Marketplaces are virtual shopping malls, where all the things you want are on one convenient platform. If this is where shoppers are congregating, then sellers shouldn’t ignore them.
Kiwis have been shopping on marketplaces for years. Trade Me, our most successful marketplace, just celebrated its 20th birthday. Other popular local marketplaces include GrabOne and NZSale. The big global marketplaces include Amazon, Alibaba, eBay and Wish. Facebook’s recent move into marketplaces has given us easy access to millions of products worldwide and opened up New Zealand products to billions of customers.
Marketplaces in 2018:
* Source: Coresight Research 2017
** Source: NZ Online Shopper Survey 2018
*** Source: Trade Me Annual Report 2018
So why do shoppers love marketplaces?
The rise of online shopping is driven by choice, price and convenience. The downside is the effort it takes to search multiple sites to find what you need. Marketplaces solve this problem by bringing retailers together in one place, making it easy to find, compare and buy.
What’s in it for business?
Marketplace platforms are a simple, low cost way for businesses to get into the world of online retail shopping. There’s no need to create your own shopping-enabled website, the platform manages all the payment transactions. Businesses just need to promote their products and fulfil orders. There are costs though, and most marketplaces have a listing fee or charge a success fee.
For many businesses, marketplaces are a good customer acquisition opportunity. By promoting a few popular products, they can catch the attention of customers and drive them to their own site. For bigger offline retailers, marketplaces are a means to increase store traffic either to view products before buying online or to pick-up products after an online purchase. Marketplaces are also a great way to break into international markets and access global shoppers without huge upfront costs or investment into local markets.
Note: Average basket size for marketplaces experienced a 7% growth between 2017 and 2018
Where to from here?
The global trend is for more specialist niche marketplaces to bring like-minded buyers and sellers together. We’re also seeing a rise in localised marketplaces and more platforms trading services rather than products. Longer term, some of the trends worth keeping in mind include:
- Increased Artificial Intelligence (AI) and machine-learning as marketplaces seek efficiencies and to replicate the personalised experience that offline shopping offers.
- Peer-to-peer marketplaces, bringing buyers and sellers together without the middle-man.
- Blockchain technologies for things like authenticating reviews and tracing product origins.1
Whether selling products or services, retailers seeking to grow their online sales must consider the marketplaces where their customers are hanging out and then find ways to integrate them into their business strategies.
1. Source: Arcadier Top 8 eCommerce Marketplace Trends in 2018