MARKETPLACE MANAGEMENT: EXCELLENCE IN WINNING AMAZON'S BUY BOX - International TCG Summit
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MARKETPLACE MANAGEMENT:
EXCELLENCE IN WINNING
AMAZON’S BUY BOX
2021 Benchmarking Study
Product A Product B Product C Product D Product E Product F
February 2021
Contact: Dr. Martin Schulte, Partner and Sector Leader: martin.schulte@oliverwyman.com
RETAIL & CONSUMER GOODS
EXECUTIVE SUMMARY • This document summarizes the results of an annual Oliver Wyman benchmarking study on marketplace management, comprising of – an annual survey of ~110 CEOs / C-level executives of consumer goods companies – a series of in-depth studies into best-in-class companies to highlight their marketplace management practices • This study focused on the consumer goods sector, notably consumer durables (white goods, brown goods, major/small domestic appliances), fast-moving consumer goods and apparel/fashion • While marketplaces, driven by their strong GMV growth, are an increasingly strong strategic priority for many consumer goods companies, most CEOs rate their company’s marketplace skills as poor or very poor • The key capabilities to marketplace excellence can be structured along six dimensions – in short: offer selection, price setting and monitoring, product navigation, content and review management, brand protection, and operations • While no single industry sector has clearly pulled ahead of others, there are clear best practices from leading companies to learn from in each sector © Oliver Wyman 2
ONLINE MARKETPLACES / PLATFORMS WILL BE THE DOMINANT CHANNEL TO COME
Online marketplaces outgrow amazon deliberately focuse on Top marketplaces outperform
traditional online retail marketplace growth (vs. own eCom growth continuously
GMV1, Global (€, bn) retail) GMV1 CAGR growth rate, Global, 2018-20
amazon GMV1 by source, Global, 2012-20
% of total eCommerce Retail GMV, 2020 (€, bn)
Marketplace
… and even stronger
5,356 416 growth of smaller
marketplaces!
31%
3,895 26%
243
49%
17%
2,058
42% 131
62% 837 416 8%
340
792 29% 63
58%
48%
13% 42%
2 3
2015 2020 2025F 2030F 2012 2015 2018 2020 eCommerce
overall
“The marketplace is the overall winner in the eCommerce business” John R. Furner, CEO at Walmart U.S, 2020
1. Gross merchandise value. 2. Including Taobao and Tmall. 3. Figures for 2020 extrapolated based on Q1-Q3 results. Source: Marketplacepulse, Annual reports, OW future of retail study
© Oliver Wyman 3
MARKETPLACE GROWTH IS DRIVEN BY A SET OF SUBSTANTIAL UNDERLYING TRENDS
GMV of marketplaces, Global, 2020-2030F
€, tn
New types of marketplaces
5.5 Firms are expanding in new industries and new types of online
commerce, e.g. group purchases and social commerce
5.0
4.5
+
New marketplaces
4.0 Number of marketplaces has more than doubled in the last five
years and accounts already to >11.000 on a global scale
3.5
+
3.0 More sellers
2.5 Number of sellers is growing with double digits across all
platforms, e.g. at amazon ~1.000.000 sellers register every year
2.0
+
1.5 General eCommerce growth
1.0 COVID pushed growth of e-commerce across the globe – effect is
expected to be sustained
0.5
0.0
2020 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F
Source: Oliver Wyman analysis
© Oliver Wyman 4
DEEP-DIVE: LARGE NUMBER OF EMERGING MARKETPLACE FORMATS, GLOBALLY
Leading marketplaces Retailers Social media Online players Smaller
(some moving into with adjacent platforms opening dedicated
retailer business) marketplaces entering into platforms platforms
marketplaces
~90% of ~10% of
total market total market
Relative share increasing (very strong growth)
Source: Oliver Wyman analysis Relative share decreasing (still strong growth)
© Oliver Wyman 5
EXECUTIVES EXPRESS MAJOR CAPABILITY GAPS IN MANAGING MARKETPLACES
Marketplaces increasingly high on the CEO agenda … … yet management capabilities lack behind ambition
% of interviewed CPG CEOs considering marketplaces a % of interviewed CPG CEOs rating their company’s
strategic priority marketplace skills
Strong priority Not a priority Very poor Good
Priority Poor Very good
~17%
~28%
~37% ~42% ~40%
~48%
72%
~55%
~54% ~30% ~32%
83% ~27%
~53%
~24% ~21%
~28% ~23%
~18%
~10% ~4% ~7%
~2%
2018 2019 2020 2018 2019 2020
Strong uplift driven by Corona-induced
substantial growth of online channel in 2020 Re-focusing on core business
Source: Oliver Wyman CEO survey (n 2018=65 ; n 2019=72 ; n 2020= 110)
in wake of Corona
© Oliver Wyman 6
THERE IS A LARGE NUMBER OF OPEN QUESTIONS AND CONCERNS
Marketplace collaboration models used (x% of consumer goods companies surveyed)
Based on Oliver Wyman CEO survey (in 2020, N=110)
… need to manage third parties … sell to marketplace operators … sell directly on marketplaces
selling on marketplaces1 acting as retailers with their own brands (“sold by
(“sold by someone”) (“sold by amazon”) brand on amazon”)
94% 62% 28%
“amazon regularly lowers their prices on our “We are worried that appearing as a
products, then retroactively demands spot marketplace seller would impact our
invest to secure their margins” brand equity”
“We have trouble managing the multitude
of marketplace sellers, and are unclear
which conditions we can set – if any”
1. Remaining 6% prevent marketplace selling through captive / selective distribution schemes. Source: Oliver Wyman CEO survey
© Oliver Wyman 7
OUR METHODOLOGY COVERS OVER 60 CAPABILITIES ACROSS 6 KEY DIMENSIONS,
RELATED TO MARKETPLACE MANAGEMENT
1 | Optimum offer selection 2 | Effective price setting
Choose and continuously manage and monitoring
the product range sold on market- Ensure that prices reflect target
places / via 3rd party sellers position and align with the pricing of
other channels, also across countries
0 | Commercial 3 | Superior product
6 | Efficient and auto-
management across navigation capabilities
mated operations
channels Ensure that products are well-
Create a dedicated marketplace visible on website, e.g. by being
team and provide them with Get real-time RoI clarity on
prices, 3net margins, and listed early-on in search results
the needed tools and processes
their erosion
5 | Robust brand protection 4 | Optimum content and
scheme reviews management
Ensure that only original products are Optimize content (e.g. A+ content) on
sold on marketplaces and that your product pages to drive conversion and
brand is well-presented actively manage product reviews
© Oliver Wyman 8SECTORS ANALYSIS SHOWS A BROAD SPREAD OF CAPABILITIES, WITH ONLY FEW
“SHINING STARS”
Marketplace management Toys Beverages Brown goods Major appliances
Select best practices
skills map Tools Beauty & care Small appliances Fashion / Apparel
Best practice
EXECUTION
LEVERS
(Brand
Advanced
protection,
operational
efficiency,
content)
Basic
Basic Advanced Best practice
COMMERCIAL LEVERS
Source: Oliver Wyman marketplace study Dec. 2020 (Offer, pricing, presentation)
© Oliver Wyman 9OVERVIEW OF IDENTIFIED BEST PRACTICE EXAMPLES TO LEARN FROM
Optimum offer Differentiated, highly relevant and curated offer across channels
selection Tailoring of offer to differing target groups, varied by marketplace type
Effective price setting High price consistency between target channels via dynamic pricing approach
and monitoring All commercial decisions centrally steered, across marketplaces and platforms
Superior product Well-tailored product descriptions drive top position in product searches
navigation capabilities Very high product visibility through marketplace search engine optimization
Optimum content and Highly standardized product presentation across videos, pictures, content
reviews management Active, real-time consumer value mgmt., e.g. reactions to consumer reviews
Using amazon’s PROJECT ZERO to detect and delete product forgeries and
Robust brand
actively manage product descriptions (also of longtail assortment) to present
protection scheme brand in best possible way
In-housing and automation of core retail capabilities, e.g. consumer
Efficient and auto-
activation, retail sales data analytics, commercial functions. Key commercial
mated operations functions separated from Ecovacs
© Oliver Wyman 10EXAMPLE: XIAOMI TEAMS UP WITH ALIEXPRESS ON KEY COMMERCIAL TASKS
Key insights
• XIAOMI governs its global
presence via AliExpress as sole
operator of XIAOMI brand shops
• AliExpress takes full control over
local promotions, dynamic
pricing and temporary rebates
• XIAOMI provides AliExpress with
exclusive variants and further
means of exclusivity
(pre launches, etc)
• Both parties operate in an “open
book” way of collaboration,
regarding supply chain
transparency, forecasting
models, etc.
• Staff members are co-located to
ensure smooth information flow
and fast decision making
© Oliver Wyman 11EXAMPLE: POLAR SEAMLESSLY EMBEDS EXTERNAL CONTENT INTO ITS AMAZON
BRAND PAGE, LEVERAGING AMAZON’S FUNCTION AS A PRODUCT SEARCH ENGINE
A single amazon
product page Link to
seamlessly linked to software
user generated backbone
content
Utilizing the user
generated content
created with Polar Flow
creates sense of
community
community at on
marketplace
marketplace as well
Source: Oliver Wyman analysis
© Oliver Wyman 12EXAMPLE: TINECO SCALES UP ITS VACUUM BUSINESS VIA STRONGLY AUTOMATED I
N-HOUSE CAPABILITIES FOR CONSUMER VALUE MANAGEMENT
Exploit digital social platforms Winning on Tmall as a priority, with Pay-off: Product sales easily
for word-of-mouth push in-housed sell-out capabilities outpace global competition
• Strong investment1 in consumer seeding • Tmall as the major sales channel, • After a few years of product
across all major social platforms, e.g. Red contributing >80% of online sales improvements and NPL in March 2020,
• Automated, tool-supported funnel • Unlike others, focus on in-housed strong growth in 2020 to 150€M
management, using AI capabilities (separated from Ecovacs) to through focus on T-Mall seller presence
maximize quality and speed of • Top 1 floor care SKU on T-Mall in 2020’s
consumer interaction single’s day
• Lowest degree of outsourcing, incl.
things like customer service
• Truly acting with a “seller mindset” on
platforms, with a strong push
automation re. commercial tasks:
– Activation: massive invest during
single’s day to create hot selling SKUs
(爆款), e.g. ~20% GMV on traffic buy
Red (vs. 5-8% for Dyson)
– Data analytics: Dedicated teams to
Taobao analyze retail sales data, such as
livestream shopper conversion funnels, and
linking to centralized CRM
Dou YIn
• Close collaboration with platforms, incl.
co-located teams
1. Investment refers to the percentage of retail sales that’s invested in driving traffic and conversion
© Oliver Wyman 13TYPICAL NEXT STEPS TO BRING MARKETPLACE MGMT. TO THE NEXT LEVEL
1. End-to-end transparency creation for marketplace activities
− Full channel P&L and an end-2-end perspective on key platforms etc. (incl. 3rd parties!)
− Channel assessment, incl. distribution analysis (e.g. underpenetrated marketplaces)
− Key 3rd party market place sellers and their strategy
2. Full commercial effectiveness analysis, e.g. based on OW 360° assessment
− Benchmarking of key commercial levers against key competitors and best in class brands
− Similar, benchmarking of key execution levers and capabilities
− Assessment of indirect effects of marketplace activities on other channels served
3. Target picture and strategy development, including:
− Role and financial ambition for the marketplace business
− Key strategic guardrails for the marketplace business
− Operationalization of the strategy and required capability build
© Oliver Wyman 14You can also read
