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Selecting a Platform: For Retailers Shifting to D2C

Apr 19, 2021

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Platforms Explained

By Andrea Nalupa, Monstarlab Marketing

Part of our Wholesale, Retail, & eCommerce Series

With increased demand for online shopping and dramatically transformed market conditions for retail businesses during the pandemic, most companies were forced to shift to Direct to Consumer or D2C sales practically overnight. Without a well-planned transition, many of them resorted to creating or jumping on to almost random online sales platforms without proper assessment of the intricacies.

A year after such undertakings, more and more businesses are facing the ill consequences of their hasty actions and finding themselves caught in the shortfalls and nuances of their chosen channels. So much so that a sizable number of them are now looking to replatform themselves with alternatives. So before anyone dives head first again into another platform, we offer a quick breakdown and comparison of options that can help you put more thought into your selection.

Choosing a Third-Party Platform

Third-party platforms like Amazon, Shopify, and Shopee offer a wide range of benefits. With little need for back-end adjustments, they allow businesses to manage orders, ship goods, and track inventory with their built-in tools, to easily tap into their existing customer base, and basically to drag and drop their way to building and running an online store. But awesome as those perks sound, there can be some trade offs:

There’s an abundance of platform fees that run your entire stay. Monthly fees go from the standard 30 USD for the basic plan to up to hundreds of dollars for a few additional features. Payment gateway fees for common payment options like Stripe and PayPal can cost about 3% of the overall charge plus an additional 30 cents. On top of all that, transaction fees also commonly cost 1-2% of overall product price. But that 5% in charges can go a long way, especially if you consider the time you save in easily setting up your store with the platform’s tools.

Though built-in templates and themes for your store can be very handy, it also means you have less control over customisation. From user experience design and site functionality to product bans and heightened price control, many of the regulations in third-party platforms also double as limitations. Untouchable controls and restrictions on the types of products you can sell and the limitations of platform-dependent customer service, for example, can hold back scaling your operations to your growth in these platforms – not to mention the snowballing fees for making more sales. That being said, it’s important to consider how important customisation and flexibility is to your brand and process.

In retrospect, third-party platforms show great potential as a stepping stone. With the ease of store setup and taking the mini-program route here to build initial clout, going with third-party platforms easily enables companies to hit the ground running. But like with all other options, you have to weigh out the pros and cons, and think long-term.

Creating your own platform

For many wholesale and retail businesses with ample time and more budget, developing a mobile app or website can be a worthwhile investment. Whether you’re coming from a brick-and-mortar store and looking to expand online, or coming from a failed attempt at penetrating shared online marketplaces, a bespoke platform proves to have many benefits. Advantages like having more control over functionality and design as well as the obvious monopoly over site visitors or app users easily seems to trump going for other choices, but going deeper unearths two critical yet commonly overlooked factors to consider.

Producing your own app or website consumes a cost-efficient but larger amount of resources. Generally, custom platform development translates to initially higher customer acquisition costs. To be exact, it costs an average of 3.62 USD more per customer accounting both installation and development costs[1]. And unlike in third-party platforms where you can completely set up in as fast as a week, your mobile app or website can take months to years longer to build. But those are the costs of working towards a more long-term and comprehensive solution – minimal compared to the 40.5% savings you can enjoy from cheaper lead conversion costs compared to what marketplace apps spend post-development [1].

Building a mobile app and/or website demands complex programming. Therefore, manufacturing your platform also requires a complicated tech stack. In mobile app development, for example, ensuring suitability for Android, iOS, and cross platform systems employs multiple programming languages with varying leverage on code speed, readability, and simplicity. Whether you’re planning to develop your app yourself or are looking for a development partner, heavy consideration of the tech stack is needed.

Compared to the fees uploading your listings in a common online marketplace and the time it takes to do so, as well as the amount of preparations needed, custom platform development can seem overwhelming. But if done right, the effort will guarantee the rewards of standing out from the competition and propelling your growth.

Employ an omnichannel approach

Selecting a platform is not a binary choice. In fact, infiltrating more platforms can translate into better sales rates and a further-reaching brand. In this approach, your business can enjoy the benefits of both having your own platform and maximising the discoverability from third-party platforms. We recommend combining the following best practices:

Create and push content into competitive platforms with Headless Content Management Systems (CMS). With this API-driven technology, you can create listings in populated online marketplaces and social media networks – all from one platform. Without the need to set-up multiple accounts, pages, and in-platform stores, you can easily publish and manage ads, blogs, media, and listings in virtually any viable platform in the market. This allows your business to easily penetrate relevant places for sales and marketing purposes. With this step, you can enjoy increased discoverability and easily drive traffic to your own platform.

You can also develop custom third-party mini programs on platforms like WeChat, Snap Minis, Line, and Apple App Clips to reach greater audiences and increase brand awareness. These mini-programs act like lighter apps within third-party platforms. Taking the form of in-app stores, video games, and even music and video players, mini-programs are excellent marketing and sales tools [2]. To top that off, they can also be used to increase engagement beyond the platform. These paid programs commonly allow integrations with your own platform and even physical store promotions to create the perfect blended experience.

Monstarlab has first hand experience in this type of platform. Anthea Zhang, China Managing Director, shares that the Chinese market is one of the successful frontrunners of utilizing mini-programs.

Sunning.com, one of China’s largest retailers, recently launched its own mini-program on WeChat and saw a surge in daily active users by more than 300% on top of a gross sales increase of close to 150% compared to 2020.

In addition, average time spent on eCommerce mini-programs tends to be longer compared to its mobile app counterparts. Sessions clock in at around 17- 25 minutes on average while most ecommerce mobile apps generate roughly 4 minute sessions [4]. Intrinsic gamified features also lend to this high usage and retention rates. As users can earn in-app currency, they can spend online when they complete tasks and activities.”

To complete the well-rounded strategy, you should develop or optimise your own platform. Besides having it as the catch basin of all your leads from the aforementioned suggested efforts, your own platform is the ultimate tool for creating compelling user experiences that turn site visitors or app users into buyers. From total control of design and functionality, to being able to add push notifications, increase security features, and fast track payment processes, a mobile app and/or website can increase sales and improve operational efficiency significantly.

Though it likely takes the combined efforts of the first two options and more, it also allows you to enjoy the combined advantages. In fact, by leveraging this multi-channel strategy for engagement, you effectively increase engagement and retention rates compared to single-platform businesses by 70% and 62% respectively [3]; demonstrating the abundance of merits from this proactive approach.

All in all, finding the right D2C channel that can help your business maximise and transition effectively into digital retail can be difficult. After all, platform is everything in eCommerce. But getting the choice right this time can spare you from the drawbacks and even help you maximise new normal circumstances.

Meet our Expert:

Anthea Zhang, Managing Director of Monstarlab China, is the global lead for market localization & integration. Having worked with large enterprises to successfully penetrate the Chinese market through innovative digital solutions such as mobile app and mini-program development.     

Read more insights and see some of our works on Wholesale, Retail, & eCommerce

Endnotes:
[1] Digital Commerce 360 Research, “It costs more than $60 to acquire an app customer”, 2021
[2] QPS Software, “WeChat Mini Programs – All You Need to Know”, 2021
[3] LeanPlum Research, “How Does App Engagement Work?”, 2021
[4] Localytics, Retail App Benchmarks H1 2018

Other References:
Forbes, “5 Stages Of Omnichannel Retailing”, 2020
Harry Guiness, “The best 6 platforms to build an eCommerce website in 2021”
McKinsey & Company, “Adapting to the next normal in retail: The customer experience imperative”, 2020

 

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