Why marketplaces keep growing
September 24, 2019
We've seen massive marketplace growth over the past decade, and that growth shows no signs of slowing down. Worldwide, revenues for marketplace platform providers are predicted to increase by over100% from 2017 to 2022. Thanks to their convenience and accessibility, marketplaces have changed the way consumers shop worldwide, and they present advantages for sellers and shoppers alike.
As a medium, marketplaces are also highly adaptable, and they’ll continue to grow in importance and introduce new opportunities moving forward.
Marketplace convenience is hard to beat
Consumers choose marketplaces due to their ease-of-use. While online shopping saved consumers from a trip to the store, marketplaces allow users to compare similar products and services from different sellers all in one place, instead of hopping from site to site. Collected customer reviews also build purchase confidence. This convenience is attracting more shoppers: in 2018 alone, gross merchandise sales via online marketplaces rose by 20% compared to 2017.
Many marketplaces also strive to make the return process as easy as possible. By taking full responsibility for products offered by third parties, they’re showing buyers that their purchases are in good hands. Some marketplaces, such as Amazon, are even partnering with brick-and-mortar stores to give shoppers more return options.
The draw of all this convenience gives marketplaces a huge edge in the world of ecommerce. In fact, research from Salesforce shows that consumers prefer marketplaces over retailers and brand’s own sites for repeat purchases. Marketplaces provide an avenue for brand-loyal consumers to find their favorite products, and brands themselves are recognizing this.
Marketplaces increase visibility
Sellers will find that even listing their products on marketplaces comes with significant advantages. Marketplace growth means that shoppers are increasingly using them for research, making marketplaces an important digital touchpoint.
Shoppers might not buy a product where they encounter it, but each point of contact is an opportunity to make an impression. Informative product information and positive reviews can lead to a sale down the road, perhaps through a different channel, such as another website or a brick-and-mortar store. This visibility gives businesses a strong incentive to get their products on marketplaces. More and more companies with their own ecommerce sites are expanding to marketplaces - not just for sales, but for exposure.
Marketplaces are endlessly versatile
When one thinks of an online marketplace, major players like Amazon and eBay may be the first that come to mind. However, though it may seem like online marketplaces are synonymous with “digital department stores,” that’s not always the case. Marketplace growth isn't just due to one-stop-shop approaches; many are homing in on specific verticals and catering to niche audiences.
Buyers looking for specialized or hard-to-find products may be more likely to check niche options. These niche marketplaces often present their selections as carefully curated for more discerning shoppers. Milan Style, for example, offers only high-end luxury apparel.Vivino
, the world’s largest online marketplace for wine, is particularly notable for the way they’ve turned their user base into a community. Users can review and recommend wines to each other, and the app makes personalized recommendations based on user data. This kind of personalization is a great example of how niche marketplaces can attract and retain loyal customers who are passionate about a specific category of product.
But marketplaces aren’t limited to just physical products. Operators listing third-party services also count as marketplaces. Houzz is a home renovation website that mixes these two approaches, with building materials listed alongside services from renovation specialists. Meanwhile, Joblift, a website for prospective employees, offers job listings from a large variety of employers. These types of marketplaces provide a new way to find and hire professionals.
We should expect to see even more types of niche and service marketplaces moving forward, as new ones continue to fill in the gaps. Since marketplaces aren’t constrained to any specific industry, their flexibility allows for great potential.
Marketplace growth is breaking down borders
Marketplaces are a major facilitator of cross-border ecommerce. In fact,two-thirds of all cross-border online shopping takes place through marketplaces.
For shoppers, marketplaces provide easy access to a huge selection of international products that might be difficult or too expensive to otherwise buy. And since marketplaces often localize for different markets in terms of language, sizes, and currency, shoppers can get an experience that’s tailored to them. Smartphones are enabling cross-border shopping even further: shopping app use is surging, with time spent on them going up by 45% between 2016 and 2018. Fifteen or twenty years ago, a shopper in an emerging market might have found it near-impossible to acquire a rare product from a foreign country. Today, that same shopper could do it on their phone in a few minutes, all without leaving their bed.
Marketplaces are also a great entry-point for companies looking to sell internationally. They allow businesses to reach new audiences with relatively low risk. By listing a selection of products instead of their entire catalog, sellers can assess demand and competition to refine their future expansion. This strategy will help sellers utilize marketplaces to expand to entirely new groups of shoppers. It’s also beneficial for large and small businesses alike.
The future of online shopping is marketplaces
Marketplaces present a host of opportunities for consumers and companies of any size, in any industry. Marcel Hollerbach, CMO at Productsup, had this to say about marketplace growth and the future of online shopping:
“Online shopping has become an ecosystem where online retailers now depend on big marketplaces and vice versa, as neither could reach their full potential without the backing of the other. Small retailers need a wide-reaching platform to list their products. Likewise, marketplaces need retailers to provide consumers with more product options. As technology progresses and competition increases, we’ll begin to see stronger partnerships form between third-party vendors and marketplaces.”It’s a mutually advantageous relationship: retailers and marketplaces both benefit from each other. And the essential third party, the consumer, does too. Marketplaces provide consumers with so much, from vast product choices to unprecedented cross-border purchasing power. That’s why marketplaces keep growing, and why they’ll continue to lead the world of online shopping in the future.
Agile data is the key to marketplace success
Marketplaces are thriving - and with Productsup, you can adapt your product data for any marketplace you need with channel-ready templates. In addition, you can sync data from many different marketplaces into your own online shop system, with automated real-time stock and shipping updates to streamline logistics.
Want to find out more about how marketplaces can help you reach new international audiences? Our guide to cross-border ecommerce is out now, and it's free! Download it now and learn how to succeed in the complex world of cross-border ecommerce, on marketplaces and beyond.