December 01, 2023
Marketplaces have fundamentally changed the way we shop. In Europe alone, 85 per cent of all retail web traffic goes to marketplaces which now account for 62 per cent of the region’s top 100 retailers by category.
The proliferation of third-party marketplaces has grown by a staggering 500 per cent since 2007 and shows no signs of stopping. It is anticipated that by 2027, almost 60 percent of all online sales will take pace on such platforms.
Convenience, competitive pricing and choice
The rising popularity of marketplace buying has been driven by a number of different factors. For consumers, they offer convenience, competitive pricing, greater choice, rapid home deliveries and the ability to easily search for millions of products across multiple categories.
Choosing a marketplace
There are essentially two types of marketplaces; general marketplaces covering a wide range of products or services such as Amazon, eBay and Alibaba, and specialist marketplaces that are often focused on a specialist niche.
There are also two, distinct ways marketplaces operate. “Pure” marketplaces simply provide a platform for sellers and buyers to come together and conduct transactions while “mixed” marketplaces not only sell products from third-party sellers but also from their own ranges. Mixed marketplaces are growing in prominence, especially now that large retailers have started launching their own platforms to extend their digital shelf.
These different types of marketplaces all come with their own distinct pros and cons. General marketplaces, by their very nature, attract a larger and more diverse consumer base than their specialist counterparts. However, the consumers using them will not necessarily be focused on looking for a specific of product or category. For example, a consumer on ASOS will almost certainly be shopping for clothes whereas a consumer on Amazon could be looking for clothes, electronics, furniture, kitchenware or practically anything else for that matter.
As well as gaining access to vast numbers of potential new customers, one of the other key benefits offered by marketplaces, particularly for smaller businesses, is that they allow sellers can take advantage of the marketplace’s huge networks and resources without having to invest too heavily in their own operations.
This is one of the reasons why marketplaces continue to grow, despite a turbulent couple of years for the ecommerce industry. Their popularity shows no signs of slowing as consumers have now come to expect the degree of choice and convenience offered by the likes of Amazon and eBay. For sellers, the benefits are just too compelling to ignore, including:
- Reach: marketplaces attract a vast number of potential customers, providing sellers with exposure to a broader audience that may be challenging to reach through individual marketing efforts.
- Visibility: sellers benefit from the marketplace's visibility and brand recognition, making it easier for customers to discover and trust their products or services.
- Cost-effective entry: joining a marketplace is often more cost-effective than establishing an independent online store. Sellers can leverage the marketplace's existing infrastructure, saving on website development, hosting, and maintenance costs.
- Marketing support: many marketplaces invest in marketing activities to drive traffic to their platform. Sellers can benefit from these efforts, as the marketplace helps promote their products to a wider audience.
- Trust and credibility: established marketplaces often have built-in trust mechanisms, such as customer reviews and ratings. Positive reviews can enhance a seller's credibility and encourage more customers to make purchases.
- Streamlined transactions: marketplaces typically handle transaction processing, payment gateways, and order fulfillment. This allows sellers to focus on their core competencies, such as product development and customer service, without getting bogged down by the technical aspects of e-commerce.
- Export opportunities: sellers can expand their customer base globally without the need for extensive international marketing. Marketplaces provide access to a diverse range of customers from different regions.
- Data and analytics: marketplaces often provide sellers with valuable data and analytics, offering insights into customer behavior, preferences, and market trends. This information can be used to make informed decisions and optimize product offerings.
- Customer support: sellers can benefit from the marketplace's customer support infrastructure, reducing the burden of handling customer inquiries, complaints, and returns independently.
- Easier scaling: marketplaces provide a platform for sellers to scale their operations without the need for significant investments in additional infrastructure. Sellers can focus on expanding their product range and improving customer satisfaction.
- Reduced risk: selling on a marketplace can reduce the risk associated with managing an independent online store. The marketplace handles certain aspects of risk management, including fraud detection and prevention.
- Cross-selling opportunities: sellers can take advantage of cross-selling opportunities within the marketplace, potentially reaching customers who are interested in complementary products or services.
The power of standards
GS1 standards play a crucial role in unlocking these benefits by powering the functioning and efficiency of online marketplaces. They provide a framework for unique product identification through Global Trade Item Numbers (GTINs) and barcodes, enabling accurate and efficient tracking of products throughout the supply chain. This contributes to faster and more accurate order processing, reducing the likelihood of errors in shipping and delivery.
This not only helps customers make informed purchasing decisions and reduces the likelihood of receiving incorrect or misrepresented products, it also provides the marketplaces themselves with certainty on what a product actually is. This ensures that products get visibility in search results, with products carrying GS1 GTINs receiving 40 per cent more impressions than those without.