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Claiming Your Marketplace Stake
How are retail marketplaces benefiting sellers? Simon Kelly, strategic partnerships manager at ChannelAdvisor, looks at how retailers can create a long-term strategy that will help drive success in a marketplace environment.
We know that third-party marketplaces are playing the long game. Amazon launched in December last year, and while there was plenty of hype surrounding its launch, none of that was created by Amazon itself.
The e-commerce giant has since launched its much-anticipated Fulfilment by Amazon (FBA) – meaning that Amazon picks, packs, ships and provides customer service for FBA approved products. Many naysayers are looking at the penetration and performance of Amazon as a basis for claims that it won’t make the same impact here as it has in the US or UK. However, Amazon launched programs like FBA in the US in September 2006, so it would be unrealistic to believe Australia could reach current US stats and make up over 12 years of ground within a month or two of its launch.
Amazon isn’t the only big-box retailer disrupting the e-commerce space. We know that the marketplace landscape is changing. eBay has completely evolved since its first iteration in Australia in 1999, launching eBay Guaranteed Delivery earlier this year. Catch of the Day rebranded to Catch last year, launching a third party marketplace to leverage this change in online retail models, and this is just a handful of local examples.
So, if retail marketplaces are evolving and consumers are shifting their attention to these new mediums, where does this leave sellers?
Top sellers in the US generate the majority of the market in terms of sales volume, while the long tail of small sellers provides the rest. On Amazon.com, 25 percent of the sales made through the platform come from only 1,000 sellers. Despite this, so far this year, 270,151 sellers have joined Amazon’s global marketplace, which equates to 2,936 new sellers every day, 122 every hour, or two every minute! It’s also a fact that most of the top sellers on Amazon have been selling for years. For instance, in the US, 67 percent of the top 10,000 sellers were also in the top 10,000 a year ago, and 50 percent were in the top 10,000 two years ago. There is a similar pattern when it comes to eBay, with 5,000 sellers accounting for 25 percent of all of eBay’s sales.
This is why it is dangerous to dismiss the impact of Amazon and the third party marketplace model, as buying behaviours are undoubtedly starting to shift. Consumers are starting to understand and take stock of the benefit of a single point of contact for all search and shopping requirements. Amazon’s paid membership program, Prime, is launching mid-year and Catch has also launched Club Catch. Not to mention that 63 percent of Amazon’s customers are Prime members, with the total subscriber base growing by 38 percent year on year. Marketplaces understand the importance of rewarding consumers for their loyalty, which is helping them generate repeat purchases from shoppers.
In the end, it comes down to shopping habits, and marketplaces are creating buying habits now that will see their sellers benefit well into the future. These marketplaces also represent an amazing opportunity for retailers of any size, but the fact of the matter is that not everyone can list and become a top seller straight away. In reality, it takes a strong sales history and fully optimised listings (the requirements of which differ from marketplace to marketplace), to get retailers ranking and performing well on the array of e-commerce marketplaces that are now available.
So, if marketplaces are playing the long game and consumers are in this for the long haul…what’s your long-term strategy?