eCommerce

The Great Marketplace, Branded Storefront Debate

In the world of physical retail, finding a product to buy is rather straightforward: People go to stores, find something that suits their needs, pay for it and take it home.

In an online retail world, the search and discovery process is vastly different, and merchants are competing for eyeballs — and conversions — in a much more dynamic setting. A well-stocked virtual store is nothing unless a consumer can find it, and the products it is selling on those virtual store shelves.

Today, merchants are faced with a different set of decisions, which go beyond a product and the merchandising of that product. Should they build out their own digital shops and use a variety of acquisition tactics to lure shoppers to their storefronts? Should they consider, instead, being a supplier on as many online marketplaces and social media sites as possible, in the hopes of capturing customers in a place, and context, where eyeballs already show up ready to search and buy?

That question, PingPong CEO Robert Chen told Karen Webster in a recent conversation with PYMNTS, isn’t the right starting point. There is no one-size-fits-all question, since the answers will vary depending on what the seller is selling, and how that merchant should be thinking about satisfying customers most efficiently in a dynamic digital environment. In many cases, he noted, the answer isn’t going to be an either/or, but a both/and.

“The trend is to co-exist,” he said. “There are a number of different models, and mixed models. Sellers have different segments and different needs — and there are a lot of formulas for filling them. Many of the best and most successful merchants we work with are running independent shops, and are also part of marketplaces.”

The Natural Evolution Of eCommerce

No matter what one sells, where they sell it or who they sell to, Chen said, there are three basic elements of a successful merchant: product, of course, since sellers need supply to sell; buyers, which is about driving traffic to those products; and payments, so they can convert that traffic into purchases.

For the firms PingPong works with (Chinese small to medium-sized businesses [SMBs]), supply isn’t a problem, as China is a major production center. Instead, their frictions involve payments and connecting to the wider web’s traffic stream. However, that can also vary. For example, an Instagram beauty influencer with 4 million followers, but with no connection to a product supply or a way to monetize that purchase, has different issues to solve.

Finding an audience has evolved as the web has matured, Chen observed. In the beginning, there was eBay, the prime marketplace. Yet, as eBay became more popular, and as a perception emerged that older sellers had the advantage in search results, the traffic and attention moved to Google search. That, Chen said, was a golden era of stand-alone shops — until “Google got a lot harder.”

So, the evolution continued — onto marketplaces like Amazon, which presents a workable model for getting in front of a large number of motivated shoppers, as well as social channels like Facebook and Instagram.

Merchants, in PingPong’s experience, are constantly looking and evaluating where the traffic is coming from, and adapting their methods and tactics accordingly over time. Marketplaces like Amazon can be natural starting points, particularly for Chinese sellers looking to expand to the U.S. and reach American consumers. However, that doesn’t mean they aren’t going to build their own stand-alone eCommerce outposts with Shopify or Magento — and use their customer acquisition tools to optimize search for the products they sell. In fact, Chen said, the most successful ones generally do.

The goal isn’t about finding a right model. It is about finding the model that works, and keeps those three pillars of eCommerce standing upright.

The Future Of Choice

What brands choose will always be dependent on what needs they are filling — and what connections they are trying to forge. The “Shopify model,” Chen said, makes it easy and efficient for sellers to build a customized digital storefront, giving those sellers a highly branded experience. That might make less sense for a player looking to sell more commoditized items broadly, or one looking to take a split-the-difference approach, finding a single hub from which to manage their stand-alone shop and all their marketplace storefronts, Chen explained.

The evolution of eCommerce, he noted, is far from complete in the form we see it in today. Sites like Facebook, Instagram, WhatsApp and Pinterest are huge traffic generators, driving a mass amount of commerce, but they aren’t fully optimized for it yet — though it is getting better.

“With a few key influencers joining forces and offering something, with a supplier situation and payments protocol settled, you could easily see something that looks much more like a real marketplace happening,” he said.

Even if that doesn’t happens, it’s certain that something is coming next — the next channel, marketplace or undiscovered territory that a clever merchant will shake out, and from which they will start selling. It will make for exciting (if complex) times for eCommerce enablers all over the world.

“It is going to be a very robust ecosystem going forward,” Chen said, “not one with a single model or marketplace dominating.”

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