Chinese ecommerce giant Alibaba will launch its online b2c marketplace Tmall in Russia, sources say. Currently, the service is in test mode, but it should become fully operational somewhere next month. It will be launched within the AliExpress platform.
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.
German online marketplace Crowdfox announced yesterday the figures of its growth in the business-to-business industry. Sales of its B2B platform have doubled in the last quarter. This confirms the company’s high ambitions at the beginning of this year as well as the strategic decision to further expand its B2B business.
In Europe, about 40 percent of the top 10,000 Amazon marketplace sellers makes use of Amazon’s fulfillment service, Fulfillment by Amazon. Since January, the share of sellers who use Fulfillment by Amazon has grown in all countries where Amazon offers this service.
Only one week after Ikea announced it has plans to sell its products through third-party websites, the Swedish retailer is now offering select Ikea products through Amazon. Thousands of products are available in all countries where Amazon has a dedicated online store.
Ecommerce automation platform Lengow has opened its door to the business-to-business market with its integration of Amazon Business in the UK and Germany and Cdiscount Pro in France. With the integration, business sellers now have access to the three largest ecommerce markets in Europe.
One out of four sellers who are active on the 5 European Amazon marketplaces, is based in China. Research by Marketplace Pulse shows that out of those China-based sellers, over half of them use Fulfillment by Amazon, which means that from the customer point of view it’s all the same experience. For European sellers this could be threatening, because it will be hard to compete with them.
Sellers on Amazon in Europe can choose from five different marketplaces to sell from. The most popular Amazon marketplace in Europe is Amazon UK, where most European sellers have listed their products. An analysis of Amazon in Europe shows other interesting findings.
Amazon has announced its plans to create 15,000 new full-time jobs in Europe this year. It would mean the European-based workforce of the US retail giant will grow from over 50,000 today to more than 65,000 by the end of the year.
The Russian Export Center and express carrier SPSR Express signed a partnership agreement, which is meant to open up opportunities of logistics services for Russian exports. Also, an ecommerce platform will be created for listing products across online marketplaces and stores.
Austrian Post, locally better known as Österreichische Post, has announced it will start with its online marketplace Shöpping.at in April this year. So far, 65 Austrian retailers will sell their goods on what aims to be a local alternative to Amazon, Zalando and eBay.
More and more German traders achieve millions of euros in sales by selling through online marketplace eBay. Actual figures from eBay Germany show that in 2016, the number of sellers with a million euros turnover via ebay.de has more than doubled in the last five years. There are now over 1,000 traders who achieved sales of at least one million euros.
Komplett.no, the biggest online retailer in Norway, will launch its own marketplace where other retailers can sell their products. The company is slowly transforming from being an online shop to an ecommerce marketplace and is aiming to become the Amazon of the Nordics.
Zalando has plans to hire 1,000 engineers throughout the course of next year. If this really happens, it would be a major increase of the German fashion retailer’s technology team, that currently counts 1,600 people.
What does Europe has to offer oppose the digital superpowers Amazon, Google, Facebook and Apple? Well, virtually nothing. But that can change, says ‘ecommerce professor’ Gerrit Heinemann. His plan is called ‘VEZOS’, a play on words with Jeff Bezos, the founder of Amazon.
eBay has launched eBay Local in the United Kingdom. It gives website visitors the opportunity to buy from sellers who live nearby. This should make exchanging goods easier, as customers can pay with cash and collect the items within minutes of agreeing a purchase.