The rapid emergence of online marketplaces is continuing to reshape the retail industry. In this article Christophe de Sahb, our in-house marketplace specialist, looks at some of the trends behind the marketplaces boom and how the retail industry is reshaping itself around the rise of marketplaces. He’ll look at what’s changing and why it matters from a CX perspective, for everyone from brand manufacturers to sellers and retailers.
Ever since the pandemic reshaped the ecommerce landscape, retailers have come to fully embrace the huge potential of marketplaces. Turbo-charged by the pandemic’s effect on consumer behavior a few years ago, the economic outlook for online marketplaces has only become more lucrative in the years since.
This is a paradigmatic shift as marketplace projects are now launched, not only by marketplace operators alone (starting a platform from scratch), but now by existing e-commerce businesses that see the business potential to add third-party sellers.
By some industry estimates, sales in online marketplaces may overtake first party ecommerce channels by 2025. For example, Amazon’s overall sales grew from $281 billion in 2019 to $470 billion in 2021, with a large slice of that growth coming from its marketplace business. Amazon hasn’t been alone, either, with established fashion brands like Zalando leading the way into marketplaces alongside players like Walmart, ManoMano and MercadoLibre.
This has meant the market has matured rapidly as the competition has upped its game, and made entering the market much more complex than it has been previously.
It’s worth remembering that on top of everything else, the world of marketplaces is still recovering from the upheaval of the last few years. The resulting post-pandemic boom has led to global logistics networks that are still recalibrating from the overload, while hiring experienced talent can still be famine rather than feast.
With those challenges in mind, let’s get started with the first of four trends we’re looking at.
Trend #1. Consumers Want a Unified Shopping Experience
Being on the frontline of customer care operations, one striking evolution in marketplace customer expectations we noticed, is an increased desire for a single unified experience across all fields of commerce. It used to be that marketplaces were seen as a discreet, single channel with their own economics. That is no longer the case.
Customers want to save time (and effort) whether they purchase online or offline, in virtual or physical stores. This means that any customer-facing agent, whether retailer or a third party actor, needs to be aware of previous buying history and customer preferences.
What do we mean by a unified commerce platform?
Unified commerce is a retail business approach that goes beyond omnichannel marketing to bring all retail environments together, in order to give customers a consistent shopping experience across all sales channels. It’s an attempt, often by retailers who have both physical and virtual stores, to offer customers a better, unified experience.
From a customer care operations perspective, this means that operators can track customer activity data across those channels, understand overall preferences, and have access to live inventory, all while also giving customers the flexibility to buy products and navigate the experience seamlessly wherever they are, either digitally or in-store.
Such a model relies on a data-centric infrastructure collecting real-time data for and from customers, inventory, and distribution network all in one place. So maintaining data quality and data accessibility throughout back office tools is critical. By linking front-end retail operations to the back-end, customer service operators should be able to access data ranging from inventory management, customer relations management (CRM), order management and Point of Sale (POS) operations.
With a unified commerce platform, retailers can help their customers save time and effort with a faster, simpler shopping experience. Executed well, it has the potential to turn every shopping journey into a brand loyalty opportunity.
Trend #2. Customers Believe Logistics And Delivery to be Fully Integrated Into Their Purchasing Experience
Marketplace operators, first heavyweights such as Amazon, followed by fashion leader Zalando and Aboutyou, have all heavily invested in logistics and fulfillment. While decades of e-commerce development have somewhat standardized the online purchasing experience, there is still room for differentiation (both delight and disappointment) in the final stages though.
Customers expect to deal with a single point of contact from start-to-finish, from consideration through to purchase, right down to the last mile. Amazon’s launch of its own Fulfilment by Amazon (FBA) offer, secured the overall order-to-delivery value chain, and in doing so significantly raised customer expectations.
Despite the complexity behind every e-commerce chain, expectations include the assumption that marketplaces are responsible for delivery speed quality. Buyers want to interact with no more than a single actor (whether that’s the seller or the operator).
Marketplaces are also the first contact for complaints, should something go wrong during any stage of fulfillment. Customers simply assume that the marketplace operator will deal with it all.
So it makes sense that control over your own marketplace logistics is advisable – up to, and including, the establishment of your own end-customer logistics. If not, you should ensure that your customer service teams have access to relevant information, should your clients be facing a logistics related issue.
Trend #3. The Ecosystem to Support Marketplace Operators And Their Sellers is Blossoming
I like to think that the last few years have seen a new retail gold rush, as operators have dashed to establish their own marketplaces, hoping to strike it rich with their own goldmines.
Now though, the marketplace ecosystem keeps growing beyond marketplaces themselves as new services for suppliers, sellers and consumers become vital, valuable elements of that ecosystem.
In part this is due to the fact that the booming numbers of marketplaces – and their needs in an increasingly complex industry – are a great incubator for agile, new start-ups. Whether it’s after-sales services or content management platforms, there is now huge growth in new specialist services to support marketplaces businesses.
It is critical that those actors cooperate smoothly with the marketplace operator, to ensure that all key customer information remains accessible, and does not needlessly complicate nor damage data quality.
Most marketplaces are also working with integrators and agencies to integrate new sellers, import their catalog and normalize product information to improve data quality and offer value for buyers.
Operators also invest in external partners to recruit, onboard, train (and retrain) their sellers so that they can make the most out of the platform and position themselves as top sellers.
In summary, marketplaces are no longer just about operators, buyers and sellers but also now include a blossoming ecosystem of service providers including KYC specialists, fraud prevention actors, seller management specialists as well as of course traditional customer care providers (to buyers and sellers).
Trend #4. How The Rise of Marketplaces Have Created Fertile Ground for Direct-to-Consumer (D2C) Brands – And Why They’re a Threat
The fourth and final trend I want to discuss is the disruptive rise of D2C brands, sold on marketplace platforms (like Amazon’s for example, using its Fulfillment by Amazon (FBA) offer). Such direct-to-consumer brands are disrupting traditional retail models.
D2C sales are estimated to reach $182.6 billion in 2023 and have increased by more than 36% between 2020-2022 in the US. Using the twin engines of social media and marketplaces, D2C brands can sell directly to customers without needing physical retailers or wholesalers. The direct (digital) connection gives the brand valuable customer data that can be leveraged into personalized products, services and campaigns.
This agile, data-driven approach to product development means quick product launches backed up by customer feedback. The promises of such a model are optimized supply chains, streamlined production, lower costs, and quicker delivery times, so time-to-market is minimal and customer satisfaction can be much higher. Higher customer satisfaction is also powered by superior customer experience capabilities, with seamless online shopping experiences, and hassle-free returns and exchanges.
D2C brands developed by actors such as Berlin Brands Group (BBG) also excel at selling stories and lifestyles, rather than ‘simply’ products. They often have a strong brand narrative that chimes with their audience and helps them differentiate from traditional competition, build brand loyalty and create a community with strong advocates.
If you’d like to talk more about any of these trends in more detail or what they might mean specifically for your business, get in touch and let’s talk.
