What: Marketplaces are handy for retailers as they allow to increase reach and assortment variety

Why it is important:  most of IADS members are engaging in that strategy. Marketplaces can be efficient tools, however, they should not cannibalize the retailer’s reputation for curation and brand selection. Above all, such solutions provide new approaches and tools to retailers, where marketplaces are efficient ways for retailers to understand the potential of new brands, and they onboard them on a wholesale basis.

Marketplaces are expanding fast, as they are considered to be one of the most adequate answers to customers’ needs: wide (almost infinite) assortment, reaching more consumers. Mirakl, a marketplace engineering company, signed with a    s many customers in 2020 than in 2018 and 2019 combined, including an airport.

However, marketplaces might not be a silver bullet for retail:

• Sellers have less control of their brand experience, with sometimes poor presentation,
• Being present on several marketplaces implies the risk to dilute the image or cannibalize sales,
• From the marketplace point of view, any bad experience in the shipping will fall on its operator whereas the responsibility is in the first place the brand’s (which explains why department stores such as El Corte Inglés also develop their own logistical solutions for their marketplace offers). From a broader perspective, the question of knowing who ‘owns’ the customer is still very  much here.

Among recommendations and good practices for brands doing business with marketplaces:

• Communicate constantly and transparently with retailers on any change and conditions,
• Consider hybrid approach: sell some products on marketplaces and wholesale others,
• Make the most of product bundlings,
• Encourage customers to leave feedback

Hudson’s Bay transformed its e-commerce site into a marketplace last March, with  new categories (pet suppliers, books, health, gourmet food, electronics, second hand) and a new business model: commission based on sales and a monthly fee. According to Iain Nairn, president and CEO, this model is extremely efficient in terms of brand onboarding leadtime: a week, vs. six to seven months in the normal wholesale process.

Mounting Marketplaces: Gamechangers but no slam dunk