What are Ann Taylor, Banana Republic, Bebe and Avon doing on sears.com? They have all joined the retailers’ online marketplace, which debuted in July but which Sears officially unveiled only Thursday.
This story first appeared in the January 8, 2010 issue of WWD. Subscribe Today.
Sears and Wal-Mart are becoming more like Amazon and eBay online, allowing other firms to sell products on their site. Wal-Mart launched its marketplace in August with a million products. Six months in, Sears has 10 million items from more than 1,500 sellers across 400 categories.
The potential for revenue and profits is significant, said Forrester analyst Sucharita Mulpuru.
“The margins should be high,” she said. “They don’t have to house any inventory and it’s just pure profit that it pushes to their bottom line. It helps to subsidize the rest of the business where they have to aggressively compete on cost.”
The marketplace is an outgrowth of Sear’s Shop Your Way program, which offers multichannel shopping such as ordering from a mobile phone and picking up in-store so customers never waste a shopping trip, said a spokesman.
“The idea of increasing the assortment is right within that strategy, and that’s the idea behind the Marketplace, which is bringing in even more products and making them available to our customers,” he said.
Sears and Amazon take a similar approach with three options and fee structures. Sellers can simply display their goods on sears.com and pay a small fee when shoppers click through to their site. Alternatively, sellers can set up a store on Sears that uses the Sears’ shopping cart, but do their own shipping. Lastly, sellers can ship goods to Sears for storage and let Sears handle fulfillment.
Fees vary by category. For clothing, advertisers pay 75 cents a click. For clothing that is sold on the Sears site, sellers pay a flat monthly fee of $40 plus 15 percent of the selling price. There is also a monthly fee of $40 for fulfillment, in addition to storage fees that start at 45 cents a cubic foot. Amazon’s fees are comparable.
Amazon does not break out Marketplace revenues or profit figures. Industry experts estimate third-party items make up at least 20 to 30 percent of units sold on Amazon.
“There’s a long way to go before Sears or Wal-Mart would start to see those sorts of numbers,” said Mulpuru. “How well [Sears] merchandises it and how good the offers are will determine its ultimate success, which remains to be seen.”