German ecommerce company Otto is the biggest competitor of Amazon, and the only European alternative to this American ecommerce giant. At least, that is what the former CEO and current chairman of the Otto Group supervisory board, Michael Otto, claims.
Whenever you ask someone what comes up in his mind on hearing the word ‘ecommerce’, there’s a big chance he’ll come up with eBay or Amazon. And can you blame him? These marketplaces are amongst the biggest and most successful ecommerce players in the world. Marketplaces are very popular among consumers as they often offer a very wide range of merchandise, all on one site.
The impact of marketplaces
An online marketplace is a platform on which multiple retailers sell (part of) their assortment. There are literally thousands of online marketplaces around the world and these players gain more and more market share. The result is a changed ecommerce industry: online sales happen increasingly from these marketplaces instead from retailers’ ecommerce websites.
The reason behind this shift is clear: consumers can find almost everything they are looking for and for retailers an online marketplace offers them lots of opportunities. Because why would you restrict your market to your neighboring countries, while you can sell just as easily to consumers in Vietnam, Greenland or Brazil using a marketplace connection. Yet, marketplaces don’t offer significant added value by definition. If you’re operating in a very specific niche industry, chances are (potential) consumers could have already been able to find their way to your products.
Why are marketplaces so popular?
The fact online marketplaces have become so popular is partly due to their urge for innovation. Amazon for example is clearly not focusing on profits, but on growing through innovation. The company is continuously investing in the latest technologies and developments, while keeping the future in mind. For an average retailer these kinds of investments aren’t financially feasible. But by joining such platforms, these same retailers can profit from the existing innovations.
Another reason is retailers just don’t want to miss the boat. As soon as a marketplace is popular among consumers and competing retailers, retailers are afraid they are missing out. And there should be a good reason why these consumers and competitors are on that platform, right? So, as a result, more and more retailers will join, which makes the platform even more interesting for other players.
Additionally, the fact retailers can also use online marketplaces to try out quite easily whether there’s enough interest for their product is another popular reason to join such a platform.
What are the down sides?
While joining a big and popular marketplace could lead to an increase of your reach and online visibility, it doesn’t necessarily mean you get rich of it. There’s a big chance one (or more) of your competitors is also active on that platform, which means a strong competition that’s based on who has the lowest prices. And even if sales go well, the commission you need to pay to the marketplace often has quite the impact on your profit margins.
The forced urge to perform is also something not every retailer feels comfortable with. In order to sell your products through an online platform, there are often many requirements one needs to qualify. Many platforms demand a certain kind of velocity: retailers need to deliver within a certain time period or they need to answer consumers’ questions within a couple of hours.
And, by joining an online marketplace, you also offer lots of valuable data to that same marketplace. Imagine, for example, you’re selling a product that’s hugely popular among a certain customer group. The marketplace could decide one day to (manufacture and) sell that same product itself for a much lower price.
Examples of market places
It is no longer just American ecommerce giants such as Amazon and eBay that have left their mark in the global ecommerce industry. Asian and European giants are also increasingly making name for themselves. Think for example of the German fashion companies Zalando and Otto, the Chinese companies Alibaba and JD.com, the Japanese player Rakuten and the Dutch retailer Bol.com.
Whatever the assortment, chances are there’s a (specialized) marketplace that fulfills your needs. According to the European Commission, in Europe alone there are over 7,000 online marketplaces and platforms. To better protect retailers who joined these platforms, the Commission came up with a set of rules.
For example, the need to explain the most important parameters that form the internal ranking of retailers. They also need to tell which data they gather and how they will use these. And the European Commission also wants these platforms to set up an internal complaint-handling system to better assist business users.
Perfumery chain Douglas wants to further expand its online business by launching an online marketplace. The company won’t stick to perfumes and make-up, it also wants to offer fashion through this platform.
Shop Apotheke is aiming to grow from 540 million euros to over 700 million euros this year. The online pharmacy wants to achieve this without any major acquisitions, but it does want to launch an online marketplace.
Shöpping.at, the online shopping platform launched by Austrian Post, receives a few hundred orders on a daily basis. The ecommerce platform was launched two years ago, but still hasn’t come out of the red numbers.
Bol.com, the biggest online retailer from the Netherlands, is rapidly transforming into an online marketplace that accommodates other vendors. The company’s own revenue is still higher than those of its partners on its platform, but the third party seller’s revenue is however increasing faster.
Russian online marketplace Joom, which features low-priced products from China, is increasingly betting on French brands. After helping French merchants to sell their products in Europe, Joom wants to take things further and target merchants in other European countries as well.
The European Parliament, the Council of the European Union and the European Commission want rules to make it easier for businesses and traders to use online marketplaces and platforms. They have now agreed to set up seven new rules to improve the fairness of online platforms’ trading practices.
Dutch online retailer Bol.com reported net consumer online sales worth 2.1 billion euros in 2018. That’s an increase of 31.25 percent compared to the situation in 2017, when Bol.com generated net consumer sales worth 1.6 billion euros.
Micolet, the second-hand fashion marketplace from Spain, is expanding in Europe again. The company is busy making the sales process available to customers in Germany. Right now, only customers in Spain can sell their fashion items through Micolet.
Google Shopping will soon be more than just a simple price comparison engine. Early 2019, Google will introduce its own marketplace in France. With the new Google Shopping platform, the tech company will compete directly with Amazon.
Rakuten France has launched Club R Everywhere, an extended version of it current loyalty program Rakuten Club. With Club R Everywhere, customers from Rakuten get a 5 percent discount on purchases at partner brands, such as Nike, Expedia and Monoprix.
Fiverr.com has launched in Germany. The online marketplace for creative and digital services now has a localized website with country-specific functions for Germans. This launch marks the first European branch of the Israeli tech company.
Bol.com, the major Dutch online retailer, is transforming into a marketplace for third party sellers. Nowadays, there are over 20,000 sellers active on the Bol.com platform and they account for about 40 percent of the company’s sales.
Amazon Marketplace is growing fast worldwide. In one year’s time, there are one million new sellers on the Amazon marketplaces across the globe. Many new sellers are Chinese. In Europe for example, 40 percent of new sellers are based in China.
eBay has launched two new services in Germany to help retailers selling their products online: eBay Fulfilment and eBay Shipping. With the fulfilment program and logistics solutions, eBay sellers are now in the position to offer next day delivery.