Blog Post - Patrick Munden, Jul 14 2016

Marketplaces – do you compete or collaborate with Amazon?

Marketplaces – do you compete or collaborate with Amazon?

Tuesday 12th July was billed as Amazon Prime Day which was predicted to be the UK’s sixth busiest online shopping day of the year.

So it was an opportune time to host a breakfast with Mirakl on the topic of “Marketplaces – Compete or Collaborate?”

Judging by the quality of the turnout there is strong interest amongst the UK retail community about marketplaces, with most of the conversation centering around how to handle the monster that is Amazon.

Amazon, globally, is still outpacing the market with 29% growth in Q1 2015 compared to general market growth of approx. 15%. They’re gaining market share - and retailers are concerned. In fact, according to Wells Fargo, in 2015 Amazon accounted for 51% of all retail growth in the US. Take that in! - that’s all retail growth, both online and instore.

So if you can’t beat them, do you join them?

Well there’s undoubtedly an opportunity here, and it was a popular topic at the event. Amazon and eBay certainly have the buyers with 310 million and 162 million respectively. The key success factors raised were:

  • Having the right selection of products, especially those with structured data (e.g EAN numbers) so they can be found in Google search results
  • Price: when you sell on a marketplace you’re competing against many sellers eager to get that sale so your pricing is a crucial element, and in most cases the deciding factor for the shopper
  • Convenience: this centres around the convenience of the end-to-end shopping experience from search, ordering, fulfilment and shipping, the latter being the current battleground with same-day shipping now becoming the norm

The downside to the collaboration model was also discussed, in particular, the fact that whilst marketplaces like Amazon and eBay bring buyers and sales, the customer belongs to the marketplace, and the customer data and associated intelligence is not shared with retailers. Additionally a key concern voiced by many participants is that, Amazon, in many cases, is using the sales data to identify products that it can sell directly - and effectively be the competitor.

Don’t collaborate – Compete!

This is still the mantra of many a retailer as well as the rallying call of Eric Chemouny, SVP Sales & Marketing at Mirakl who provide software solutions for retailers to launch and operate their own online marketplaces. Eric gave the example of clients such as Galeries Lafayette, Best Buy and Halfords who have established their own marketplaces and within a short timeframe have significantly increased their product range - and revenue streams. Eric explained that the effect of an increased product range goes beyond simply more choice for existing customers; it also improves SEO ranking for the site, as more searches result in positive results for the marketplace and this leads to new customers.

The event also brought into focus the use of niche marketplaces such as the fashion site Lyst, Jenny Cossons who heads up partnerships at the company stated that niche marketplaces that offer a mixture of content and curated experience with a wide range of dedicated products are popular with younger shoppers seeking inspiration on mobile devices.

If you are interested in learning more about marketplaces and competing and/or collaborating, then Salmon, a Wunderman Commerce Company, can support you in defining a strategy for success. We’ve already partnered with Mirakl in developing marketplaces for brands such as Halfords and GAME. We’ve also put together a guide that you can download “How to grow your business via a marketplace”- alternatively contact us.

Contact us to discuss your Marketplace strategy