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Why online marketplaces can be catalysts for SME growth
It’s for this reason that digital marketplaces have become the go-to platform for savvy entrepreneurs looking to fast-track growth while cementing their digital footprint.
What is a digital marketplace
A digital marketplace – think eBay, Amazon, Etsy – is essentially a digital market, where many businesses sell their goods on one platform. The marketplace ‘host’ is responsible for payments, security and delivery. Setting up secure payment methods, establishing logistics and distribution, building a brand, driving traffic to site and various other operational requirements is simplified as established etailers already possess the necessary operational infrastructure.
In the South African context, economists believe marketplaces will be instrumental in unlocking SME potential. Elias Masilela, executive chairman of DNA Economics, says the National Development Plan identifies SME as a key ingredient for growth. “One of the biggest hurdles faced by SMEs is access to markets – and staying in the market. Big business also fiercely guards its dominance in the market.”
Marketplaces can assist by providing a vehicle that drops the barriers and makes distribution more affordable to this sector of the economy. In doing so, they can become more competitive players to the benefit of the consumer and the economy. Distribution is central to the success of business.
Frederik Zietsman, head of marketplace at Takealot, says, “Digital marketplaces are contributing trillions to the global economy. The ability to connect buyers and sellers is catalysing unprecedented entrepreneurial growth and, in many ways, is just getting started. Takealot.com is fully committed to growing this part of the business as it not only provides sharp growth in terms of product offering range, but it also allows for relatively easy scaling and empowering of local business owners.”
These are Zietsman’s top reasons for SMEs to consider marketplace selling:
1. Online spending is increasing
PayPal and Ipsos’ cross-border commerce report predicts SA’s online spend to reach R53 billion this year. There are big opportunities for SMEs that capitalise on online marketplaces but also a growing gap for those that don’t benefit from these.
2. Credibility and trust
For some customers, it feels safer to do online transactions with a big e-commerce name than a small, relatively unknown SME.
3. A bigger reach with fewer resources
Established e-commerce sites often have large and loyal customer-bases for small businesses and entrepreneurs to tap into.
4. A seamless end-to-end customer journey
Operating via these platforms allows SMEs and entrepreneurs to offer new and existing customers an elevated level of service.
5. Delivery logistics are taken care of
With the marketplace delivering the SME’s products to the customer’s door. How fast a customer receives his or her goods is directly correlated to the prospect of repeat business.
6. Marketing best practice
Not only will the marketplace help package products beautifully, they’ll also have best practice marketing, SEO and analytics, all of which help a business grow.
7. Rich data
A marketplace system is ideally positioned to provide truly rich data. From buying habits to emerging trends, a digital platform allows for analysing and understanding customer demands.
8. No need to invest in bricks and mortar
Robert Friese of Eurocare Wellness says that an online marketplace gave them instant access to the market without the need to invest capital in retail outlets. “Without listing on Takealot.com there would be no business – we got instant access to the market. We now grow by an average of 10% month-to-month.”
9. Training opportunities
Big marketplaces can also offer training and continuous learning opportunities to sellers along with specialised skills to bridge capability gaps.
10. Growth… and lots of it
An established marketplace allows for sellers to quickly – and affordably – reach a much broader audience. No longer confined to a physical location, business owners are now able to promote their products easily and more efficiently.
Are you a SME business owner hoping to set your company apart from the competition? Maybe it’s time you investigated a local marketplace to suit your needs. Whether it’s for selling birdseed or baths, comics to cameras, there’s sure to be a buyer for your products online.
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