Amazon, Crate & Barrel, Facebook — just a handful of companies that are taking a stake in the e-commerce marketplace game. In the ever-diversifying and competitive landscape of e-commerce, retailers and brands are exploring new revenue channels to not only answer thwarting consumer demands, but to also test products without the weight of full buy-in.
So why is this approach so compelling?
Well, there are several reasons. Surprisingly, to rival Amazon’s speedy operations isn’t the main objective. “Retailers are embracing the new curated marketplace model to generate more revenue by offering their consumers an extended aisle of products from the brands who resonate with their consumers. This is less about competing with Amazon and more about each retailer providing their consumers with a better shopping experience,” explained Josh Wexler, cofounder and chief executive officer of RevCascade, an e-commerce marketplace platform service.
Timing is everything, especially in the e-commerce stratosphere. Retailers are internally seeking for answers to consumers’ demands — and revenue streams. “Consumer behavior and expectations play a key role in curated marketplaces. This trend is driven in part by consumers shopping less in stores and embracing e-commerce because it gives retailers and the brands they carry the ability to offer the right products to the right consumer at the right time,” said Andrea Tobin, cofounder and president of RevCascade.
Though not directly looking to compete with Amazon, this suggests the necessity of comprehensive data to match each shopper with a significantly specialized buying journey dependent on previous purchasing behavior.
It’ll be worth it, quite literally. Wexler added, “The major e-commerce marketplaces currently generate over 40 percent of global e-commerce sales, yet most mid- to high-end retailers have just begun to embrace marketplaces as a major opportunity. The new curated marketplace model represents the largest new digital revenue stream for brick-and-mortar retailers and the brands they carry.”
But caution should be exercised before jumping on the marketplace bandwagon. “Retailers who launch a marketplace need to be just as thoughtful about the brands and products they carry in their marketplace as they are about the products they carry in their stores,” Wexler explained.
“If you could tell a retailer that they can double the number of products they offer their consumers online without doubling their budget for those products — that’s powerful,” he added. Consider the consumer’s daily activities, and which new products might relieve a task or make it more enjoyable.
Marketplaces also offer retailers a bird’s-eye view of consumer responses to new products. Wexler said, “That’s what the new marketplace model can do, it gives retailers the opportunity to experiment with new brands and categories, and offer significantly more products that drive a major revenue stream for their business. Curating products is the key factor.”
The more targeted the new inventory, the higher chance for success, he added.