Spanish fashion brand Mango is collaborating with Amazon Europe. It opened a private online store on the popular marketplace. Or actually, it opened several online stores as the assortment is country-specific. In the UK for example, customers can buy all products, while in Germany and France only the men’s, kid’s and Violeta by Mango lines are offered.
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.
Etsy has been testing an updated search ranking so locally-made items for buyers in the United Kingdom and Australia are shown more prominent. The goal is to create a better local shopping experience. That may be the case for shoppers browsing Etsy, but its sellers aren’t too happy about it.
Swisscom and Coop are allowed to build their joint online marketplace Siroop. The two companies want to defy the American ecommerce giant Amazon in Switzerland by launching their own ecommerce platform. The Swiss competition authority has now greenlighted the project.
eBay has started a pilot project in Germany, which should give a boost to local commerce. The pilot project called “Monchengladbach on eBay” is intended to allow retailers to offer their goods alongside the existing distribution channels on eBay.
Auchan, the third largest food retailer in France, has announced it will increase its product lines and range. It does this by launching a new online marketplace. For now, Auchan will focus on two main categories: food, which is the core of its business, and garden articles. The categories ‘high-tech’, ‘baby care’, ‘furniture’ and ‘toys’ should complement the marketplace by the end of this year.
eBay is said to launch a paid shipping membership service in Germany. The program, called eBay Plus, promises free delivery within two days on millions of items, as well as free returns within 30 days of a purchase. eBay Plus will launch in late September in Germany, but will be available to all buyers on eBay Germany by October.
Neteven, which helps retailers to reach their target audience via online marketplaces, announced that more than 100 leading fashion brands are using its software. The European marketplace management provider is active in all key verticals, but focuses especially on fashion as the customer demand in this market has increased and there are increasingly more marketplaces dedicated to the fashion industry.
Dutch fashion retailer MS Mode is already active in six European countries, but wants to expand this number by launching an international store on Amazon and La Redoute. The expansion is planned for the end of this year. With this move, the fashion retailer expects to address a group of consumers that haven’t shopped at MS Mode before.
Halfords, Britain’s biggest bike retailer, today launche its marketplace service to give customers more choice, with plans to stock up to 40,000 SKU’s. About 25 per cent of the company sales are already made online. The marketplace is powered by Mirakl, that just announced another funding round earlier this week.
ePrice, one of the biggest online retailers in Italy, has launched a new marketplace. The ecommerce company wants to improve its product selection and growth in the Italian market as well as in Europe. It is now opening the marketplace to European merchants, who will be able to sell their products to Italian customers.
Global marketplaces such as Amazon, eBay and Alibaba will own almost 40% of the global online retail market within five years. At least, that’s what retailers from all over the world expect to happen. A new study gives more insights in the rise of global marketplace and how retailers can compete with them.
Neteven recently accelerated its European expansion by strengthening its position in the UK and developing its international sales team and marketplaces partnerships. 50% of the products integrated by Neteven now come from companies based outside of France. By connecting eight new marketplaces in the country it wants to attract more foreign brands and retailers to the French market.
Amazon is launching a new marketplace: Amazon Business. Here, business shoppers can order a wide range of items and get their products delivered in two days for free if an order costs more than 45 euros. It’s seems like a very logical step for Amazon, who says millions of business customers have purchased billions of dollars of goods on the regular Amazon.com website in the past year.
The ecommerce industry in Italy was worth approximately 24.2 billion euros in 2014, which means an overall increase of 8% compared to 2013. Marketplaces and foreign players are positioning themselves in the Italian market and seem responsible for the transformation that’s noticeable now.
Fyndiq, the popular bargain marketplace from Sweden, will expand to Germany this year. The online company is currently looking for German-speaking people to fill the dozens of job vacancies they have. It’s no secret Fyndiq wants to spread its wings. After a funding round last year the company said it was looking to take its business to new markets, starting in Germany, the UK and Poland.