The growth of marketplaces such as OnBuy – not to mention Amazon, ManoMano and more – over 2020 shows just how retail has changed in a year.
Before the pandemic, marketplaces were growing and gaining traction – in 2019, our research arm RetailX estimated that the pan-European marketplace market was worth around €150bn – but 2020 has seen them explode.
Amazon lodged its largest ever quarter in Q4 2020, breaking the $1bn mark – comfortably at $125.56bn – 44% up on Q4 2019. OnBuy, meanwhile, has seen some 600% growth in a year, topping out at £200m in GMV. It is aiming for its £1bn year in 2023. Others have sailed ahead too.
More retailers are also looking at setting up their own marketplaces, to tap into this consumer shift to how they shop online. Increasingly, shoppers are looking at one place to go for all their needs.
Take the DIY and Gardening sector: shoppers here are looking to find one place to buy everything in one go. Ideally they want it all delivered together, but this ins’t a deal breaking, more they want to have a convenient way to focus in on that job in hand when they shop online. Much as they would have browsed the aisles of a DIY store back in the ‘olden days’.
Shoppers are making this now happen online – and retailers need to keep pace.
For retailers, getting on a marketplace is now essential and there are many tools and companies to help you do that. For big retailers right down to those at the lower end of the Growth 2000 and those that are yet to get that far marketplaces offer a way to accelerate their ecommerce offering and get their products out there in front of shoppers.
And there are many fledgling retailers waiting to do just that. According to research by Experian, three quarters (76%) of retail businesses formed since April are registered at residential addresses, up from 65% between January and March of this year. Retail accounted for 12.5% of the business established in 2020, up from 8.6% of companies formed in 2019 and 7.7% in 2018.
Cake bakers, craft gin distillers and cheese subscription clubs all belong to the food and beverage services category. 56% of new businesses of this type have been based from homes since April, up from 42% in the first three months of 2020.
These newbies are all looking to sell and using marketplaces is their first port of call for starting the climb through the echelons of ecommerce.
Why should you care? Well, for all retailers online in general and marketplaces in particular are a very much a level playing field. A G2K cheese maker is going to have to compete with a one-woman kitchen table cheese maker – and all they have to compete on is how darn good their cheese is. Of price.
This applies not just to the cheese-makers (blessed as they are), but to any retailer of pretty much any goods.
The art is now going to be in which marketplaces you are going to sell. As shoppers look to do more focussed project-by-project shopping, retailers need to make sure that their items are being sold in the places where those consumers go.
You may not like marketplaces, but they are increasingly the platforms for ecommerce – especially now that many more people, many of them new to online shopping, have joined in.
It is also worth noting that social media sites are also joining retailers in wanting their own slice of the marketplace action, further cannibalising the market and changing the places that consumers go to shop.
Getting on board with a marketplace strategy now is something that all retailers need to be working on if they are to be ready for the next major shift in the industry as it consolidates the changes that it has experienced during the pandemic.