Online Marketplaces - Best & Worst Practices
Best practices for operating/running an online marketplace involved the deployment of an Inventory Management System with features such as dynamic repricer, inventory control and reordering capabilities, 24/7 customer service supported by a flexible data model that does not hamper the platform's workflow, and maintaining a strong presence on social media as a promotion platform.
#1: Best practice relating to types of technology/software available to manage inventory across multiple marketplace
- Managing inventory across multiple workplaces is cumbersome, as it involves multiple aspects to be handled such as updating inventory, handling dispatches, and so on.
- It has been observed that for handling these aspects of managing order, inventory and returns requires specialized software rather than comparative simpler software such as MS Excel.
- One of the best practices for operating/running an online multiple marketplace is multichannel inventory management. This system helps to sell effectively in each marketplace and comes with dynamic repricer, inventory control and reordering capabilities.
- A report revealed that this inventory management software have other features such as warehouse management, order management, purchasing management, multichannel listing, reporting and so on.
#2 : Best Practice relating to Customer Relations
- Examples of the best practices in online marketplace to improve customer relations include having a 24/7 customer service, an "easy-to-navigate" website, a mobile friendly user interface, accurate product descriptions, and having a well-covered FAQ for customers who prefer to help themselves.
- The best practices also involve providing timely responses to customer inquiries, listening to customer feedback on social media and making the correspondence with the customers personalized (e.g. writing the customer’s name in every email correspondence).
- Application of these various approaches require a support platform with a flexible data model that does not hamper the platform's workflow.
#3 : Best Practices relating to Promotion of products
- One of the best practices for promoting products regarding online marketplace is products promotion on social media platforms such as Facebook. A report revealed that 52% of product sales can be attributed back to Facebook and 75% of a buyer’s touch points with a brand took place on social media.
- According to Nuestar study, it was reported that Pinterest ads are 30% more effective than other display ads with sales in multiples of five, while delivering a 28:1 return on investment.
- Also, Facebook was found to be effective in sales of products belonging to tech, retail, apparel, beauty, and fitness categories.
The Worst practices
#1: Worst practice relating to types of technology/software available to manage inventory across multiple marketplaces
- Using a localized software that most employees are not trained to use was found to be a practice to be avoided, as this cause bottlenecks in inventory and order fulfillment due to the lack of proper training.
- Other worst practices pertaining to the field of inventory management include different aspects such as overselling, over ordering, outdated pricing, infrequent inventory check, and so on.
#2 : Worst Practice relating to Customer Relations:
- One of the worst practices pertaining to customer relations involved poor customers' engagement unless there is an emergency.
- A report revealed that building a strong relationship with customers even when there is no emergency is a necessity. According to Zendesk report, 88% of customers reported that the company customer services influenced their buying decision.
- Other worst or avoidable practices pertaining to customer relations are making false promises for short-term benefit and lack of transparency with the customers.
#3 : Worst Practice relating to promoting products
- Seeing product-promotion not as a continuous endeavor was found to be one of the worst practices.
- Also, closing a campaign then restarting it after a long period was found to be one of the worst practices in products promotion. A report revealed that advertisements of the company's product require a continuous process for guaranteed success and often required to run throughout the year.
To address the research request, the research team searched through various media publications, industry reports, press releases, business publications, reputable consultancies databases, case study reports, research databases, and so on to identify the best and worst practices for operating an online marketplace and also in relation to the type of technologies/software available to manage inventory across multiple marketplaces, customer relations, products promotion, and so on. Our search was successful in identifying the required information. From various resources identified, we garnered different lists of best practices and worst practices for operating an online marketplace and inventory management, and selected the ones that are the most consistently mentioned in numerous listings.