To the Marketplace Seller, this one’s for you

Word from the Publisher:

This may be the riskiest piece I have written to date. I hinted at this previously but as a reminder, given the recent market changes regarding SHEIN and TEMU broadening their business models into US marketplaces and investing in fulfillment centers – to Amazon’s announcement that directly places them at the center of competition with the CTC (China to Consumer) models. I felt it was time to put up a scoreboard or maybe better put, a guide for marketplace sellers who are trying to prioritize which marketplaces will give them the biggest opportunity. Be warned, these are directional estimates at best, with sources to be shared at the conclusion of this piece.

With that said, let’s go.

First, let’s score board the current leading US marketplaces by their US GMV and growth rates:?

Initial take, no surprises as Amazon and Walmart takes the top 2 spots. But SHEIN surprises by edging out eBay and Target. Explanation here is SHEIN is aggressively focused on the US market with high demand stylish and cheap clothing, while eBay remains fairly split between US and International markets with a lean towards lower demand collectibles and car parts. Likely eBay has comparably better margins but SHEIN is best positioned, category wise, for unit volume. Target and TEMU cover the last two spots with Target still early in their eCommerce marketplace journey and TEMU growing at a frightening pace from just a year ago, likely powered by their parent company, China-centric PDD Holdings.

Next, what about seller dynamics? The numbers look great in terms of opportunity, but if there is too much competition, the promise is mute:

I have to admit, this data was the hardest to capture as the companies do not report regularly on seller counts in the US or really overall. But across a number of sources can at least find a close baseline. In addition, where I could not find updated numbers, held the values flat as directionally, the end conclusion is still the same. eBay being the most mature has the highest count of sellers, likely due to their Consumer to Consumer model versus Amazon’s B2C model. Alternatively, the remaining marketplaces, still early in their journeys have yet to reach the seller count of the two most mature ecommerce channels.

Now, the big one, GMV is great and sellers are helpful but the one table I’m sure you want to see is estimated opportunity per seller. Here you go:

Shock and awe, angry emails to come and many puzzled looks as I can imagine the above is unexpected. Despite their GMV size, Amazon and Walmart barely break the top 3 due to the high amount of competition per GMV $. In addition, eBay’s C2C model offers little promise with multi-millions of active sellers offering anything from open boxes of Nespresso pods to barely worn Khakis. But Target and SHEIN? Who could imagine that these two would lead in terms of potential seller opportunity. I’d chalk it up to Target’s nascent marketplace efforts with high barriers to entry, as the few of us who have tried to sell on their platform can attest to. While SHEIN, powered by hyper consumerism and supply chain execution, has scaled far faster with their 3K manufacturing suppliers than any online retailer in recent memory, cracking the China to US shipping code that Wish tried to do so long ago.

There you have it sellers, a college try at helping you focus and grow. Run, don’t walk to Target Plus before Shopify reduces the opportunity. And when it comes to SHEIN, good luck with the margins at those low prices. But if you can do it, $13M is yours.

And now, the newsletter. . .

Marketplace Dynamos

Temu's first US sellers are all Chinese

• Temu has begun onboarding US sellers to reduce environmental impact by offering local fulfillment; however, these sellers are mainly Chinese sellers with US inventory, creating two seller types: those using Temu’s Chinese fulfillment services and those self-fulfilling in the US, similar to Amazon's model. Despite benefits like reduced shipping times, Temu faces challenges ensuring on-time delivery with merchant-fulfilled orders, and future growth may depend on attracting US brands and retailers.

Meta and Amazon’s growth is increasingly tied to China

• Amazon and Meta's increasing reliance on Chinese sellers and advertisers has resulted in record profits despite challenges faced by American small businesses, leading to higher consumer prices and a shift in economic benefits towards Chinese enterprises.

Amazon's "Significant" Reliance on Chinese Sellers

• Amazon acknowledged the significant impact of Chinese sellers on its marketplace, highlighting that they account for a substantial portion of its third-party seller services and advertising revenues, and noting potential risks to its operating results due to regulatory, trade, and geopolitical factors affecting these China-based sellers and suppliers.

Amazon: If You Can't Beat Temu, Join Them

• Amazon is launching a direct-from-China discount section on its website to compete with Temu and Shein, offering cheap items with 9 to 11-day delivery times, despite having already facilitated direct fulfillment from China for over five years; meanwhile, Arkansas' Attorney General has sued Temu's parent companies for alleged data theft and privacy violations.

Consumer Trends

Gen Z and Millennials just want to have fu-un!

• Consumers are experiencing a "great exhaustion" characterized by widespread fatigue, stress, and burnout, particularly among Gen Z and younger millennials, driving a desire for simpler lives and small, everyday joys; retailers are advised to adapt by embracing transparency, supporting autonomy, creating micro-moments of joy, and leveraging technology to enhance human experiences.

Celebrity-led brands offer cheap awareness, but little else

• Celebrity-founded CPG brands, particularly in beauty and food & beverage, attract significant media attention and retail placements but face challenges in achieving substantial consumer wallet impact, with slower growth rates, lower household penetration for beauty brands, and the need for traditional marketing strategies to reach broader audiences beyond their core Gen Z and millennial demographics.

Hot take: Health and Wellness is price inelastic

• ?Despite rising costs, consumers continue to prioritize health and wellness, with 67% considering it a top priority, leading to a significant opportunity for food manufacturers to meet evolving demands by focusing on effective, scientifically backed ingredients and essential nutrition products.

Consumers prioritize free shipping, coupons and brand shopping to offset inflation

• Nearly two-thirds of respondents have changed their online shopping habits due to inflation, with many considering coupon stacking and reselling products; key motivators for choosing brands include free shipping, affordable goods, and frequent sales.

Market Trends

May Retail report: up 4.5%, ecommerce continues to drive sales

• Despite a general resilience in consumer spending and rising e-commerce sales, retail sectors like home goods and sporting goods are struggling, while consumer caution and value-seeking behaviors continue to influence buying patterns amidst economic challenges.

Increased shipping and technology costs push DTC deeper into wholesale

• At Glossy's E-Commerce Summit, executives highlighted the rising costs of direct-to-consumer (DTC) e-commerce, noting that increased expenses in shipping, logistics, and technology are reducing margins, prompting some brands to reconsider retail partnerships and streamline tech operations for better efficiency.

Retailers in Action

Amazon Prime Day from unique selling point to eComm table stakes

• Amazon's Prime Day will run from July 16-17, featuring deals from influencers and a music video by Megan Thee Stallion; rival sales at Walmart, Target, and Best Buy offer competitive deals without membership fees, highlighting a broader summer sale trend with a focus on back-to-school items and technology.

Express and Bonobos, saved by the mall

• Phoenix Retail, a joint venture of Simon Property Group, Brookfield Properties, Centennial, and WHP Global, received court approval to acquire most of Express Inc.’s assets out of Chapter 11 bankruptcy for $174 million, ensuring over 450 Express and Bonobos stores remain open and preserving nearly 7,000 jobs, with a focus on maintaining the current store footprint and expanding e-commerce.

Retailer in Action: Walmart

Walmart empowers suppliers with web analytics to drive online sales

• Walmart's new self-serve insights solution, Digital Landscapes, launched in beta on June 5, helps suppliers track online shopper behavior and engagement trends on Walmart's platforms and across the internet, aiming to optimize marketing and sales strategies by providing detailed tracking and targeting data, amid the phase-out of third-party cookies.

Walmart launches digital store labels and promises no dynamic pricing (for now…)

• Walmart plans to implement digital shelf labels (DSLs) in 2,300 stores by 2026 to expedite price updates, enhance employee efficiency, and streamline stock replenishment, while maintaining its Everyday Low Prices strategy and avoiding dynamic pricing practices.?

The Feel Goods

Denver tested Universal Basic Income. A year later, half of participants had housing.

• The Denver Basic Income Project's first-year results show that 45% of participants secured stable housing, experienced improved mental health, and reduced reliance on public services, saving the city $589,214, with the program providing direct cash payments to over 800 homeless individuals.

I want to hear from you!

Love the newsletter? Have feedback? Let me know! Email me at [email protected] with your thoughts.

Sources and Guesstimations:

• https://www.channelengine.com/en/blog/worlds-top-marketplaces
• https://ecommercedb.com/insights/amazon-com-produces-50-of-amazon-s-marketplace-gmv/3954
• https://www.wsj.com/articles/fast-fashion-juggernaut-sheins-sales-close-in-on-zara-h-m-11666949403
• https://www.marketplacepulse.com/articles/shein-temu-marketplaces-with-no-us-sellers
• https://www.marketplacepulse.com/articles/shein-temu-marketplaces-with-no-us-sellers
• https://ecomclips.com/blog/temu-the-new-budget-friendly-e-commerce-giant-that-you-must-know/
• https://www.helium10.com/blog/how-many-sellers-on-amazon/#:~:text=rewarding%20for%20sellers.-,How%20Many%20Amazon%20Sellers%20Are%20in%20the%20US?,it's%20still%20the%20second%20largest.
• https://www.marketplacepulse.com/articles/walmart-reaches-100000-active-marketplace-sellers
• https://www.edesk.com/blog/ebay-statistics/#:~:text=31%25%20of%20eBay%20sellers%20are,sellers%20currently%20on%20the%20platform.
• https://www.retaildive.com/news/target-plus-adds-shopify-merchants-digital-marketplace/719727/#:~:text=Target%20Plus%20features%20more%20than,like%20apparel%20and%20sporting%20goods.
• https://www.mobiloud.com/blog/shein-statistics

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