Editor-in-Chief of Internet Retailing and board-level advisor
The new role for marketplaces in multichannel retail
For many years retailers have had a love-hate relationship with marketplaces, but now the winds are changing and a new role is being defined for marketplaces in the multichannel retail industry.
Originally, marketplaces were the reign of SME retailers and niche retailers – mom and pop brands that whittle artisan crafts on their back stoop, right through to eclectic retro clothes sellers – who gladly seized the opportunity to start playing in eCommerce at a low cost. They provided them with the chance to grow and develop their stock portfolio in an almost limitless way.
Many big retailers and brands, on the other hand, steered well clear of third-parties such as Amazon and eBay. They believed that by selling via these sites they’d lose their control over the way they presented their brand, that it would reduce brand loyalty; and that, by adopting them into their strategy, they would lose the insight and data that they gain from sales on their own websites.
But the mood now seems to be changing – and driving that is the customer. From a consumer point of view, marketplaces deliver unparalleled choice, competitive pricing and the ability to pretty much buy anything at the touch of a single smartphone button from anywhere in the world.
The changing tide
More than half (55%) of US shoppers now start their retail searches on the Amazon website, according to a BloomReach study in 2016. That figure was up from 44% a year earlier and suggests that many retailers and brands will miss out on the intent to buy their products unless they are available on that site.
As a result, retailers have slowly but surely started adopting marketplaces, particularly when tackling new markets.
Retailers who previously would not sell via them in Europe and North America recognised that to sell in markets like China they quite simply had to use a marketplace, whether Tmall or JD.com. Why? Because they recognise that’s where most sales – and searches – take place.
For example, for many brands, from Waitrose to Sainsbury’s to Burberry, the Alibaba Group’s Tmall is now a channel of choice as they target the Chinese market.
All recognise that selling via Tmall gives them the opportunity to reach the millions of Chinese shoppers who now have both the aspiration and the means to buy from foreign merchants.
Other brands are partnering with marketplaces, including Amazon, eBay and, in Europe, Zalando. They’re opening branded stores on third-party sites as they make the most of the opportunity to sell to new audiences.
Gap, for example, started to sell on Zalando as it looked to reach a European audience that didn’t visit its own websites in great numbers. Retailers from Asos to HMV have also enabled smaller sellers to do business on their own on-site marketplaces as they look both to provide a service to customers and to gain incremental revenues.
Giving consumers what they want
Consumers today expect to find everything they need on marketplaces, including top retailers’ products. In fact, eBay said last year that its own research shows 88% of UK consumers expect to find their favourite brands through online marketplaces.
One reason that consumers are now shopping via Chinese, and other marketplaces around the world is that those sites have made a real effort to raise their game, by weeding out counterfeit goods and developing partnerships with the trusted brands that shoppers want to buy from.
Perhaps, then, it’s now time for those retailers that have held out to do the research and find out where their existing and potential customers are searching for their brand and buying. If that’s on marketplace sites, then this could be time to make it part of their retail strategy. By doing so directly, they may not gain the insight into customer behaviour that they value, but they’ll gain the contact details for shoppers that they can then target and persuade to shop directly on their own websites, and in their stores.
Marketplaces – could be a win-win situation.
Marketplaces, international strategy and latest ecommerce trends are only some of the themes that will be addressed in this year’s InternetRetailing Expo, set to unveil the future of the retail nation.
Taking place on 5th and 6th April at the NEC Birmingham, the event will showcase latest innovations, initiatives and technology, as well as world-class speakers from brands such as Alibaba Group, Lululemon, Google, Harrods, LEGO, John Lewis, Volkswagen, Schuh, GAME and Made.com.
Find out more and register for free at www.internetretailingexpo.com