Direct-to-Consumer Marketplaces Use Data to Maintain Buyers and Sellers
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Direct-to-consumer marketplaces like Poshmark, ThredUp and The RealReal follow a unique “buy-sell-buy-sell” or a “flywheel” model, where customers might begin their relationship as a seller and later convert into a shopper — or vice versa.
Their revenue models are heavily influenced by their ability to transform first-time buyers into repeat shoppers, sellers into shoppers, and shoppers into sellers, over and over again, through regular engagement. Like any retailer, their focus is equal part acquisition and retention, but different from most retailers, they often have thousands of one-off products (e.g., one pair of like-new Louboutins in a size 7.5), rather than well-stocked inventory of every single product. They also need their audiences to select them, over their competitors, to sell their high-value products. These nuances make it critical to be able to speak to the same audiences as both a customer and a partner, all while offering a high-touch experience and extending the quality of the brands they sell to the end-user.
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To achieve these things, each interaction with shoppers and sellers must offer value — on and off their platforms.
With hundreds of thousands of sku’s across multiple brands, price points and varying levels of availability — and audiences that range from everyday buyers or sellers to milestone and occasion-based shoppers — personalizing for individuals at scale is both necessary and very hard to achieve.
Here are three ways direct-to-consumer marketplaces can offer personalization at scale, under these unique circumstances.
Don’t do anything before you understand how to compete on unique features, offerings and core brand value.
Quite simply, if you’re a marketplace or retailer that competes primarily on price, selection and speed, Amazon is going to win every time.
While direct-to-consumer retailers have had to introduce incentives like free shipping and high-frequency discounts to remain relevant, it is those that compete on their core value propositions, curated experiences and other unique offerings that are able to transcend Amazon’s lure and drive direct demand to their e-commerce properties.
For instance, a luxury watch marketplace may pride itself on giving audiences a high-touch experience and a trusted and secure place for customers to buy previously owned but certified, high-value goods. It’s these core values that differentiate it from Amazon and other marketplaces, and are therefore important foundational building blocks to its communications. If a marketplace considers everything it does a core value or unique feature, its true competitive advantage will get lost. So, before moving onto personalized messages, determine what underlying messages need to be reinforced in all communications, and which don’t need to be communicated at all.
Learn from a combination of very nuanced customer and product behaviors.
Online marketplaces that differentiate through high-touch customer experiences or an unparalleled understanding of what you need next must demonstrate their acute interest in each buyer. Those that differentiate based on their access to the rarest finds, need to appeal to sellers who have other options when it comes to selling their vintage watches, apparel or jewelry.
Both scenarios require transcending basic demographic data or relying too heavily on just one or two stand-alone data points. In the case of the customer, the better approach is to create a fluid narrative across multiple data points and use those to predict customers’ likely next move, at an individual level.
For instance, data can determine the cadence an individual buys and sells their shoes. It might reveal that one customer will usually buy their next pair of shoes within 60 days and sell their old pair within a year, and another will buy shoes within 100 days of their last purchase and sell their old pair within 10 days. Having surfaced this level of insight, a marketer (with the help of technology) can begin setting up individual campaign rules based on the cadence they are buying, and create messaging specific to the type of shoes each person bought and what they’re most likely to buy or sell next.
An added challenge for marketplaces is knowing which product to surface for each customer next and whether they have the right size, color and so on. This can only be accomplished with real-time insight into their diverse and constantly changing product catalogues.
A retailer with data about individual customers’ interactions with specific products and the products in its catalogue is able to predict a customer’s future relationship with specific products at a very high level of accuracy. As a result, they’re able to deliver relevant and highly personalized messages throughout their relationship with the customer.
Never send out a single communication that’s not in some way customized to the recipient.
Regular engagement is critically important because online marketplaces’ revenue models are so heavily influenced by their ability to transform onetime buyers or sellers into repeat users.
Many of these marketplaces default to communications that are widely shared across audiences, or triggered messages sent in response to different interactions with merchandise. For instance, a customer searching for a dress may receive a social ad about the variety of dress designers a marketplace offers. Or, a customer who adds a handbag item to their cart but exits before completing the transaction might trigger an e-mail reminding them of what they’ve left behind.
While these tactics are very effective at capturing a potentially lost sale, they’re merely a first step to establishing the long-term relationships marketplaces depend on. Marketplaces and other retailers that have a holistic view of their customers — how they behave and the communications they respond to — are better able to prioritize what is communicated to who, and how frequently, so they’re communicating with each customer exactly how they want, and as often as they prefer. They’re also able to optimize communications as frequently as customers’ preferences change, using feedback to continue to tailor messages and solidify customer relationships.
Personalization is extremely challenging for every retailer, but especially online marketplaces whose customers are also the sellers of the thousands of products they house across brands and prices. Marketplaces and other retailers that are willing to adapt to change among customers and the industry, and onboard modern tech — specifically with retail-specific AI/ML — to help them do so, will see a significant growth in business outcomes. The highly engaging and personalized experiences they offer their audiences will make or break their ability to compete with other marketplaces and transform onetime buyers (or sellers) into repeat users.
Fayez Mohamood is the chief executive officer of Bluecore.
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