The retail rush to marketplaces
The theme of this September edition is a rush to digital marketplaces. To understand challenges and the economic potential of marketplaces for the retail industry, mind Retail is taking stock of what to remember, the numbers, key players and which opportunities to flag up for the future.
At the beginning, marketplaces were the anti-Amazon club. However, many retailers worldwide have now invested in similar developments. As e-commerce has gained unprecedent traction for the last two years, all retailers want to enhance online market share, via a wider offer, customer traffic, deeper data or second-hand opportunities. Meanwhile, marketplaces also affect consumer experience. Do they offer better profitability than stocked e-commerce? How can retailers play the synergy alongside a store network?
A digital marketplace hosts a computer technology (a platform) hired to use for third-party vendors seeking new customers and higher sales. Similar to a business partner, the host is paid with a percentage share but typically does not hold any physical goods. This is different to direct e-commerce, where a retailer purchases goods and then resells these for a margin using their own website.
In Asia, 80% of online sales goes through marketplaces. In Europe, marketplaces have grown from 30% of e-commerce in 2017 to 40% in 2020. They are expected to reach 67% by 2022 (source Gartner). Marketplaces are outperforming e-commerce. In 2020, they grew by 27%, twice as fast as 2019.
For several online retailers, they win the bulk of sales business. At Amazon, marketplaces accounted for 60% of retail sales in H1 2021. At Cdiscount, “It’s close to 50% in the first half,” said Stanislas Prigent, Chief Operating Officer at Octopia. “The marketplace is driving growth, with a more than 20% or even 25% on certain product families, whilst standard e-commerce remains below 10% growth.”