Some of the world’s most successful companies, such as Alibaba, Amazon and Zalando, make their money as online marketplace.
The combination of supply and demand on one platform creates a win-win situation for brands and retailers. And consumers also benefit from a larger selection. But where does this model come from, and why is it worth considering for retailers to enter the marketplace business? We took a closer look at the marketplace model and compiled interesting facts and figures.
What is an online marketplace?
The main difference between traditional trade models, such as wholesale, and marketplace models is that the trader does not buy goods in a marketplace in order to sell them. Instead, marketplaces really just provide the “space” for brands on their online platform, without taking the risk of unsold goods. This way the retailer can simply offer a lot more. In return, brands benefit from the existing visitor numbers of the platform and the contact to new customers. Cooperation instead of competition! And both sides can expand their business. Sales via marketplaces and platforms are booming, especially in the particularly competitive fashion and lifestyle industry. But how did this type of trade develop?
The history of online marketplace
Online marketplaces are inextricably linked to online shopping, which has only been around for a good 25 years. In 1994, a CD was bought with a credit card on the US platform Netmarket: the first online purchase in history. Since then, retail has seen a continuous shift from offline to online sales. The number of marketplaces is constantly increasing and consumer behavior is changing accordingly. The ongoing corona pandemic has accelerated and intensified this trend. Today, B2C marketplace sales are projected to grow to $3.5 trillion by 2024.
When brands consider using marketplaces as a new sales channel, they should consider which of the different marketplace types are best suited to their goals.
Online Marketplace trading today
There is a lot of interest in platform companies. Customers expect that when they shop in a trusted online environment, all of their purchase desires will be fulfilled. That’s also partly why McKinsey is forecasting 2021 annual digital growth of 20% over 2020. In addition, the pandemic is a driver of platform trading. According to Forbes, more than half of all online sales are now made by platform companies, giving them twice the profit and twice the market value of their competitors.
Fashion and lifestyle products are the top-selling online category. The luxury market is also joining this trend, doubling its online market penetration by 12% since the pandemic. Overall, it is clear that this shift towards platform structures will spread across all fashion and lifestyle sectors and will endure over time.
Would you like to know more about the topic? Or do you already have concrete plans that you would like to implement? Then talk to one of our experts and find the right strategy for you.