There are currently no items in your cart
Making the Most of Marketplaces | Q&A with Mirakl
Marketplaces have certainly made a name for themselves in the last 18 months, and not without reason. Consumers have access to a wider range of products, competitive pricing and a curated shopping experience. For retailers, this model allows businesses to scale, meet customer demands, and maintain flexibility.
We spoke to Tzipi Avioz, the EVP Customer Success, Americas and APAC at Mirakl to explore the power of marketplaces, the benefits, the pitfalls and how retailers can make the most of the marketplace.
In the recent Mirakl Enterprise Marketplace Index, it was revealed that marketplace retailers outperformed peers and competitors by 81 percent YoY. Do you expect this trend to continue as e-commerce becomes a more mainstream platform for retailers and shoppers alike?
Yes, we expect this trend to not only continue, but accelerate. During this most-recent digital transformation marketplaces have risen to the top because they offer consumers a one-stop shop for all their buying needs. Not only did marketplaces grow at more than double the rate of overall e-commerce, but last year marketplace purchases surged more than 100 percent – indicating retailers with marketplaces are cementing themselves as true shopping destinations.
Now that consumers have really experienced this efficient, cost-effective way of shopping, how could they want to return to the way things used to be done?
Consumers are in need of convenience and ease of use when it comes to shopping online, which marketplaces have a clear advantage. What makes marketplaces so effective to consumers, and how can retailers take advantage of it?
Marketplaces allow consumers to buy anything, anytime, anywhere. With just a few clicks they can confidently browse an extensive selection, compare prices, and get the exact item(s) they’re looking for.
For retailers, a marketplace allows them to meet all of their customers’ needs. With this model, they now have the flexibility to boost their catalogue, test products, and expand into new categories. Not to mention, all of this is done without taking on the typical risks associated with adding inventory. By connecting sellers directly to consumers, retailers no longer have to purchase items and store them in a warehouse. Retailers also gain the agility to quickly add new sellers and capitalise on the latest trends, while also protecting themselves from being stuck with underperforming items because shoppers have already moved onto the next thing.
What have been the three major reasons why marketplaces shot up in popularity in the last 18 months?
It’s impossible to ignore the role the pandemic is playing in accelerating e-commerce. Seemingly overnight, there were new rules, priorities, and expectations. During this time retailers turned to marketplaces because they offered them a platform to take advantage of this change.
First, marketplaces create a truly endless aisle. No longer restrained by what fits on a shelf (or in a warehouse), retailers could quickly onboard and manage new sellers. This freedom allowed them to strengthen their existing categories, ensuring they never ran out of stock, while also breaking into new ones as demand changed.
Second, marketplaces improve the customer experience. By delivering exactly what they’re looking for, retailers can boost brand loyalty and attract new shoppers.
Third, marketplaces offer valuable customer insights and take the guesswork out of what customers actually want. Retailers can then use this information to not only cross-sell and up-sell but also improve their overall understanding of their customers’ preferences and behaviours.
Simply put, marketplaces saw a boost in popularity because they’re an effective and efficient way for businesses to deliver on the evolving needs of their consumers.
The Enterprise Marketplace Index indicates that retailers with marketplaces saw a 34 percent increase in traffic to their core e-commerce sites in Q4 YoY. What are some of the core reasons for this? Do you think these figures will change over time?
The power of a marketplace is that it can lift up an entire website, and boost all of a retailer’s offerings. With a broader selection you’re able to attract new customers, while also giving existing ones more choices. Introducing quality sellers and products helps strengthen your brand DNA and transform your site into a true shopping destination.
Expanding your selection has the additional benefit of improving search engine optimization (SEO). An expanded selection means you’re more likely to rank for the many different types of products that buyers are searching for, which means you stay top of mind for your existing customers while also finding new ones. Since you’re helping shoppers locate and buy what they’re looking for, you’re going to build brand loyalty and increase the chance they’ll come to you first the next time around.
Moving forward we expect this increase in site traffic to continue to grow. More quality options will always lead to fresh content and satisfied shoppers.
What makes marketplaces more attractive to consumers than traditional e-commerce storefronts?
Marketplaces offer customers more assortment, at competitive prices, from brands they trust. With just a few clicks they’re able to confidently browse and compare items, eliminating the need to visit a competing site. It’s why marketplace gross merchandise value (GMV) grew 81 percent in 2020. Operators who use their marketplace to meet more of their shoppers’ needs will keep buyers coming back.
Did any results from the Enterprise Marketplace Index surprise you? Why/ why not?
What really stood out in the report was how much of an impact sellers have on marketplace growth. These numbers really shatter the myth that more sellers on marketplaces cannibalise each other’s sales; instead, they create new opportunities.
While we always knew this to be true, seeing these numbers really drove home the importance of expanding your seller base to drive growth for both first- and third-party sales. That 81 percent increase in GMV is only possible through a 46 percent boost in third-party sellers. They’re the ones driving marketplace growth by offering a scalable solution – allowing businesses to deliver more selection, and a better overall value to their customers.
Do you expect to see more marketplaces in the future? If so, could this damage the impact it currently has on the market?
I believe the marketplace trend will continue to grow. There can be as many marketplaces as there are trusted brands. Becoming a marketplace doesn’t mean turning into an ‘everything store’. There may only be one Amazon, but for quality brands a marketplace is the best way to transform your business into a profitable destination for your customers – it’s about improving engagement and delivering on all of your customers’ needs.
Just like the formation of new businesses doesn’t damage the market, marketplaces must be viewed the same way. They are helping businesses evolve to new customer demands and expectations by providing a business model that’s highly efficient and scalable.
What does the future of online retail look like to Mirakl?
We’ve only scratched the surface of what can be ordered online. Customers want a one-stop-shop that’s personalised and fulfils all of their unique needs. When I say ‘needs’ I don’t just mean products, but services too. With a marketplace, all of this can be done on a single site.
The great thing about our platform is that it’s adaptable to the needs of the business, and its clientele, so we’re excited to see how retailers continue to innovate and utilize the marketplace model.
Is there anything you’d like to add?
The numbers you mentioned all came from Mirakl’s Enterprise Marketplace Index, and I encourage everyone to read the report for insights and strategies on building a successful marketplace. Our goal behind the report was to offer the benchmark metrics retailers must know and measure to achieve growth and success with the marketplace model.
It’s a great opportunity for businesses to learn more about the marketplace model and consider whether it’s the right avenue for them.
Read the Mirakl Enterprise Marketplace Index and find out more about the power of online marketplaces here.