Six Impactful Digital Commerce Budget Allocations for 2023
Economic downturn is presenting new challenges for digital commerce merchants and marketplace operators. Here’s how you can navigate the headwinds.
Apple, Microsoft, Spotify, Lyft, Coinbase, Tesla, Twitter, and Uber – what do they all have in common? All of them have paused hiring. America is bracing itself for what could be the next recession after the 2020 downturn. With central banks raising interest rates, economic news of late has been gloomy. In anticipation, businesses across sectors have begun to dial back on their spending. Budgets are under scrutiny, and companies are forced to focus on profitability more than ever. For B2b businesses, economic downturn present challenging time to navigate. Rising inflation and the aftereffects of the pandemic have them contemplating how to prepare for the future. Reports suggest that tech spending may or may not be impacted due to uncertain economic conditions.
Fortunately, saving money while still hitting your marketplace platform development and performance goals is still possible. This blog will look at six ways to recession-proof your digital commerce budgets by focusing on significant incremental enhancements while avoiding a massive re-platforming exercise. We will look at how you can add multi-vendor commerce capabilities as well as some features to your existing platform to raise the value proposition for buyers and sellers on your platform.
- Add Multi-vendor Commerce Capabilities – Adding multi-vendor commerce capabilities presents a staggering opportunity for commerce merchants across a variety of sectors. Multi-vendor commerce software is a web program for building an eCommerce website that enables multiple independent online vendors to sell their products. The latest research from iBe suggests that nearly half (50%) of online retail sales come through marketplace channels worldwide. Another option to get into multi-vendor commerce is via the Dropship model. In a Dropshipping model the marketplace operator does not keep products in stock. Instead, they fulfil the order by passing on the sales order to a third-party supplier, who then ships the order to the customer. There are plenty of multi-vendor commerce software’s out there, and it might be difficult to decide which ones meets your requirements the best. McFadyen Digital’s Suite Spot Report could be good place to start. Marketplace Suite Spot Report, the industry’s only detailed comparison of online marketplace software vendors evaluates the top technologies that businesses can use to create, launch, and grow their digital commerce marketplace.
- Improve Site Search and Discoverability – Site search is an essential driver for conversion. As per the research from eConsultancy, on-site searchers have a 1.8% higher chance of conversion than regular users. Site search providers such as Algolia provide many cutting-edge features like scalable search with real-time updated inventory, enhanced customer experience through product recommendations, and fast and easy implementation of optimized merchandising. This not only improves the overall site experience but also significantly increases the overall conversion rates. Even with significant back-end heavy lifting, a brand-new search capability can be added to a marketplace platform in 1-2 weeks. Most work is usually to redesign and rethink the user experience marketplace website.
- Invest In Performance Management – When every dollar spent on the marketplace is scrutinized, analytics is your best friend. Having robust reporting capabilities for marketplace performance management ensures that the marketplace operations team is measuring the right metrics to drive actionable intelligence that reliably translates into profit and scale. Analytical tools for eCommerce provide data with complete visibility for all parts of the consumer journey. This can help derive actionable information on customer acquisition, user experience, cart abandonment, and much more. If you are looking for a more marketplace-oriented tool, then McFadyen Digital offers Marketplace Performance Management Dashboard – an industry first best-practices packed intelligence tool created for marketplace operators by marketplace experts. The powerful dashboard reports help marketplace operations team in measuring the right metrics to drive actionable intelligence that reliably translates into profit and scale.
- Embedded Financials – This feature is becoming a game changer in the marketplace space. Embedded financials provide an enormous opportunity for platforms to create stickiness with buyers and sellers by also becoming their banks. A broad range of financial services, such as banking, wealth management, insurance, and lending, can be offered to customers and suppliers by integrating financial services into the platform. Embedded financials help create an additional revenue stream. Hence the cost of investing in this can be justified, and returns are immediate. On the B2C side Klarna and Affirm are good examples of point-of-sale financing companies that enable customers to buy now and pay over time. On the B2B front Balance is a good example for B2B eCommerce payments that is built for marketplaces and merchants
- Double Down on Marketing– Marketplace marketing budgets are usually the first ones to take a hit during a downturn. But great marketplace operators are the ones that see it as an opportunity to build brand credibility and recognition during these trying times. It’s a good time for marketplace operators to think through how to meet the customers strategically with a relevant message on the right channel. Product discovery behaviors are shifting; you need to be there on these new channels when they are being looked up. Customer loyalties are changing in exchange for convenience and a more personalized experience. It’s time to think about how you are meeting those needs. Maybe it’s a good time to double down on your marketing.
- Focus on CRO (Conversion Rate Optimization) - In the downturn economy, with changes in buying behavior, channel performance, and budget scrutiny, marketplace operator has to do more with less. One key area to focus on is optimizing the conversion rates and checkout experience. There is no shortage of literature about optimizing the checkout experience on the internet. Also, a host of tools are available that help understand why visitors aren’t converting, identify possible changes to make to your marketplace website, and test changes to make to your site to deliver the highest conversion rates. Broadly these tools can be segmented into three categories: Web analytics CRO tools, Behavior analytics CRO tools, and CRO testing tools.
As a marketplace operator and tech leader, you should have a sound knowledge of your business to understand where economic metrics like inflation, recession, and supply chain problems could impact your business. With the right tools and strategy, you could turn this time of gloom into a fantastic opportunity to prioritize what’s important and stay competitive. Instead of looking at large-budget re-platforming, you could look at byte-sized manageable feature enhancements to your existing platform to stay sharp. The six suggestions above can help lessen any negative impact of the impending downturn. Doing marketplace implementation for over two decades has given McFadyen Digital competitive advantages of rapid deployment, world-class quality, and reduced costs. Get in touch with us today to help you focus on your marketplace digital strategy amid the economic headwinds.