Online retail is only getting bigger every year. In 2023, global eCommerce sales were worth 5.8 trillion U.S. dollars. This is promising for online retail businesses, which can generate serious revenue by selling online products.
If you own a successful eCommerce business, you may wonder about your next steps. The first place you may look is marketplace expansion, but this strategy is more complex than it may seem.
There are different types of business expansion, and the strategy you choose depends on your niche and buyer demand.
What Is Market Expansion?
Marketplace expansion is the act of selling your items in a different market. Businesses reach this point when they fulfill all goals and needs in their current market and are looking to expand their business further.
Market expansion can accomplish numerous goals. For example, businesses have the opportunity to generate more revenue and brand awareness.
This strategy brings many rewards but also comes with its risks. When planning your strategy, businesses should identify the best opportunities and find the most reliable market expansion partner.
Types of Marketplace Expansion
There are multiple directions a business can take during marketplace expansion. While marketplace expansion can vary due to niche and customer demand, most eCommerce stores use one or more of these strategies.
Retail
Retail is one of the first options for a market expansion strategy. Let’s say you sell your products on one marketplace, such as Amazon, you may decide to expand to Walmart. This is an easy way to increase sales, widen your reach, and take advantage of another platform’s benefits.
Before expanding to a different retail platform, ensure you never signed an exclusivity agreement with your current marketplace. If you never did, you’re free to sell your products elsewhere. It’s still best to conduct research before selling in a new marketplace to ensure your business remains competitive while still attracting your target audience.
Product
There are a couple of ways to go about a product expansion. The most obvious answer is adding new products to your inventory. But brands can also embark on a product expansion strategy without adding anything new.
For some brands, a product expansion encompasses new ways of advertising their items. This can include highlighting different features of an existing product or adding new graphics.
By changing a product’s advertising, you not only increase awareness but engage existing customers.
Another common market expansion example is revamping a current product. Some brands may even add additional perks to an existing product, such as better insurance or warranties.
Geographical
Many eCommerce businesses look to geographical expansion when they want to attract new customers and gain more sales. While the internet may help us connect to a global user base, logistics issues can cause hurdles when buying internationally.
There are numerous resources for brands to sell their items in different countries, such as Amazon Global Selling. But before expanding internationally, businesses must sell in countries with both an opportunity and demand.
Brands will also need to consider certain best practices, such as language, legislature, and advertising. Ecommerce companies must also look into logistics, such as supply chain management and local warehousing and shipping. A global accelerator service can help with all these tactics.
Vendor and Supplies
Marketplace expansion can also include working with new vendors, such as suppliers and wholesalers.
This can result in market growth for various reasons, such as the ability to offer new products or increase supply chain efficiency with remote fulfillment. Working with new or varied suppliers can also produce better product quality or more variety.
When Should You Expand Your eCommerce Business?
Even if your brand and products are successful, timing is everything regarding marketplace expansion. Here are signs that you’re ready to expand your eCommerce company.
You Have the Funding
Even if your business generates impressive sales, you shouldn’t expand your company unless you have the capital.
Depending on your expansion type, you’ll need funds to create new products, reinvent existing ones, hire new employees, and for advertising/marketing. There’s also the risk that your strategy will fail, so having leftover funds will ensure you can keep your business afloat.
Businesses can always receive funds in the form of working capital, inventory funding, and more.
You’re Behind the Competition
If your competitors are launching in a new market, this is a good sign you should follow suit. For example, maybe you see your main competitor is expanding to a new country, so you can start putting an international seller plan together.
When you don’t keep up with the competition, you risk getting left behind, so it’s vital to always keep up with your competitors.
Supply and Demand Impacts
If sales are increasing and your customers continue returning, this is a sign you need to invest in your product strategy. The way you approach this strategy depends on consumer demand. For example, if you’re expanding your product catalog, it’s a good time to find new suppliers.
Need to Scale Your Business
Your marketplace expansion may not always be about making more money, keeping up with the competition, or satisfying consumers. Marketplace expansion offers many benefits, including the ability to scale your business model.
If you’re concerned about your current strategy, investing in a scalable supply chain solution or changing your retail marketplace makes sense.
Tips When Creating a Marketplace Expansion Strategy
If you think marketplace expansion is right for you, you’ll first need to ensure your strategy is successful.
Analyze the Competition
Before choosing the best marketplace expansion strategy, conduct research to see what your competitors are doing.
Determine their marketplace strategy and if they’re generating results. If they’re attracting a larger audience and generating more sales than you, it’s best to implement their tactics into your strategy.
This will not only improve your chances of increased brand awareness and revenue, but will also make you a more competitive business.
Conduct Market Research
In addition to analyzing the competition, you’ll want to know what your customers want.
Research your market and what they’re demanding from you. This can offer several tactics: you can think of a new product idea, expand your retail platform, try cross-border eCommerce, or improve your current inventory.
Customer research not only ensures marketplace expansion success, but you can make better business decisions and avoid any potential losses.
Invest in Marketing and Advertising
Marketing and advertising is a key factor in generating more online sales. The right marketing and advertising strategies can also help ease you into your marketplace expansion.
For example, let’s say your business expanded your inventory. You can promote this on social media to engage your current audience and attract new buyers.
Certain expansion tactics, such as selling on a new marketplace, will require a marketing overhaul. For example, if you were selling on Amazon and are now also selling on Walmart, you’ll need to apply Walmart SEO tactics to your listings.
Take Advantage of Various Marketplaces
An easy way to accomplish different expansion techniques is by taking advantage of different marketplaces. While Amazon is a major player, they’re not your only option. Some other platforms you can sell on include:
- Target
- Lowe’s
- Walmart
- Mercado Libre
All of these platforms let you take full control of your listings. You can write your own product descriptions and upload media. Many marketplaces also offer tools where you can manage your inventory and listings.
Create a Successful Marketplace Expansion Strategy
As a successful online retail brand, it may be difficult to know your next move. Marketplace expansion is usually the answer for most businesses.
You can expand your business by retail platform, inventory, product development, geographical location, and even by vendors.
Before creating your expansion strategy, analyze the competition, conduct market research, invest in marketing and advertising, and look into different retail platforms.
