Rise of the Marketplaces: Benefits for retailers

by | Jun 30, 2017 | Omnichannel, Retailers

Retailers have certainly been challenged by Amazon over the last few years as they up the ecommerce game: faster fulfillment, free delivery, two-day shipping. Now Amazon is even venturing into a full-fledged brick and mortar store strategy.

Despite its phenomenal growth and constant media attention, Amazon is still smaller than Walmart and only controls a small portion of the overall retail market. Yes, it is getting an amazing amount of search volume online and more than 50 percent of product searches start there, but here’s the thing: Retailers can use all of that to their advantage by opening up their own “store” on Amazon. Amazon Marketplace is a collection of third-party retailers and vendors who are selling products through the Amazon platform, taking advantage of the same fulfillment, free delivery and shipping promises that consumers have come to expect.

Marketplaces beyond Amazon

But Amazon Marketplace is not the only marketplace available. There are several other marketplaces dotting the ecommerce landscape, and they’re all having an effect on the retail industry. Many people are already familiar with eBay and Etsy, but there’s also Rakuten.com, NewEgg.com, Bonanza and Overstock.com are just a few of the different retail marketplaces available to consumers. That also means they’re an available sales channel for retailers as well.

Of course, not all marketplaces are created equal, and you don’t have to be on every one. For example, NewEgg is more about tech and electronics (though it does offer clothing along with automotive, sporting, and industrial products), while Overstock.com is geared more toward home goods and some fashions. And Rakuten.com (formerly Buy.com) has a heavy consumer base in Europe and Japan, opening up the possibilities of finding new consumer markets.

Marketplaces: Where consumers shop

Multi-merchant shopping portals are now a bigger part of online retailing in the U.S. than ever before. In fact, 97 percent of U.S. consumers who shop online do so on marketplaces, according to a 5,000 shopper study published in June 2017 by UPS and comScore Inc. That’s up 85 percent from the previous year.

Many marketplaces function like an online mall. Rather than being about just one thing or type of product, such as electronics or home goods, these marketplaces carry many different product lines from many different suppliers, all carried under one roof.

But finding the marketplaces where your customers spend their time can help you 1) reach customers you already have by being where they are, and 2) reach new customers who might not know who you are. This means that not only are you selling your products, but it’s a marketing tool that lets you promote your brand as well.

If you understand the demographic and geographic information about your customers, you can use that information to decide which marketplace is better for your brand. The stores are easy to set up, the products descriptions are easy to upload, and you can fulfill the products from your warehouse or stores, or you can have some of the larger e-retailers handle it for you.

For retail brands that are considering having their stores fulfill ecommerce and drop ship orders, these retail marketplaces can be one more channel to help you move in-store inventory.

Whether you want to sell products on Amazon Marketplace, or any other network of retailers or suppliers, SPS Commerce can help you find a solution. To learn more about our cloud-based software solutions, please visit the SPS website for more information or contact an SPS representative today.

Tony Thrasher