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5 Reasons Why Marketplaces Matter

5 Reasons Why Marketplaces Matter

Marketplaces are changing the world by connecting buyers and sellers at a global scale.

Marketplaces are becoming the new department stores, allowing customers to buy in a way that provides more convenience and value than ever. At IRCE 2017 in Chicago, it was revealed that in the US alone, $200 billion worth of goods have been sold on marketplaces, with $120 billion of that coming from 3rd parties (i.e. excluding the marketplace operator’s sales).

Amazon Stocks vs Competitors since 2015

Amazon vs Competitor Stock Value Change Since 2015

Amazon, Alibaba, and thousands of other marketplaces are disrupting retail and other industries through a ‘platform revolution’. They do this by connecting sellers of all sizes with potential buyers around the world. Need proof, Amazon, the most successful and impactful marketplace provider makes 50% of their sales via marketplace products offered by 3rd party sellers. When taking a look at the stock values from Q1 2015 through Q2 of 2017 of Amazon versus competitors such as Walmart, Target, Kohl’s, Macy’s, Sears, and Bon-Ton, you see that Amazon has increased by 250% while the other have experienced various levels of losses, ranging from Walmart’s -8% to bon-ton’s -94%.

One way to capitalize on the popularity of the marketplace model that companies like Alibaba and Amazon execute so effectively, is to start one of your own. So here are 5 of the top reasons to start an online marketplace that is agile, fast and scalable:

#1 Explosive growth amongst retail decline

Amazon Marketplace Growth since 2011

Billions of Amazon Ecommerce Sales

The $23.86 trillion global retail Industry is being disrupted. Established retail practices especially brick and mortar stores have gone into decline in recent years. Marketplaces with global customer bases are growing exponentially. In its report Global Powers of Retailing, Deloitte notes that while 4 of the Retail Leaders (Walmart, Costco, The Kroger Company and Schwarz) still lead the list. Amazon has made its way into the Top Ten list and is slowly closing in on Retail’s Big Four. A great way to ride out the current wave of change is to invest in your own marketplace and grow your business globally.

#2 Amazon is coming for you

Amazon is disrupting more and more industries with their infrastructure. The Amazon juggernaut is taking on industries like publishing, retail, logistics, entertainment, banks, cloud computing and real estate. In the B2B space, Amazon has acquired over a million customers in the US with 85000 sellers. So, creating your own marketplace positions you as an industry leader and can help fend off incursions from Amazon and others.

#3 Customers love the additional selection

A Gartner study reveals that over 60% of online sellers will list their products on marketplaces or sell third party products on their core commerce sites by 2020. Customers today have access to more information online than when talking to an in-store sales associate. Online reviews and price comparisons make them more confident in their buying decisions. Adding third party sellers to your commerce property broadens the products being offered, attracting more buyers, improving search engine rankings, and ultimately increasing customer satisfaction and loyalty.

#4 The SEO benefits are real

Your business definitely needs to have an SEO strategy in place to create a successful marketplace. When you sell more, more sellers will want to participate in your marketplace. This gives you more market power with better offers and deals. When properly tagged and linked these additional pages provide additional SEO relevance, which raises average position and drives more visitors. Investing in organic SEO is more important now than ever before.

#5 It’s essentially free product research

Marketplaces provide information about customer product preferences, informing decisions on what products to add to the site’s core offering, and providing data on customer buying patterns. Use marketplace category sales information to determine which additional products to add to your own core offerings. With your marketplace, you get to conduct this free research before investing in a category expansion of your own. You have the freedom to expand your existing categories, your adjacent categories and create new categories. On your marketplace, more products means more happy customers.

The good news for ecommerce operators is that functionality additions once costing hundreds of thousands of dollars  can now be added via cloud-based technologies at a fraction of the time and cost. You do not need to ‘re-platform’ to achieve your business goals in the digital markets of the future.

Your customers today expect an Amazon-like experience, so keeping the user experience fresh and including modern user contributed features keep up with expectations. By launching your own marketplace and fighting fire with proverbial fire, you put yourself in position to call the shots and become even more of a leader in your space.

McFadyen’s marketplace solution can help you quickly deploy a robust marketplace with an increased catalog, better customer insights, and easy drop-shipping /fulfilment by third parties. Built on the Mirakl platform, these marketplaces are platform agnostic, easy to integrate and deploy in a modular fashion, ensuring the fastest time to market with the highest quality.

A recent Forrester Research report reveals that 95% of all consumers have already used a marketplace and more than 50% of buyers have revealed that it has changed the way they shop. If you are interested in exploring the possibility of adding a marektplace to your existing ecommerce platform, please contact us via our web site or give us a call at (703) 226-3800.

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