Online marketplaces

It’s no secret that marketplaces attract significant traffic and have high visitor engagement, thanks to their fast delivery propositions, broad choice of products available and competitive prices. Amazon has become a starting point for most shopping journeys, with most consumers using the platform as a shopping search engine to discover a vast array of new products and repeat purchase favourite items. But as the marketplace model evolves beyond the traditional horizontal ecommerce business archetype (one stop shop that attracts a mass market), individual mainstream retailers have the opportunity to create niche marketplace solutions, that offer more localised and specialised products to their target consumers.

Rise of the vertical

The vertical marketplace concept, aimed at a single market sector to serve a specific category of products to a targeted consumer, allows individual retailers to better differentiate on the basis of quality, knowledge and expertise, and the variety of products offered within their niche. This narrow focus also gives retailers the opportunity to highlight their expertise in the form of specialised knowledge or years of experience in the industry. A rich example of this is Etsy, the Brooklynbased online marketplace has become one of the leading destinations for handcrafts and vintage items. Multiple high street retailers are following their lead to launch curated digital marketplaces in 2022, including Superdrug, Mr Porter, Nike and B&Q. With white label marketplace software and plugins, such as Marketcube, making it possible for such businesses to set up a plug-and-play marketplace platform, it appears to be a low-risk strategy for growing product sales.

The recipe to marketplace popularity

Even before the pandemic, shoppers were turning to online marketplaces in droves. Beyond convenience, access to the best deals, seamless checkout and quick deliveries, marketplaces exceed consumer expectations for an intuitive one-stop shopping experience. Couple these tangible benefits with the increased feeling of trust that comes from access to impartial peer-to-peer reviews and greater visibility of product availability, prices and stock levels, the gamble of buying new products is somewhat de-risked. But the rising appeal of marketplaces isn’t solely down to improved purchasing efficiencies and brand transparency. Yes, consumers may come for products, but they are staying for the experience. Marketplaces have become hubs for likeminded communities of consumers to share information and vlog about product and service experiences. 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.

The benefit of marketplaces to retailers 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. 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.

The benefit of marketplaces to retailers

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. 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.

The future

Overall, online marketplaces strengthen a brand’s foothold in key categories. Retailers of all sizes that have launched their own marketplaces have been able to expand what they could offer existing customers well beyond their own inventory, with low risk and little overhead. For instance, at the onset of the pandemic, sensing the shifting customer demand signals, Etsy quickly ramped up its catalogue of face masks due to the dynamism of its marketplace seller base. Behaviour like this also inspired new partnerships between companies – even those that may have previously seen one another as competitors. Whilst the future looks bright for online marketplaces in general, only retailers who can keep up with trends in this way will be able to make the most of the opportunities presented.