The rapid growth of the online marketplace model is showing no sign of slowing down, with eBay and Amazon leading the way as shoppers continue to look for reliable, affordable ways to shop.
Currently accounting for around 40% of the UK’s total online spend, the last six months have seen a number of major retailers – including Superdrug, B&Q and Debenhams – all launching their own curated digital marketplaces. So why the sudden interest?
“Even before the pandemic, shoppers were turning to online marketplaces in droves,” Initials CX strategy director Annie Little told Charged.
“Beyond convenience, access to the best deals, seamless checkout and quick deliveries, marketplaces also exceed consumer expectations for an intuitive one-stop shopping experience,” she adds.
According to a report by OC&C Strategy Consultants, the ecommerce marketplace model is on track to grow by 15% annually, as it drives the largest fundamental shift in consumer spending habits since the emergence of online shopping in the 1990s.
The research predicts that by 2025, spending through leading online marketplaces such as Amazon and eBay will overtake the majority of ecommerce outlets.
The arrival of the pandemic saw marketplaces rise dramatically in popularity, accounting for 62% of all web sales, according to a report from emerchantpay.
Marketplaces give unfettered access to a huge range of products, meaning consumers are not restricted to a specific brand or offering. Shoppers are able to compare products and decide what they want, with minimal friction or confusion in comparing metrics.
Evidently, retailers are looking to reap the benefits of the marketplace model. But what exactly are the benefits and where should they start?
How do marketplaces benefit retailers?
“Retailers should always look at new ways to get in front of their audience and marketers want to be able to get the right content in front of the right people at the right time,” Organic group account director Simon Dale says.
With marketplaces, this means having a wide variety of products readily available when customers are in “buying mode”.
“By being part of the overall marketing journey, retailers may offer great top of funnel content, but if a consumer is purchasing from Amazon or eBay and providing the solution to their products on these channels, it will help win sales,” Dale continues.
“The perception is that the related services, such as shipping and sales, will be the same when purchased from trusted marketplaces.”
As such, marketplaces allow retailers to host a variety of products from third-party sellers, while maintaining their existing reputation and giving consumers confidence to purchase.
The value of marketplace data
Retailers can also benefit from valuable data that the marketplace model offers them.
“The reach that marketplaces provide offers ample opportunities for retailers to not only connect with new customers – via access to customer data – but also glean insights into what potential and existing buyers are thinking,” Annie Little says.
“Most marketplace platforms give sellers access to data and analytics tools that provide in-depth insights into the shopping behaviours of consumers on the platform.
“These insights not only help sellers optimise their marketplace strategy, but also adapt their entire omnichannel strategy to best reach their customers.”
Marketplaces, Little continues, also inspire an increased feeling of trust among consumers that comes from access to “impartial peer-to-peer reviews as well as greater visibility of product availability, prices and stock levels.”
These key elements mean the gamble of buying new products is somewhat neutralised.
However, Little insists that customers the growing appeal of marketplaces isn’t just down to improved purchasing efficiencies and brand transparency. While consumers may come for the products, they ultimately stay for the experience.
“Marketplaces have become hubs for like-minded communities of consumers to share information and vlog about product and service experiences,” she says.
“This circulation of information that is tangential to the virtual ecommerce marketplace platform itself, enables strangers to feel like locals, as they are able to connect through shared passions and circumstance.”
Will more retailers launch marketplaces in the future?
According to research from marketplace platform Mirakl, 94% of consumers expect to maintain or increase their future use of marketplaces. At the same time, 7 out of 10 consumers think that a marketplace is the most convenient way to shop online.
Mirakl is an ecommerce software company working with major retailers including Superdrug, B&Q, Hotter, Mountain Warehouse and Debenhams, using its SaaS platform to power their marketplace offerings.
Mirakl regional vice president UK & Ireland Jessica Christenson says the surge in ecommerce has created a fierce competition among retailers.
“There is a lot of movement across the entire retail sector and particularly in health & beauty, fashion and grocery as these retailers look to win in a competitive environment with rapidly growing customer demand,” she says.
“The future of a resilient retail sector lies in the adoption of marketplaces. They are no longer ‘nice to have,’ but are a clear preferred way for consumers to shop, especially for younger generations.”
Marketplaces give retailers the opportunity to expand the products they are able to offer customers, far beyond their own inventory, with low risk and little overhead.
Superdrug x Mirakl
Back in March 2022, Superdrug announced it would be launching its own marketplace, powered by Mirakl tech.
The health and beauty retailer recently revealed it has already signed over 200 brands to its upcoming Superdrug Marketplace. Set to go live in September 2022, the company is still recruiting brands ready for launch.
According to Superdrug, the marketplace will be “seamlessly integrated” onto its existing website, providing customers with a “smooth journey” for purchasing products.
“Superdrug Marketplace is the logical next step for our business,” Superdrug ecommerce director Matt Walburn said.
“As well as further strengthening our accessible health and beauty offering, it’s designed to help remove listing barriers for innovators in the market and provide hundreds of offline and online businesses with a flexible business opportunity and support they need to succeed in the digital world.”
As well as hosting a variety of upcoming brands and products, the marketplace will focus on growing trends, throwing a spotlight on brands that are homegrown, female-founded, sustainable and inclusive.
It is not difficult to understand the appeal of a marketplace for a retailer like Superdrug.
Through the marketplace model, the company is able to offer its consumers a variety of third-party brands, all under the security of the Superdrug name.
It is an excellent way to increase revenue and consumer reach, while maintaining brand affinity and loyalty.
Marketplaces are clearly powerful platforms with several tangible benefits. With major retailers like Superdrug jumping on the bandwagon, the retail industry should expect them to grow even further, as they take up more of the ecommerce market share.