What are the key factors in margin analysis in marketplaces?
- Price: The price must be carefully defined, taking into consideration the official price list of the target country and the degree of flexibility acceptable. Price flexibility allows dynamic changes to achieve the desired margin.
- Expected return rate: This value varies by product type and country of destination, representing a crucial element in assessing the operational and financial efficiency of sales.
- Shipping charges: They vary by product type and country of sale. These charges must be integrated into pricing strategies to understand the overall effect on the cost incurred by the customer.
- Logistics storage costs: These differ according to the type of logistics chosen and are often related to the occupied volume of products ready for shipment.
- Return fees: These also vary by product type and country of sale. You should consider whether the marketplace has specific constraints on returns, such as the need to provide a local return address and a maximum number of days to make a refund.
- Order and return management: Operational and logistical processes that need to be evaluated in terms of efficiency and associated costs.
- Marketplace commissions: Varies depending on the specific marketplace. Commission rates vary widely, with Coin at 10 percent and Yoox at 22 percent. Zalando, for example, has a commission system stratified by product type and different price ranges: 0 – €19.99, 20 – €49.99, 50 – €99.99, >€100.
- Reversal of commissions on returns: Some marketplaces consider a partial reversal when a product is returned by customers. This is an important factor to consider when defining costs.
The sales strategy must begin with a clear vision of the goals to be achieved, using these as a guide for defining the actions to be taken.
By establishing a target margin, optimization of the various parameters available to achieve the desired result can be carried out.
Once the values of the variables that allow for the right margins have been identified, the brand’s potential at that specific price on that particular marketplace is calculated.
This process involves a direct comparison with the top 100 products in the same category to determine the positioning the brand would achieve.
This process involves a direct comparison with the top 100 products in the same category to determine how well the brand would rank.
Once we have identified the values of the variables that allow for the right margins, we proceed to calculate the brand’s potential at that specific price on that particular marketplace.
