Capturing consumer attention is paramount in the new world of shifting power dynamics. In grocery, that means enabling consumers to define the shelf, not the retailer. The top grocers have embraced this shift by leveraging the marketplace model to dynamically add and remove products on a “virtual shelf” and rely on their sellers and brands to hold and ship inventory on demand instead of limiting themselves to the four walls of their physical locations.
Grocers selling solely through physical locations have more difficulty scaling. Expansion means increasing headcount, bigger stores and warehouses, and a potential revamp of logistics workflows. The next logical step for grocers is selling online, but this model still requires grocers to hold inventory and perform fulfillment which inherently limits their product offerings. The marketplace model, however, allows grocery stores to offer an endless aisle online — increasing sales, revenue, and receiving critical information on emerging products without having to hold or ship the inventory themselves.
Now is the time for grocers to launch an online grocery marketplace and begin reaping the four benefits of becoming a marketplace: customer growth, increased network, greater product assortment, and cementing leadership.
Customer Growth: Creating a destination with an ever-growing choice
Today’s online consumers are prioritizing convenience and looking for an easy, seamless shopping experience. The same rings true for grocery shoppers, where a diverse selection of products for a one-stop-shop experience removes friction and increases customer reach. In fact, just 3 months after Albertsons marketplace launch, they had over 3,000 net new customers.
Where can you focus your grocery strategy to achieve customer growth? There are three tenants to making a grocery site a destination for customers:
- Lean into Popular Brands: Adding popular brands to your grocery marketplace means having an increased product range, and an increased product range opens the door to repeat buyers on your platform
- Make the Marketplace a Destination for Discovery: Leverage commerce tools like search analytics to augment your catalog with products consumers have already expressed interest in
- Increase Offerings: Increase the breadth of your offerings through services that resonate with your customer base and complement both their online and in-store shopping experiences
Increased Network: Demand drives growth of brands and distributors
There is only so much space in a physical grocery store, and brands are always competing for shelf space to test their new product offerings. By embracing the grocery marketplace model, you can create new revenue opportunities by allowing brands to test and promote new products. As a marketplace, expand your shelf with a virtual “endless aisle” and increase online revenue by offering brands “preferred placement” in category searches on your marketplace.
Where should you focus your strategy to increase your network? Here are three tenants to implement:
- Provide a Hub for Testing New Products: Create a win-win environment for your brands and distributors by providing an avenue to test new categories and products for your customers
- Leverage Data: After testing new products and categories, utilize data to bring “online only” products to a storefront, especially those that were successful with customers
- Increase Revenue Streams by Offering Preferred Placement: Allow brands to purchase virtual top placement on your category and product searches
Product Assortment: A platform for brands to connect with shoppers
The job of a marketplace operator is aggregating demand to the platform. In order to create this demand, you need a robust, curated product offering.
Because of the detailed product curation, a marketplace naturally can become a powerful search platform. Consumers generally search for a product type over a specific brand name, and as the de facto search engine, your marketplace can capitalize on this monetization opportunity.
Here are three ways to focus your energy on building product assortment:
- Relationship with Brand: Reach out to brands you have a strong relationship with to begin curating a strong product assortment
- Expand Your Catalog: Seek out new brands to create a variety of choices for shoppers as a proven way to boost revenue
- Leverage the Flywheel Effect: As your marketplace gains traction, use that momentum to guide self-perpetuating growth. As more sellers jump on board, you’ll have more inventory for your grocery marketplace
Grocery stores have lower margins than other retailers, so it’s imperative to increase product offerings without increasing overhead. This endless aisle approach has limitless potential for search, as your marketplace could become the quintessential hub for searching for specific food items.
Cement Leadership: Outperform Your Peers and Competitors
The dynamic in commerce and consumer behavior has shifted dramatically, and it’s no longer sufficient to continue doing what has worked. Grocers that have embraced a marketplace are experiencing not only a revenue boost but brand loyalty — igniting real growth and returning customers.
Marketplace retailers grew by 81% in 2020 versus 40% for ecommerce counterparts, cementing their leadership during a period of massive digital acceleration. Here are three ways to cement your leadership for your marketplace:
- Be Forward Thinking: Retail is in a reinvented phase. Embracing multi-vendor commerce positions you to seize the new way consumers shop and buy goods and services they love
- Capitalize on the Opportunity: While others are operating in business as usual commerce models, now is the time to embrace a proven revenue-generating initiative
- Reinforce Market Positioning: Leverage data to secure an unfair advantage compared to the competition. This will also allow you to respond in an agile way to shifts in consumer behavior
Launch Your Grocery Marketplace Today
In the past, it took years and millions of dollars for grocers to become an online marketplace and allow third-party products to be listed on their site. Today, there are multi-vendor marketplace offerings, like Nautical Commerce, that enable you to launch your marketplace in days and rapidly validate your business model. With Nautical, your grocery marketplace sellers can onboard in minutes and upload their products directly from popular ecommerce platforms like Shopify and WooCommerce.
Get your grocery marketplace up and running today on Nautical’s multi-vendor marketplace platform. Reach out to our team to get started.