Over the last few years, changes in Internet user behaviour have significantly reshuffled the deck in the retail sector, driving the development of e-commerce and the rapid expansion of marketplaces. Today, half of the top 20 online retailers have set up their own marketplace. This model has seen remarkable growth, and this exceptional progress is challenging traditional structures and organisations for retailers.
The retail marketplace model offers a number of significant advantages for retailers, and is gradually establishing itself as a standard in the retail sector in France and elsewhere. Find out more about the main benefits, as well as the reasons behind this growing popularity.
What is a marketplace ?
A marketplace is an online platform that makes it easier to bring buyers and sellers together, whether they are professionals, freelancers or private individuals. The platform earns its revenue either through commissions on transactions or through subscriptions.
These virtual spaces simplify transactions by managing payment operations between customers and sellers for products or services. Initially designed for B2B markets (such as central purchasing bodies), marketplaces have evolved to adapt to more varied needs: they now allow professionals and private individuals to coexist on platforms that support B2B, B2C and even C2C exchanges.
This business model eliminates many of the physical constraints associated with traditional retailing. Today, it enables horizontal integration with great flexibility and depth, challenging traditional retailers who are struggling to compete with the rapid growth of these innovative platforms!
The retail marketplace, one of the most influential models in 2024
The retail marketplace has become the most influential e-commerce business model today, propelled in particular by the Covid-19 crisis. It accounts for around 30% of e-commerce in France and 40% worldwide. The major marketplaces in Europe include Amazon, Cdiscount, Priceminister-Rakuten and Zalando.
These platforms provide sellers with a range of marketing tools, making it easier to manage their product catalogue, set prices and retrieve the information they need to process orders.
Creating a retail marketplace also makes it possible to liquidate unwanted stock in the traditional sales network: this adds an additional distribution channel that will have a positive impact on sales, improving supplier satisfaction and strengthening the position in commercial negotiations.
By extending their distribution strategy to include both online and offline channels, companies can offer additional services such as “click & collect”, directing customers to the nearest point of sale, which can increase in-store traffic. Offering complementary products or presenting new products also contributes to an optimal omnichannel strategy!
How do e-retail and the marketplace differ?
For those unfamiliar with the field, the distinction between an e-commerce site and a marketplace may seem blurred, as in both cases customers buy products online. However, the business models are fundamentally different.
In the case of online shops, the customer is the end user, i.e. the consumer. The selling entity is the e-tailer, which manages its own inventory and logistics, seeking to attract and retain customers through its brand and products.
In a retail marketplace, on the other hand, the typical customer is the seller. A marketplace aims to attract sellers with varied, high-quality offerings, which in turn attract consumers. The marketplace acts as an intermediary and receives a commission on the sales made by the sellers it hosts, without being responsible for stock management or logistics.
Marketplaces to meet the new challenges facing retailers
Matching modern consumer expectations
Today’s consumers want to be able to shop anytime, anywhere, on any device. This trend accelerated during the health crisis, making this mode of consumption essential. According to a study by The Future Shopper 2022, over 50% of purchases are now made online, equalling (or even surpassing!) in-store purchases. For retailers, selling online and keeping up with retail trends has become essential if they are to remain competitive.
Economic benefits for retailers
Managing logistics and stocks can be both costly and complex. One of the major advantages of the retail marketplace is the ability to transfer these variable costs by simply charging commission on sales made via the online platform. This simple and effective business model is why many retailers are turning to this solution.
Mandatory digital adaptation
Marketplaces are radically transforming distribution by transcending the physical limits of space and time, offering a range of products with virtually unlimited horizontality and depth. This poses increasing challenges for traditional retailers, especially given the rapid growth of these new business models. Indeed, in recent years, companies have gone out of business due to insufficient digital adaptation.
Irruption of pure players in the retail market
While this digital revolution is challenging the foundations of retail, raising questions about the limits of dematerialisation and disintermediation, it is also opening the way to new competition that is reinventing the landscape of physical shops. Pure players are investing in ultra-connected points of sale, marking a major advance in the world of physical shops. The aim is clear: to create synergy with the marketplace, broaden the customer base and generate genuine brand preference.
What are the advantages for a marketplace retailer?
Expanding the product or service offering
Retail marketplaces make it possible to considerably broaden the range of products and services on offer. They offer the possibility of selling both physical and digital products, and even the products of third-party sellers, while earning a commission. However, it is crucial for retailers to select their vendor partners carefully in order to preserve their brand image and consumer confidence. It is important that the extension of the catalogue remains consistent with the existing offer to maintain its effectiveness.
Optimising stock management and logistics
The marketplace significantly reduces storage and logistics costs. For the retailer, this represents a new sales channel for disposing of unsold stock via traditional channels, thereby improving negotiating margins with suppliers. What’s more, stock and logistics management is often delegated to third-party sellers, allowing the marketplace retailer to concentrate on collecting commissions without the hassle of direct product management.
Improved catalogue management
For brands managing thousands of products from different vendors and numerous sub-brands, the marketplace greatly simplifies catalogue management. It makes management more direct and rapid, and opens up new opportunities for efficiency.
Increase in Internet traffic
Marketplaces generate considerable web traffic and often occupy the top positions in search results. For a retailer, integrating a retail marketplace into its website is an effective strategy for increasing natural traffic.
Internationalisation of the business
La marketplace facilite l’internationalisation de l’entreprise. Avec de simples adaptations comme la traduction de l’interface et l’intégration de vendeurs étrangers, il est possible d’atteindre rapidement une audience internationale. Cela permet non seulement d’augmenter le nombre de clients potentiels, mais aussi de renforcer la crédibilité globale de l’entreprise auprès des consommateurs internationaux.
The marketplace facilitates the internationalisation of a company. With simple adaptations such as translating the interface and integrating foreign sellers, it is possible to quickly reach an international audience. Not only does this increase the number of potential customers, it also strengthens the company’s overall credibility with international consumers.
Key points to bear in mind when setting up a retail marketplace
Business model
A company’s success is closely linked to its choice of business model. Although every online merchant has already developed and implemented an e-commerce strategy, adopting the retail marketplace model is a game-changer. This model requires a complete overhaul of strategy, particularly in terms of optimising commissions on the platform.
Logistics
On the logistics side, marketplaces need to provide a range of delivery and pricing options for their customers, offering them the ability to track their orders in real time, for example. The right choice of fulfilment and warehousing partners is crucial to the success of a platform that hosts multiple suppliers.
Legal
The legal aspect is also essential and should not be underestimated. Marketplaces act as financial intermediaries: they are therefore governed by specific legislation. They must comply with mandatory identification procedures, such as KYC (Know Your Customer) and KYB (Know Your Business), before integrating buyers and sellers, and ensure that they respect the latest payment authentication protocols.
Payment
Payment methods, often overlooked by e-commerce players, are vital for encouraging customer acquisition and loyalty. Offering a variety of currencies and payment methods, such as PayPal or deferred payment options, can greatly enhance the consumer experience and boost sales.
Raising awareness
Beyond defining the offering, it is crucial to give meaning to the retail marketplace for both consumers and in-house teams. The marketplace is at the heart of the company’s transformation and has an impact on all departments. There is a before and an after to its introduction, and it is essential to involve everyone in this change. For example, you need to make sure that customer services don’t deal directly with requests relating to purchases on the marketplace, inform the purchasing teams that this won’t cannibalise their categories, involve the legal department in drawing up sales contracts, and clarify with the financial departments that transactions on the marketplace don’t follow a traditional business model.
With LUNDI MATIN, you can upgrade your Gezy e-commerce site to a marketplace without changing your platform, which is a significant advantage when choosing your e-commerce tool.
