Riding the Marketplace Wave: How Retailers Can Expand Reach, Reduce Risk, and Futureproof their Ecommerce Operations

The rapid growth of online marketplaces is redefining the ecommerce landscape. In the US alone, marketplaces now account for over one-third of all retail ecommerce sales - and this figure is expected to surge past 35% by 2027, growing at over 10% annually.

For retailers, this marketplace boom represents a watershed moment - one that presents both challenge and opportunity. On the one hand, they must contend with the scale and selection of industry giants like Amazon. But on the other, the rise of multi-vendor marketplace models offers a strategic path forward, enabling retailers to rapidly expand their online catalogs and reach new customer segments - all while minimizing the inventory risk that has traditionally been a barrier to growth.

"Retailers can't compete with the biggest online marketplaces without expanding their product catalog and providing a curated experience to their customers," explains Francisco Campos, an expert panelist at the 2023 GS1 Regional Forum. "The marketplace and dropshipping models have made product catalog expansion with zero inventory risk possible, allowing retailers to seize this emerging opportunity."

The Marketplace Model: Balancing Supply, Demand, and Value

At the heart of the marketplace model is a delicate balancing act. Retailers must strategically cultivate both their supply of third-party vendors and their base of engaged customers - all while demonstrating tangible value to both sides of the equation.

On the vendor side, retailers need to clearly communicate how the marketplace can help expand sellers' reach, unlock new customer segments, and streamline logistics. As Lauren Wilson, founder of the luxury fashion marketplace Dora Maar, notes: "You need to think about what already exists that you can plug into the vendor marketplace side of the business."

Equally crucial is building demand through compelling branding, optimized SEO, and loyalty-driving initiatives. By creating a distinctive shopping experience and giving customers ample reason to return, retailers can establish their marketplace as a go-to destination.

"It's really important that customers keep coming back to your marketplace," the article advises. "In addition to offering a way for them to discover new brands and products, you need to deliver a great customer experience."

The Technology Imperative: Streamlining Complexity, Enabling Scale

While the strategic vision for a successful marketplace is clear, the operational reality can be daunting. Retailers must grapple with a host of logistical challenges, from inventory management and order routing to payments and returns processing.

Fortunately, the technology solutions required to launch and scale a multi-vendor marketplace are more accessible than ever before. By partnering with a comprehensive platform like Onport's Marketplace and Dropshipping Automation solution, retailers can tap into a pre-built infrastructure that handles the intricate backend operations - freeing them to focus on high-level strategy and customer experience.

"Obviously, with the more vendors we bring on, there's no way we can manually track what's sold where and keep records updated," notes Dora Maar's Technology Project Lead, El McMillan. "That's why those real-time inventory updates are key for scaling."

Moreover, these flexible, composable platforms enable retailers to future-proof their ecommerce operations. "It's very helpful to have pre-built integrations for platforms such as Shopify," McMillan adds. "It's such a quick and easy integration for vendors."

The Path Forward: Seizing the Marketplace Opportunity

As the ecommerce landscape continues to evolve, the rise of marketplaces represents a pivotal moment for retailers. Those who act decisively to leverage this trend - strategically curating their vendor partnerships, delivering exceptional customer experiences, and tapping into the right technology enablers - stand to reap significant rewards.

The numbers speak for themselves. Marketplaces are poised for explosive growth, and the future will belong to the retail innovators who have the foresight and agility to ride this wave. By embracing the marketplace model, forward-thinking retailers can not only expand their reach and reduce their inventory risk, but also futureproof their ecommerce operations for sustainable, long-term success.

The race is on. Are you ready to lead the charge?