From Sales Channel to Innovation Lab: A Conversation with Marketplacer and McFadyen Digital

In the rapidly evolving landscape of e-commerce, the traditional inventory model of “buy, hold, and hope” is being challenged by a more agile approach. Marketplaces are no longer just additional sales channels; they have become strategic innovation labs where retailers can test new categories, respond to trends in real-time, and learn from their customers without the weight of inventory risk.

In this candid conversation, McFadyen Digital and Marketplacer—strategic partners helping brands launch and scale curated marketplaces—explore how modern retailers are leveraging the model to drive innovation.

The Participants:

• Jeffrey Mikos: Head of Strategy, McFadyen Digital
• Luke Hilton: VP of Solution Engineering Global, Marketplacer
• Jen Fitzpatrick: Marketing & Partnerships Director, Marketplacer

The Shift Toward Asset-Light Innovation

Why do you believe marketplaces are evolving from sales channels into strategic innovation labs, especially for testing new categories without inventory risk?

Jeffrey Mikos (McFadyen): Operators today have a clear objective: finding asset-light revenue streams that don’t stray too far from their core competency.The marketplace model is uniquely suited for this. It lets you expand into new categories and test customer demand without taking on inventory risk. And once you’ve built a retail media network, marketplaces become a growth accelerator—every new seller you onboard brings incremental demand and non-native products that fuel your media revenue. It’s a flywheel. More sellers, more assortment, more traffic, more ad inventory.

Luke Hilton (Marketplacer): We often see the “penny drop” after a retailer starts working with a marketplace. They realize they can roll out a curated range extension play and optimize their existing inventory. For example, why hold big and bulky products in your own warehouse when you can shift them to a third-party supplier?

I recall a grocery customer in Australia who noticed “zero results” for Christmas hampers in their search data. They onboarded a supplier in a marketplace model (commission on sale) within a few days, capitalized on the holiday demand, and then promoted this seller to a dropship model (cost-plus model) and were able to control the margin without ever touching the inventory.

Overestimating Risk vs. Underestimating Upside

Where do retailers overestimate the risk of marketplace testing, and where do they underestimate the potential upside?

Jeffrey Mikos (McFadyen): Retailers often underestimate the volume of data that a marketplace produces and how to leverage it. They also underestimate how quickly they can move. If you as an operator have strong brand equity, sellers will be “chomping at the bit” to work with you. The challenge is often prioritizing and managing that backlog of interested partners.

Luke Hilton (Marketplacer): On the flip side, retailers sometimes underestimate the operational effort involved—the “people and process” side. Technology doesn’t just “patch up” existing issues with customer experience, logistics, or fulfillment. You still have to manage returns, refunds, and cancellations to maintain that experience.

Jen Fitzpatrick (Marketplacer): I’ve noticed that prospects often get stuck on a “laundry list” of things they think they have to do to run a marketplace, rather than looking at the massive data-driven reward.

The Role of Curation in Brand Identity

What role does curation play in ensuring that a product test enhances rather than dilutes the operator’s brand identity?

Luke Hilton (Marketplacer): It’s about quality over quantity. The marketplace needs to feel intentional, not chaotic. You need guardrails—quality standards and compliance checks—to ensure that range extension isn’t just about adding SKUs, but about getting the right products in front of the right customers.

Jeffrey Mikos (McFadyen): A retailer’s brand identity is something they’ve spent decades creating. The marketplace needs to supplement and augment that, not distract from it. Curation isn’t just about which categories you allow, it extends to the quality of the product content and the seller’s operational capabilities. If a seller’s data or service level is below your standards, they aren’t a good fit, regardless of how relevant their products may be.

Identifying Success Signals Beyond Sales

Beyond sales, what early signals indicate whether a product should be scaled, refined, or retired?

Luke Hilton (Marketplacer): We look at the construct of the basket—how much are you selling across different commercial models? There are also engagement signals like search volume and product views. We also look for “shop the room” opportunities where third-party marketplace items complement first-party products. Finally, sentiment analysis is huge. How do ratings and reviews differ between your first-party and third-party experiences? That data tells you when to take the next best operational action.

The Internal Mindset Shift

What internal mindset shift needs to happen for retailers to embrace marketplaces as an engine of innovation?y get stuck?

Jeffrey Mikos (McFadyen): It’s a shift from “we choose what our customers can buy” to “we learn from what our customers choose.” Historically, retailers had to be prescriptive because shelf space was limited and expensive. Now, the marketplace allows for a more democratic, data-driven approach.

Luke Hilton (Marketplacer): Top-level buy-in is critical. If the buying team tries to apply old-school procurement and onboarding processes to a marketplace model, it won’t work. You have to empower teams to run experiments and “fail fast” without the typical bureaucracy.

Jen Fitzpatrick (Marketplacer): The role of the buyer changes. Instead of managing every product end-to-end, they become curators who spot opportunities and test new brands using real-time data. They aren’t stuck with a warehouse full of shirts nobody wants anymore.

Real-World Agility: The “Wall of Masks”

Have you seen examples where rapid marketplace testing helped a brand enter a category faster than competitors?

Jeffrey Mikos (McFadyen): Etsy is the classic case study. During the COVID mask mandates, they sold nine figures worth of face masks almost instantly because they could activate an entire network of creators. Meanwhile, traditional drugstores and grocers had to wait months for supply chains to catch up, often receiving a “wall of masks” long after the initial peak demand.

Luke Hilton (Marketplacer): Whether it’s masks, backyard gym equipment, or viral toy trends like fidget spinners, marketplaces give retailers the agility to respond to high-visibility trends in real-time.ors mitigate risk with explicit seller recruitment and onboarding strategies. Early on, they gate participation and ensure suppliers align with their culture and value proposition.

The Future of Category Expansion

Do you see marketplaces becoming the default method for category expansion in the next 3-5 years?

Jeffrey Mikos (McFadyen): Absolutely. The market is dictating this shift. Customers already expect the breadth and convenience they get from Amazon, and retailers can’t meet those expectations by buying deeper into inventory. Marketplaces let you match that assortment breadth while keeping capital flexible. It’s becoming less of a competitive advantage and more of a baseline requirement.

Luke Hilton (Marketplacer): I agree. Given the financial stress many retailers are under, the combination of a new revenue stream and retail media is too powerful to ignore. The software is also much more mature now—it’s plug-and-play. We’re seeing B2B projects on BigCommerce and Shopify go live with sellers and orders flowing in just weeks. The seller community is ready, often operating on over a dozen marketplaces already; it’s time for retailers to catch up

The Path Forward

The era of “playing it safe” with rigid, inventory-heavy models is coming to an end. For modern retailers, the marketplace model represents more than just a secondary storefront—it is a high-speed engine for experimentation, allowing brands to listen to their customers in real-time and pivot with precision.

However, moving from a traditional retail mindset to a marketplace-first strategy requires more than just a change in philosophy; it requires a combination of world-class technology and deep strategic expertise.

This is where the partnership between McFadyen Digital and Marketplacer becomes a game-changer. By combining Marketplacer’s best-in-class scalable platform with McFadyen’s decades of experience in marketplace strategy and implementation, we provide retailers with a proven blueprint for success.

Together, we help brands navigate the operational complexities discussed today—from curation and seller onboarding to data-driven scaling—ensuring that the journey from “innovation lab” to “revenue powerhouse” is both seamless and profitable.Ready to turn your e-commerce site into an innovation lab? Contact McFadyen Digital and Marketplacer today to begin your journey.