The rise of e-commerce has radically changed the way we live. In 2021, consumers all over the planet spent over 3 trillion dollars on goods from online marketplaces.
Amazon, eBay, and Alibaba get the biggest share of the pie, reaping around two-thirds of all global e-commerce sales. 15% of Americans reportedly make at least one online purchase every week.
In Latin America, e-commerce sales grew by 25% in 2021, at 85 billion dollars. And in the UK, the Philippines, and Russia, the growth was at ~20%.
In fact, e-commerce sales worldwide are expected to reach 7 trillion dollars by 2025. There will be competition.
One effective strategy to counter the completion is identifying and specifying your marketplace demographics.
How Demographics Impact Online Marketplace Success
Demographics look at specific characteristics of a population within a certain location.
It does this in three primary ways.
- Identifying the right products and services that customers want and need
- Streamlining marketing campaigns according to a target market's preferences and behavior; and
- Helping monitor societal changes that inform how your business should adapt
When it comes to launching an online marketplace, demographics lay the groundwork.
Some of the Most Important Demographic Variables for An Online Marketplace
Age and Generation
Age plays an important role in your marketing messages.
For example, market data indicates that those aged between 35 and younger tend to buy more tech devices or products like video games and cell phones.
In China, for example, Alibaba CEO Daniel Zhang said in 2018 that their Taobao mall was shifting to become "younger" to better accommodate 70% of their users who are 20 to 30 years old.
Airbnb users are also mostly millennials and Gen-Z members, as 32% of their guests in 2020 were likewise between 20 and 30 years old.
On Amazon, 65% of consumers who are aged between 33 to 40 years old visit the platform a few times a week.
Gen Xers are less likely to make impulse buys on online marketplaces, compared to millennials and boomers.
Having your market's age knowledge allows you to tailor your message and convert your users at a higher rate.
As one might suspect, gender also plays a role in online shopping behavior on marketplaces.
Women buy 7.1 times more than men every year!
But men spend more!
Men reportedly shell out 10 euros more for each purchase, and they're also more likely to believe their spending will further increase this year.
More men also visit Amazon and Walmart.com more frequently every week, compared to women.
55% of men also feel safe shopping on international retailer websites, while only 41% of women feel the same.
Men spend more on electronics, as well as travel and sporting goods or athleisure items.
What about luxury goods?
Men not only buy more luxury goods, they've also been found to buy more non-essential items.
But there are also certain parallels between men and women when it comes to shopping online.
Both expect speedy delivery on orders, patronize retailers they've already tried, and opt for products with a lot of reviews.
Consider wisely, which gender you are targeting.
Education and Income
Purchasing power dictated by education and, consequently, often income further dictate how people behave on marketplaces and e-commerce websites.
Typically, households with higher levels of education and higher income opt for more specialized experiences, such as buying healthy groceries.
Other demographic variables that impact how people buy include:
- Marital status
- Family status (such as the number of people in a household)
How to Start Determining Your Online Marketplace Demographics
When it comes to defining your own marketplace demographics, here are some ideas.
Take a Hard Look at your Online Marketplace Offerings
The first thing to do is to understand your offerings.
One might consider Etsy, as an example.
Etsy is a global marketplace for anyone who wants to sell and buy "unique" and often "handcrafted" items.
While this seems pretty broad, the main draw for this platform is that it's one of the few shops on the Internet where buyers can choose from various handcrafted keepsakes.
But it also offers an uplifting community to independent creators, enabling them to make "something extraordinary."
This specific business model has resulted in a mostly female group of buyers, who are typically aged between 18 and 35.
But does that mean that Etsy doesn't or cannot cater to men?
No, in fact, through understanding that the majority of Etsy buyers are women, the platform has decided to tailor its offering to "understand men's shopping attitudes and behaviors, and... [provide a website that offers] a positive impact [for] their purchases or buying items that reflect their personality."
In summary, take a notepad and make a list of the following:
- The exact needs that your offering(s) will meet(s)
- The pain points or problems that your online marketplace will solve; and
- Tie in specific business goals you are looking to achieve
Conduct Market Research for Your Online Marketplace
It is one thing to sit down and write down what you know (or what you think you know) about your target demographics.
And it's another to sit down and write down what you know for sure through market research.
Market research can help you drill down who makes up your target demographic, by:
- Giving you a precise look at what customers think about your offerings, and how you fare against competitors
- Helping you design a model that will leverage your unique selling points, especially against the weaknesses of your competitors
- Allowing you to chart whether your marketplace will be viable, and what you can do to ensure that it will be well received
One way of conducting market research is to invite target customers to a survey.
You might start with a tool like SurveyMonkey, which offers templates for various demographic surveys.
Analyze Your Competitors' Target Audiences - A Good Place to Start
Doing this will help you see the marketing strategies that they’re employing to effectively turn their target demographic into paying customers.
For example, if you want to build a niche marketplace like Wayfair, which deals in home decor, you can find much of the information online that you need.
In doing this, one might find out that the common customer on this platform is a woman who is aged between 35 and 65, and has an average annual household income of $60,000 to $175,000.
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