The proliferation of marketplaces in retail is hard to ignore. Last year, GlobalData, revealed that by 2024, UK shoppers will spend 50% more than they do now on online marketplaces, with spending rising to a whopping £39.3bn.
This spike is the result of more companies embracing marketplaces as the best platform to facilitate online sales, accelerate cross border expansion, increase product range whilst improving logistics, costs and operations. Unlike a retail shelf, the marketplace shelf is endless and ever-changing, with numerous possibilities and options. Its power stems from its ability to evolve effortlessly, showcasing trends whilst also considering cultural nuances.
The current state of play
Until recently, online marketplaces’ share of the global e-commerce sector was still dominated by international businesses like Amazon, Alibaba and eBay. We’ve also seen multinational retail companies move into the space like Walmart, who’s e-commerce business is now north of 40% of its total business. With media ad revenue set to equate to 30% of its business, the company has successfully built out an in-house approach by collaborating with brand advertisers to track actions to sales with transactional data and behavioural targeting.
However, thanks to fresh technology, evolving business models and changes in consumer behaviour, there has been a number of new entrants launching in niche areas or new markets. Simultaneously, we are starting to see big brands shift their presence away from the dominant global players.
The ‘blueprint’ for the future; Nike and Zalando’s success story
At the end of last year, Nike announced it was ending its direct-sale agreement with Amazon, the world’s largest marketplace; a move that sparked significant debate. Yet last month at the NRF Big Show in New York City, Nike’s VP of Marketplace, Stuart Hogue, was on stage discussing the brand’s hugely successful partnership with Zalando, a fast-growing European marketplace across 17 territories specialising in high street to high-end fashion.
During the session, Hogue suggested that “mediocre and undifferentiated retail will not survive,” and to combat this and remain ahead of the curve, Nike is “looking at driving digital transformation from end to end, from how we make products to how we move products through our supply chain and ultimately to how we serve consumers in the marketplace.”
A further interesting point made, was the set of principles that Hogue spelt out for how Nike partners with online marketplaces; something all brands should consider whilst exploring marketplace options. Nike’s ranged from ensuring the marketplace matters to the consumer, to ensuring it is committed to elevating the consumer experience, being able to provide new growth for the brand and guaranteeing the marketplace is a source of authentic Nike products.
One good example was when Nike saw a “huge opportunity to introduce sneaker culture to ‘her’” in Europe by collaborating with Zalando to “tell great stories around sneakers on a platform.” This included building product pages that “romanced the heritage and stories of our sneakers” as well as creating look-books showing females how to style their sneakers.
Keeping customers front of mind
When looking at marketplaces that matter to the consumer, ASOS is a prime example of a fashion giant that has positioned itself as a global online community of fashion lovers, having built a loyal customer base across the globe.
Its marketplace paves the way for lesser-known and niche brands to evolve and grow whilst holding at the heart of the business what is important to the customer. The ‘Trending Now’ section emulates this with the offering of ‘Charity Boutiques’ and a ‘Sustainable Edit’; two topics incredibly relevant in the current climate as consumers look to reduce their carbon footprint and move away from unsustainable resources.
It has also reviewed and updated the back-end of the shopping process. Not only can it pivot itself to fulfil the most topical customer needs, but it has also thought of the financial and logistical implications, making the transaction process seamless with seven payment options as well as delivery to most places in the world. Most recently, the retailer has struck up a partnership with Klarna, a buy now and pay later payment model, revolutionising the way we shop.
Indeed, Klarna adds an interesting dynamic to the world of marketplaces, allowing consumers to buy now and spread the cost over three months, interest-free, with payment automatically taken every 30 days. This breaks down previous barriers when purchasing and in turn, extends the reach of many luxury brands and higher ticketed items.
The new role of marketplaces
What’s therefore evident is that marketplaces are no longer simply providing a shopping experience but instead, lifestyle solutions. They’re removing complexity from the path to purchase and have transformed it into an everyday activity that allows the consumer to plan purchases in a sustainable and personalised way. With this shift and dynamism being introduced into the consumer journey, it will be interesting to see if in the future, concepts such as voice, may be added into the mix as the marketplace continues to revolutionise consumer purchasing habits.
Moving forward, it’s essential that brands look to up and coming marketplaces, whilst streamlining processes and ensuring that brand image is consistent across every platform as well as invisible spaces both in-store and online. The gaze of the consumer is now a 24/7, 365 days per year phenomenon and shopping habits of consumers are changing as each marketplace battles to set itself apart from the next. And although Amazon is the omnipresent giant of the e-commerce world, it is crucial that brands understand and harness their power as they can challenge the status quo; Nike is a prime example of this. It’s time to embrace this new world of e-commerce.