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Transparent pricing

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Exploring the place of marketplaces within the wider European retail picture

THE INTERNET has made it far easier for customers to compare prices. No longer do consumers have to traipse around a variety of shops in the rain to find the keenest deal. Instead, with certain caveats, the best price is only a click away.

In itself, this does much to explain the rise and rise of marketplaces. These are destinations that aggregate goods sold by a variety of different businesses and individuals – retailers, brands, entrepreneurs, craft enthusiasts, your neighbour who’s doing some decluttering – and where there are bargains to be had and unusual items to be found. Digitally powered transparency on price is built into their DNA.

While we don’t classify many marketplaces as being retailers in themselves, they exert a huge influence on retail within the EEA and Switzerland. Over the coming years, we expect that influence to grow. As we noted when compiling the IRUK Top500, for example, the planned acquisition of Home Retail by Sainsbury’s will mean Argos’s drop-and-delivery service partnership with eBay will likely be available via new Argos outlets in supermarkets.

In addition, as customers around Europe grow more confident about ecommerce and generations of digital natives grow up, we also expect the influence of marketplaces to grow simply because consumers are far more comfortable with the idea of using them. This will be growth from a high starting point: compiling the IREU Top500 Footprint last year, we found that 41% of EEA web traffic was generated by users of Amazon and eBay websites.

We focus here on eight different marketplaces: three that made the list of leading European retailers because they take payment, stand behind the sale, etc (see page 4 for the full definition of a retailer used in the IREU Top500 research); and five that we’ve tracked but not included.Marketplaces in the IREU Top500:

Amazon: The launch of Amazon Marketplace has helped to cement the online behemoth’s place as a shopping destination because it gives shoppers access to thousands of items the retailer itself doesn’t stock. In a sense, Amazon has become both destination store and shopping centre.

When it first launched Marketplace, some questioned whether its reputation would suffer if those who sold via Amazon weren’t able to match the company’s high standards. In truth, this doesn’t appear to have happened, perhaps because its customer reviews’ system means it’s easy to check whether a seller offers satisfactory service.

Sellers can choose to offer different delivery options, and Marketplace operates in all countries of operation.

eBay: Less obviously a retailer than Amazon, in that it grew from an auction site, we have chosen to rank eBay in the IREU Top500 because it stands behind its operations and its vendors’ sales in a way that’s analogous to a more conventional retailer.

It’s also a hugely impressive performer in key areas of online retail. Its UK homepage loads in 2.3 seconds on mobile, and it scored 93 out of a 100 for full website performance on mobile devices. In addition, our research found that eBay offered iOS and Android apps in the UK and Switzerland that scored the highest marks for app personalisation. The apps were native and transactional.

Allegro: This marketplace operates primarily in Poland where it is immensely popular and successful. Within our research, it achieved a top score for search relevance. It offers effective brand-specific and price-specific filtering options on its search page.

It’s also noteworthy in that it shows how a retailer in one country can affect others. Polish émigrés in the UK often use Allegro, to the extent that, when we researched the IRUK Top500, we noted that it would have been included had it been eligible.

Marketplaces excluded from the IREU Top500 but which we’re tracking:

Alibaba.com: Defining itself as “the leading platform for global wholesale trade”, Alibaba inevitably exerts a huge influence on global business. The Alibaba Group, valued at $212bn in December 2015, operates Tmall.com (formerly Taobao Mall), aimed at Chinese consumers. Effectively, any European retailer wanting to launch in China needs to consider selling via Alibaba.

DealExtreme: This Chinese marketplace is based in Hong Kong and it specialises in selling electronics to Europe and the US at competetive prices. DealExtreme guarantees three-day delivery in Western Europe and North America.

PriceMinister: The second-most visited ecommerce site in France, this marketplace focuses in great part on building trust. It guarantees a refund to the buyer if the product is not delivered or if an item is found to be damaged on delivery. It ensures payment to the seller.

iOffer: Describing itself as “a global marketplace”, US-based iOffer operates slightly differently to online auction sites. Rather than a bidding-based model, the idea is that consumers negotiate with sellers in the same way as they might at a flea market or garage sale.

Etsy: Peer-to-peer ecommerce website

Etsy is focused on crafts and vintage items. As of 31 December 2014, Etsy had 54m users registered as members. While it’s arguably a niche service, its revenues in 2014 were US$195.6m, a figure that reflects a move towards consumers wanting to buy one-off and handcrafted items. Our research showed that it generated 93% higher EEA traffic than the average traffic generated by IREU Top500 retailers.
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