Marketplaces already offer numerous advantages to shoppers – everything from multiple vendors selling the same products at competitive prices to guaranteed returns. Yet the lockdowns of 2020 have given Europe’s online marketplaces one further, unexpected boost.
The European marketplace landscape is simultaneously both simple and complex. Simple because there is the same variety of players as there is elsewhere – an ever-changing mix of pureplays, retailer-run marketplaces, quasi-marketplaces and non-transactional sites. Complex due to the variety of business models, rules and regulations that operate across these marketplaces, with a lack of any coherent standard way in which they operate.
What drives it
The European marketplace market has largely been driven by convenience. Up until the start of 2020, under more usual, pre-pandemic conditions, marketplaces were already growing in popularity because they offered a single place to buy either a variety of items, or very specific items.
Much like a retailer needs a unique selling point or niche to fill, marketplaces too have evolved – and are continuing to do so – from being servicers of niche products to becoming retailers in their own right, carving out their own offering based around what they sell, how they sell it and how they take payments
The global coronavirus pandemic has driven consumers online to do their shopping. Many of these have been first-time online shoppers forced to do so due to brick-and-mortar store closures, although this new behaviour has continued around the world even after lockdown. As a result, ecommerce has increased, with marketplaces taking a sizeable chunk of these extra sales.
The reasons for this apparently permanent change in consumer behaviour are myriad, but chief among them is that marketplaces offer convenience both as one-stop-shops as well as being a dedicated supplier of niche products.
Another major factor in their rise during this ecommerce boom is that, being host in many cases to multiple vendors, they are often a more consistent source of supply. This has ensured that many shoppers have gone to marketplaces to buy during the pandemic because they know they are more likely to be able to find at least a single merchant that stocks the required product, while often there are multiple vendors from which to choose. As we shall see, this has led to some marketplaces starting to look into selling essential items outside of their traditional remit in order to tap into growing demands for items such as food, cleaning products, toiletries and cosmetics.
There are many marketplaces across Europe (see chart and table on pages 10-13), and all are very different. The biggest differences lie in the business models employed by each, which can change depending on what they sell and where they are located, as well as whether they are trying to create their own niche in what is turning into an increasingly crowded environment.
Many marketplaces operate an Amazon-like approach and sell a huge variety of different and disparate items, seeking to act as a one-stop shop for customers to seek, search and buy whatever they are looking for. These are typically limited to one or two per country or territory and are dominated by a few key players. While this often includes Amazon, many markets also have home-grown alternatives – such as the Netherlands’ bol.com or Poland’s Allegro – which dominate their domestic markets.
The second tier of marketplaces revolves around retailers dedicated to selling within a certain niche. Witness Etsy and its approach to selling all things arts and crafts related, or those that deal in, for example, rare automotive parts or vintage model kits. Within this tier there is a raft of marketplaces that are based around very different ways of creating sales. Some are pure fixed price retail outlets, for example, while others rely on auctions or offers to encourage sales. Some handle payments on-site – either processing payments themselves, or through third-party payment hosts such as PayPal – while many don’t handle payments at all, acting merely as the connection point between buyer and seller, who then work out the payment between them. The structural variety of marketplaces continues across how they handle customers, logistics, merchant onboarding, fees and subscriptions.
In short, there is no simple way to describe a single kind of marketplace, with many mixing elements of all of the above to create their own unique offering.
Regional and geographical differences exist between marketplaces. While language is the main driver of these, local cultural customs and an innate desire to gain trust by being obviously ‘local’ also factor into such differences.
Language, though, is clearly the largest defining factor in marketplace localisation. While that’s also true for all ecommerce, the need to be able to read and understand product descriptions, technical details, terms and conditions, delivery options and reviews is a high priority.
Yet there are other cultural differences too, such as the German preference for lengthy and detailed product descriptions, for example. Such changes typically, but not always, revolve around marketplaces in each country. Shoppers in Belgium, for example, tend to shop online along ethnic lines. The Dutch-speaking parts, accounting for 60% of the population, tend to shop at the Dutch-based Bol.com marketplace, the 39% French-speaking Flemish section of the population shop on the French language Amazon.fr, while the Germanic remainder tends to shop at Amazon.de, the German-language version of Amazon, as well as at other German marketplaces.
Consumer habits shape the European marketplace environment. While convenience explains why most shoppers use marketplaces, consumers also like the buyer protection, enhanced delivery options, preferential access to goods, seamless returns and other customer services that marketplaces have in place.
Many marketplaces act as an aggregator for multiple merchants, providing range and variety in that way. Others seek to only sell from approved merchants and offer their own payments handling and logistics, adding a layer of security and comfort for shoppers.
Marketplaces that handle the logistics – from warehousing and order management right through to shipping and lastmile delivery – also are attractive to consumers because this complete package helps guarantee delivery and, in many cases, returns. This is a selling point that is increasingly becoming a business differentiator across all of ecommerce and something that some marketplaces do better than almost any single retailer.
Marketplaces also are pioneers of subscription retail, which is growing in popularity among both merchants and consumers. There are two different forms of subscriptions that are coming to bear on marketplace ecommerce: subscriptions to the marketplace itself and subscriptions to individual goods and retailers therein.
Both offer shoppers the ability to sign up so that they get preferential services, such as free next day delivery or access to unique content and goods, as well as often also collecting points that can be put towards discounted purchases. For merchants, subscription locks shoppers in and provides a guaranteed income stream. For the marketplace itself, subscription gives them access to customer data that can be linked to search and buying habits. Such data can make the marketplace better at personalisation and targeted marketing, giving the marketplace’s merchants better access to the right customers and the customers access to better-targeted products.
The European marketplace landscape has evolved and developed over the past 15 years to be a complex one centred on convenience and servicing customer needs, from the macro down to the minute and niche.
The 2020 coronavirus pandemic has given it a further boost and attracted even more consumers to ecommerce which, in turn, is seeing marketplaces evolve further to offer more complex offerings such as subscriptions, better payments, more targeted delivery options and access to a broad range of products in one place.
There are many cultural and regional differences that affect how marketplaces operate and, even in a single market, there are no hard and fast rules as to what makes a successful marketplace. Rather, it is a complex mix of customer offerings and merchant demands, which we shall explore in more depth through the research data analysing the key marketplaces across Europe.