi@onlinesales.ai.

Interested in Implementing a Seller Monetization and Marketing Solution?

Schedule a Demo
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Rajat Jadhav
Rajat Jadhav is currently the Partner Manager at OnlineSales.ai - with a focus on implementing data-driven growth strategies for our E-commerce Partners. When he's not empowering E-commerce marketplaces around the globe, you can find him immersed in self-actualization reads or playing basketball.

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