Marketplaces are conquering e-commerce

The prevailing trend among large online retailers is now to launch their own marketplace. This brings benefits to retailers – it allows them to easily expand their offerings, increase sales and attract new customers – and also meets the needs of consumers, who can buy more products in one place. Companies that have bet on this type of e-commerce platform are pleased with the increase in sales over the past 12 months.

This is what can be found in the report “E-commerce in Poland: E-commerce in Poland: competition and rising expectations drive growth” published by Strategy&. Meanwhile, the publication, which is dedicated exclusively to martketplaces, was prepared by Inquiry. The “Digital marketplaces: a global study of your next growth channel” report is based on a survey conducted between September 2023 and April 2024, in 11 countries. The interviews included experts with extensive knowledge and practical experience from working on such e-commerce platforms. 

Why are marketplaces conquering retail?

Marketplaces are not a new or innovative concept, but they have the scale, reach and traffic-generating ability to maintain above-average growth and show no signs of slowing down. They already have a 30% share of the global e-commerce market today. What’s more, their projected total GMV (gross merchandise value) growth in 2024 is expected to be 10%, reaching $3.8 trillion, while the compound annual growth rate (CAGR) of global retail sales in 2023-30 is expected to be around 4.5%. 

Global brands and DTC (Direct To Customer) are recognizing the growth opportunities that marketplaces offer, with relatively low barriers to entry. They also allow testing of products and even product categories. This is of great value to companies, because in the traditional retail model, it is usually slower to implement the changes that new market trends require.

Marketplaces are therefore very attractive from a retailer’s point of view, but in order to succeed in increasingly competitive markets, they will need to clearly differentiate their offers – and this is true for both consumers and the brands selling their products there. Compared to platforms that do not innovate, marketplaces that differentiate themselves will attract and retain consumers and the most attractive brands. Of course, this requires the right strategies and investments.

Hybrid marketplace

A hybrid marketplace, such as Amazon or Zalando, earns commissions from trading third-party products as well as from selling its own products. Opting for a hybrid marketplace is an opportunity for retailers to improve both the depth and breadth of their offer, without a large investment. Hybrid platforms have unique opportunities to offer omnichannel services and programs to ensure increased share of wallet for loyal customers, as well as to strengthen partnerships with the most effective retailers.

Expanding the assortment to include products that are complementary to the retailer’s offerings helps prevent a reduction in choice for improved performance and profitability, something that retailers are sometimes forced to do in a fiercely competitive marketplace.

Hybrid marketplace success depends on efficiently addressing three key challenges:

1. Reinforce the Brand Promise

Expanded product and service offers reinforce the brand promise. Carefully selected goods and services from third parties make the retailer’s offering better.

2. Offer a seamless customer journey 

The process of buying products on marketplaces, should be consistent with that of the retailer’s own assortment. Omnichannel shopping platforms will differentiate themselves from traditional marketplaces.

3. Strengthen and integrate the organization with efficient processes for managing third-party and in-house product offerings

Marketplace management requires new processes that cover the various touchpoints. Integration of processes and metrics will be key to effective marketplace operations.

Most hybrid markeplaces are still in the early stages of development and should strive to improve both the core value proposition (what makes a company stand out from the competition) and the integrated customer journey. However, experts believe that hybrid marketplaces have the potential to increase market share at the expense of traditional shopping platforms, including market leaders.

Exorigo-Upos offers a powerful SaaS platform that helps you launch your own marketplace, and it does so for both B2C and B2B sales. Anyone interested is welcome to contact us.