The Online Marketplace Revolution
"The worlds largest 18 marketplaces sell over $1 trillion worth of goods every year."
By 2020 it is estimated that marketplaces will account for over 40% of the global online retail market. With the ability to enhance customer loyalty, increase average order values and boost trust it seems like integrating marketplace technology will be a logical move for many eCommerce businesses within the next 5 years.
But what is an online marketplace?
"An online marketplace is a type of e-commerce site where products or services are provided by multiple third-party vendors, where transactions are processed by the marketplace operator. This allows vendors to direct their resources towards their core business functions and not having to deal with the logistical and shipping operations. (The best example of this are the likes of Amazon and Ebay)
Retailers who have high volumes of traffic can easily implement marketplace technology to capture increased revenue on commissions on sales and to test product and category interest prior to directly sourcing SKU's. This strategy can save retailers significant amounts of upfront investment. On the flip side, distributors with multiple suppliers can become a clients one stop shop by providing and displaying a wider selection of products and SKU's as well as creating direct to consumer stores.
The notion that eCommerce is a distinct store or activity is continuing to disappear; digital and in-person are now intricately linked, creating the symbiotic commercial ecosystem we call omnichannel. Enhancing the customers shopping experience in this way and broadening reach and selection of products by integrating the marketplace model to the eCommerce strategy is proving to be a truly compelling proposition.
MARKETPLACE KEY FACTS
- 54% of all merchandise sold on Amazon comes from third party sellers
- 12% of major retailers currently operate marketplaces & 32% are considering launching one.
- 86% of retailers identify the customer transaction and relationship as a key component.
- 47% of online shoppers would prefer to shop on an online marketplace rather than going to various sites.
- Half of Online Product Searches Start With Marketplaces
Case Studies
Best Buy Canada, once an electronics speciality store, capitalised on its significant levels of traffic by integrating a marketplace and quickly doubled its online SKU's and expanded to various other categories including furniture, baby products and many more.
Catch Group Australia, who are a pure player known for their daily deals launched their marketplace in 2017, a segment which has grown to over 25% of their revenue with over 500 sellers. They went from 25,000 SKU's in their warehouse to over 1,000,000 SKU's online.
For retailers looking to add marketplace capabilities, solutions like Mercarto have the ability to connect to existing eCommerce ecosystems and make it possible to quickly deploy your own eCommerce marketplace.
For distributors, buying groups or sellers looking to diversify their sales channels by adding multiple marketplaces, Mercarto has the technology to enable this. Mercarto can work as a SKU syndication tool that connects products and pricing to multiple channels; being able to connect you to hundreds of marketplaces worldwide, as well as giving you the ability to create eCommerce storefronts for increased sales capabilities.
Looking to explore how marketplace technologies can be a key driver of future success for your business? Then get in touch with us to find out more;