This article is directed toward mid-market, American companies. This article will help you understand the digital marketplace and how it is important to your company. It will explain what we mean by digital marketplace and things your company should be thinking about as your strategy shifts to address technology-driven competitors and changing consumer behavior.
What is the Digital Marketplace?
The digital marketplace is actually a collection of marketplaces that exist online and accessed through web browsers, mobile devices, smart speakers, and more. These marketplaces bring together vendors and consumers using platforms created by vendors themselves, or by 3rd parties that provide these platforms for the purpose of bringing consumers and vendors together. The composition and nature of the digital marketplace is constantly changing. The digital marketplace is more than just one outlet or e-commerce site: it is an interconnected network of websites and platforms. Consumers are a powerful part of this network because they communicate and share with other consumers, a powerful marketing channel of their own.
Complexity arises from the networked nature of the digital economy. The digital marketplace is multi-channel – requiring vendors to create and control multiple messages across multiple platforms, each with its own consumer behaviors, demographics, and community. Businesses must understand that their products may not share the same value proposition across all platforms and marketplaces. This fact further complicates the messaging and marketing strategies required of the digital marketplace.
Lastly, the digital marketplace is defined by the wide array of devices on which a business must promote, present, and deliver their value. Consumers exist across devices as lifestyles evolve with changing technologies. It is important to harness this evolution, which includes increasing media influence, role of influencers, and sharing of messages through the network of consumers themselves.
Why the Digital Marketplace is Important
To some extent, the digital marketplace is important because everyone is doing it. More companies and individuals are adopting digital consumerism every day. According to mobile retail research by Statista, the mobile retail purchases on mobile devices will reach over $3 trillion by 2021.
The digital marketplace is important because consumers find and evaluate things differently today. The customer journey has been altered by the technology of devices and the organization of platforms. The consumer gathers information in ways quite different from the past. Ratings, reviews, recommendations and influencers play a large role in buying as trust moves from the company that sells a product to peers: other consumers who have used the product – or are somehow knowledgeable about the product.
The opportunity for business today is the variety of platforms and marketplaces to tell their story: what is special about the product, service, or company. The same platforms that create complexity can become opportunities to communicate your company’s differentiation – that unique value proposition. These can be opportunities to educate consumers.
Getting back to the customer journey, platforms that make up the digital marketplace bring buyers and sellers together – supply and demand – with increasingly efficient transactions: both potentially shortening the purchasing decision process, and making payment faster and easier. The digital marketplace has removed, to a large degree, the middlemen and reinvented logistics and business models. Amazon.com, for example, is a fascinating mix of proprietary listings, marketplace for businesses, and a revolution in product delivery. For some businesses, the digital marketplace is the entire business model. For others, the digital marketplace is a complement to a traditional business, presenting opportunity and unique challenges.
The importance of the digital marketplace is this: businesses need it. Whether B2B or B2C, in order to sustain growth and remain relevant in the future, the digital marketplace must be mastered like any other marketplace.
Who Are the Winners?
The first winner in the digital marketplace is the consumer. There has never been more choice, easier transactions, or faster delivery of value. There are other winners as well. Nimble companies of all sizes and industries. Those who have a clear vision about how to use the digital marketplace as an advantage and can execute well on that vision. Companies who can adapt their value chain to the digital marketplace quickly and efficiently have seen tremendous growth over their competitors.
Another winner in the digital marketplace are the platforms that bring the various sides together. The explosion of platforms – and the integration of retail sites with these platforms – has created dynamic exchanges of products, services and revenue. But the landscape is constantly changing, and leading platforms of today are likely to be overtaken by new, more popular platforms that offer greater or more tailored value to the consumer.
Lastly, companies that create relationships with consumers across platforms, social media, and other marketplaces stand to realize the greatest benefit. Building loyalty and retaining it in the digital marketplace is very challenging. Those that do, benefit from all of the features the platforms offer: lower CAC, greater CLV, efficient business models, and the network effect of customer sharing and recommendations.
What Must Mid-Market Companies Do To Succeed in the Digital Marketplace?
Focus on the customer. Create a customer-centric relationship and ecosystem that includes social media in the buying process to promote sharing, ratings, reviews. More than ever, clarify differentiation. Form a strategy for entering and sustaining one or more digital marketplaces. Make sure your products and services are digital-ready and appropriate for the digital marketplaces.
Find experts to help with the acquisition of technology competencies. For many companies, the best path forward is to outsource the core technology components. This includes establishing digital products, digital services, and other technology-driven differentiation. The path forward includes learning and gradually bringing these competencies in-house for sustained market success and establishing continuous innovation.
Succeeding in the digital marketplace – and the digital economy in general – requires a structural adjustment within your organization so you can adapt to, and exploit technology and software development as a competitive advantage.
The digital marketplace (or marketplaces) are critical to B2B and B2C businesses. Buying behaviors and customer journey of both customer types have become increasingly similar. To meet the customer expectations, needs, and to deliver value in these marketplaces business must acquire and be proficient in many new areas as the value chain is becoming increasingly driven by rapid technological change.