Total retail sales worldwide are expected to come in at $29.3 trillion in 2023. This marks a 3.9% annual increase, a slight slowdown from last year’s 6.9%. Diving deeper, the biggest growth is expected to take place once more in the Middle East and Africa, where retail sales increased by 16.1% in 2022.
Over the past few years, the e-commerce sector has been steadily gaining ground, becoming an indispensable force in the retail industry. In 2020, the online retail market accounted for 19.2% of global retail sales totalling $5.4 trillion. Analysts predict that by 2026, it will reach 23.3%. Driven mainly by the exponential growth of online marketplaces, these online stores have revolutionised the way consumers and businesses shop, connecting buyers and sellers on a global scale like never before.
Marketplaces – The numbers that matter
Third-party online marketplaces are set to be the largest and fastest-growing online retail channel globally, accounting for nearly two-thirds of online sales by 2027 – expected to total $4.3 trillion globally. The four largest global online marketplaces – Amazon, Alibaba, Pinduoduo, and JD.com – will be responsible for 66.5% of global e-commerce sales (taking into account first-party and third-party sales).
Let’s zoom into the UAE, the region’s leader in e-commerce adoption. In 2021, 83% of online shoppers in the UAE had purchased products from Amazon.ae. This comes as no surprise as Amazon.ae ranked number 1 and is the most visited marketplace website in the United Arab Emirates as of May 2023, followed by Noon.com as the runner-up. This confirms the importance of marketplaces and e-tailers as a brand and product distribution channel for retail brands. Harnessing the advantages of online marketplaces is paramount for businesses seeking to stay competitive.
For online shoppers in the UAE, the preference for marketplaces goes beyond its borders. According to a survey by Global-E on consumer preferences when it comes to shopping online from overseas, the top three reasons cited were higher affordability, quality, and variety compared to what was on offer domestically. The top three retail categories for cross-border purchases were fashion & accessories, consumer electronics, and beauty.
Selling on marketplaces is not as easy as one may think
Managing your presence on marketplaces is challenging and extremely competitive. To start with, you are competing with similar products on the same page. The data highlights that 80% of all clicks happen on the first page of search results, and 60% of clicks go to the top three ranked products. An average shopper will read only 20% of the product page but will look through all of the images. So, how does a brand get listed at the top of the sales rank? Developing a profitable marketplace strategy for your brand is essential to win over fierce competition, maintain profitable margins, and manage your brand and product content. Here are the four key areas you should be considering before launching on a marketplace.
1. How to select the right marketplace? This step starts with research and insights. While there are many platforms to choose from, which one is right for your brand? Each platform will have a different target audience, awareness, customer experience, fee structures, terms and conditions. Check to see if your competitors are present, how their products are displayed and what type of content they're pushing. Determine which platform is the right fit to maximise reach and profitability.
2. What content will you deploy? You will need to stand out from your competitors, and this starts with content. Make sure your brand message is consistent online and offline. Produce visuals such as videos and high-quality images, and detailed product descriptions in localised languages. It is equally important to maximise customer reviews to increase conversions. Deploy authentic user-generated content about your product to engage audiences and come across as trustworthy and credible.
3. How will you generate more traffic? Many marketplaces sell paid listings and advertising to increase page and product views. Paid advertising can push your product listing to the top of the search results, increasing your product awareness, leading to increased sales and gaining organic ranking. Continuously test with different creatives, copy, and audiences to learn how your ads are performing whilst keeping an eye on budgets. Increased traffic is great, but what you need is conversion and sales, and ultimately organic sales.
4. What product price will you choose? Sellers on marketplaces constantly adjust their pricing to stay competitive by appearing at the top of search results as most shoppers will filter their search by price, leading to price erosion. Close monitoring and adjustment of your product price will allow you to safeguard your profitability and protect you from being undercut by the competition.
Keeping a close eye on stocks, forecasting accurately and planning pricing strategies can result in healthy margins and profits. Uplo supports the world’s leading brands in the region with EDI-ready integrations with the region’s leading marketplaces and e-tailers like Amazon, noon, Namshi, Ounass, Boutiqaat, LookFantastic, Bloomingdales, and more.