Marketplaces

Recent work requires me to grade each item based on "who" buys the item.

For instance, one company outsourced customer acquisition to a broad category called "Marketplaces" (i.e. Amazon). For many catalogers, that's the choice right now ... the industry sunk my clients (co-op performance, paper/printing/postage availability/costs) and their ability to acquire new customers, so they're doing what they have to do. Can't blame them.

However, this decision (one made out of necessity) comes with a series of consequences.

Certain items sell well on Marketplaces.

Certain items appeal to New Customers.

Where those two things interact, you end up with a nasty dynamic.

Here's a crosstab of the top 207 selling items for a brand. Each item is graded ... A/B/C/D/F for the propensity of the item to attract new customers, and for the propensity of the item to sell at above-average levels in Marketplaces. Let's look at the crosstab.

Read across the items that are graded as "A" for attracting new customers (top row). There are 41 items that do a very good job for this brand ... 31 of those items are "A" items for Marketplace sales, 7 are "B" items for Marketplace sales.

Here's the nasty dynamic / consequence that happens when you go down the Marketplace path.

1. Marketplace customers are typically lousy customers from a future-value standpoint.
2. You have no choice but to pursue new customers, so you pursue marketplace customers.
3. Those customers have a specific item interest.
4. They're not going to repurchase going forward.
5. Your merchandising team is going to see in reporting that marketplace items perform well, causing them to pursue more of those items. But those items appeal to first-time buyers on marketplaces, creating more of a problem.

There's a level of merchandise sophistication that is required, going forward. We are going to have to change our definition of what a winning item is. Is a winning item an item that sells well on marketplaces, attracting customers who won't purchase again?

Give it some thought.