As brands seek to diversify the number of places they sell their goods, retailers should consider building out a marketplace model that can help brands reach more customers while also cutting down on retailer costs and creating new revenue streams.
Marketplaces are on the rise: Last year, the number of businesses that began selling on marketplaces increased 31% YoY, per data from Mirakl. In addition, over half (53%) of marketplace sellers said they were selling more on marketplaces than they were a year ago and 62% plan to expand their presence across additional marketplaces in the next 12 months.
Where brands go, the money will follow.
The price is right: Retailers with a marketplace model are able to offer an expanded product assortment to their audience without having to manage additional inventories or incur other costs.
Who’s on top? Unsurprisingly, Amazon dominates the US retail marketplace space.
But there’s something for everyone: Retailers don’t need to reach Amazon’s level of success to consider launching a marketplace. In fact, sometimes a more curated marketplace is better because of its ability to bring in a more engaged, targeted audience.
Here are a few examples of other marketplaces that have cropped up recently.
Macy’s launched its online marketplace in September 2022, adding 400 new brands in 20 categories to its product assortment.
The marketplace model allows Macy’s to “test quickly, introduce brands and ideas that we haven't had at Macy's or Bloomingdale's before, and then we can move quickly, whether we add those things to our stores or whether we keep them just as a part of the marketplace,” said Spring.
Launched earlier this year, Michaels’ Makerplace more than quadrupled the retailer’s online assortment.
“We went from having around 200,000 SKUs online to adding another 1.3 million,” said Heather Bennett, executive vice president of marketing and ecommerce at Michaels, at an August eTail event in Boston.
There were two major factors in getting Michaels marketplace up and running, said Bennet — executive buy-in and the right talent.
“It’s really easy to abandon things … you have to have that perseverance to say, ‘We will get this done, we are going to invest in it,’” she said, noting that investment included “talent that had experience, specifically in bringing startups and new businesses to life.”
The fast-fashion retailer is expanding its third-party marketplace to see more brands in stores and online in order to help it double its revenues by 2023, CEO Helena Helmersson told Reuters.
Helmersson noted that the marketplace has been effective at getting shoppers to spend more with H&M, though expanding into new markets will require the right supply chain and organizational capabilities, which could impact the bottom line.
It’s unclear whether investing more in its third-party marketplace will help H&M gain an edge in the battle for fast-fashion dominance. Though it’s facing mounting competition from all sides, including powerhouses Amazon and Shein, H&M’s brand partnerships could be a differentiating factor.
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