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Are Marketplaces the Future of E-Commerce? Sïmon Saneback

Debate: Are Marketplaces the Future of E-Commerce?

2015-11-16 11:40

The e-commerce veteran Sïmon Saneback gives us his view on marketplaces and if you as an e-tailer can survive in a world of Amazon and eBay.

The fact that Amazon is one of the leading e-commerce players in the United States is no secret. Still, I was quite surprised when I attended the Internet Retailer Conference and Exhibition (IRCE) in Chicago earlier this year. Everyone was addressing Amazon as the elephant in the room—there was even a separate track with sessions about the e-commerce giant, but Amazon was conspicuous by its absence.

Online marketplaces, like Amazon and eBay, have undeniably raised the bar for e-commerce all over the world. Consumers are increasingly powerful, and there is a continuous demand for e-commerce players to innovate or be crushed. Marketplaces have, with their enormous ecosystems, succeeded in meeting consumers’ expectations in offering more selection, convenience and confidence than ever before.

It Is Easier for Consumers

Consumers love shopping at online marketplaces, as it’s easier for them to start their online shopping journey in a place where they can find a much broader offering of the products they want and be able to compare prices. The downside of marketplaces becoming consumers' primary shopping destination is that this is where consumers pledge their loyalty instead of remaining loyal to one particular brand or retailer.

Many retailers appreciate the contribution of third-party marketplaces to their overall business, as marketplaces act as a new channel that drives sales and revenue as well as increased brand awareness. Marketplaces also create an opportunity for retailers of all sizes to enter new markets at a minimal risk, compared to establishing a localized online shop. Marketplaces have evolved from playing a complementary role to a critical one. For thousands of small and mid-sized players, selling on marketplaces has actually become a matter of survival.

Marketplaces Will Dominate E-Commerce

According to a recent study, conducted by the Ecommerce Foundation and Nyenrode Business University, retailers expect that global marketplaces, such as Amazon and Alibaba, will own nearly 40 percent of the global online retail market by 2020. Whilst this prediction paints a picture of marketplaces eating the e-commerce world over the next couple of years, the vast majority of retailers and brands should see this indication as a wake-up call.

Retailers are under intense pressure to distinguish themselves from their competitors. I believe this is where a great shopping experience and customer service come into play. Although marketplaces offer choice and value, it’s still difficult for them to deliver the service levels and full consumer experience like a brand does, not to mention some key challenges with the perception of marketplaces being a destination for bargain hunters.

Let’s be honest, online marketplaces have taken the world by storm, but retailers and brands still have a chance to redefine their strategies and remain competitive by successfully offering better content, advice and service to their consumers.

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Create a Memorable Experience

It’s no coincidence that some of today’s leading e-commerce players like ASOS and Zappos are the ones that are innovating on every step of the online shopping journey to deliver an excellent and memorable experience that will contribute to long-term loyalty and an increased customer lifetime value.

One of my favourite keynote presentations this year was ‘The Four Horsemen’ by Scott Galloway in which he presented his analyses on Amazon, Apple, Facebook and Google. If you haven’t seen the video, I highly recommend you do. These giants, among others, have just begun serious efforts to embrace the growing e-commerce industry with various acquisitions and initiatives such as the social media “buy buttons”.

Still Room for Niched Brands

Global marketplaces are definitely growing, and they are here to stay. However, their reach and efficiency doesn’t offer a platform that fits all retailers and brands. Despite this new e-commerce landscape dominated by marketplaces, I still strongly believe that there is room for niched brands and retailers that are specialized in their offerings.

Finally, this issue is not just black or white. Marketplaces can still be used as a medium from which to learn, gain scale and enter international markets. But I expect that retailers that can distinguish themselves by offering their consumers the best shopping experience and customer service will, in the long run, become the real winners.

So the main question is: what are you doing to distinguish yourself as an online retailer?

Sïmon Saneback

E-commerce entrepreneur

An award-winning entrepreneur, a well recognized figure within the Scandinavian e-commerce community and a frequent keynote speaker around Europe. He has held executive positions and advisory roles in global companies and has over 13 years of experience in the online industry.

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