Marketplaces: underpinning the growth in e-commerce

ChannelAdvisor recommends UK e-tailers should seize the opportunity to go global

Marketplaces are playing a significant role in the evolving e-commerce landscape. Amazon and eBay have arguably led the field with huge global reach and resulting success. Forrester recently reported that Amazon has 173 million active accounts worldwide and, in 2012, generated $60 billion-worth of revenue globally. Similarly eBay has a global customer base of 223 million, with $14 billion of revenue in 2012, an increase of 21 per cent from 2011. Each marketplace has had a focus on innovating and growing their third-party marketplace models as they see significant revenue generation with retailers and consumers alike embracing these channels.

The global success of Amazon and eBay’s third-party marketplace models has led to an explosion of emerging marketplaces from new players and global retailers – Tesco, La Redoute, Newegg, Groupon Goods, Rakuten’s Play.com and Mercado Libre are just a handful of examples across the globe. These emerging marketplaces are growing fast. To put this into context, six out of ten Japanese consumers are members of Rakuten, Mercado Libre is the largest online trading platform in Latin America with a market of more than 550 million people, and La Redoute is the largest marketplace for clothes and home interiors in France, with an average of seven million unique visitors per month and ten million active customers.

Marketplaces offer a unique channel for retailers to capitalise on the growing e-commerce opportunity, with significant volumes of active users and infrastructure that consumers are familiar with and confident in purchasing through. Marketplaces offer retailers access to new sources of demand. Whether catering to a niche audience or focused on a targeted geography, emerging marketplaces represent a smart online growth strategy.

Leveraging marketplaces for international growth

Marketplaces offer a logical starting point for retailers looking to expand internationally as they offer low barriers to entry and less risk than setting up a domestic website for each country. Savvy retailers are jumping on the bandwagon.

According to research, conducted at Catalyst Europe 2013, a leading European e-commerce event, 17 per cent of European retailers are anticipating expansion into Asia within the next two years, in addition to 17 per cent that are already selling into Asia, compared with 21 per cent who expect to expand into North America, in addition to 34 per cent that already sell into North America. It is also expected that a further 13 per cent of European retailers will expand to South America in the next two years, increasing from the 23 per cent who currently operate in this region today. However, retailers are not overlooking the UK and European e-commerce markets. The retailers surveyed are very active in these “home” regions with 91 per cent active in the UK and 71 per cent active in other European countries.

Forrester recently estimated that 8 to10 per cent of online sales in the UK are cross-border and IMRG, the UK’s industry association for online retail, reported that cross-border sales in Europe are set to reach €36 billion in 2013, while e-commerce sales in Asia-Pacific grew more than 33 per cent to $332 billion in 2012.

So how can retailers of any size succeed in selling through international marketplaces?

Marketplaces offer three strong benefits for retailers seeking to expand internationally: they come with a ready-made audience already shopping on the channel, alleviating the need for a local website; they have a robust marketing engine and a globally recognised brand that promotes trust among shoppers – driving traffic and revenue; and they offer programmes and services to assist retailers in their international expansion – such as global fulfilment schemes.

Tackling international fulfilment

Fulfilment is a key issue for which retailers need to have a comprehensive strategy when selling internationally. Retailers shouldn’t shy away from the international opportunity because of concerns about not being equipped to deliver goods across the globe. Today, many marketplaces offer specific services to support the fulfilment of stock. For example, Amazon’s FBA (Fulfilment by Amazon) programme enables retailers to store products in Amazon’s fulfilment centres and dispatch to customers across Europe.

Managing success

As retailers prepare their strategy for international expansion they need to keep one very important thing front of mind – marketplaces have very high standards. They garner millions of loyal customers and generate millions in revenue because they have built trust with their customers; trust that only comes from repeated positive shopping experiences. With the percentage of third-party sales growing dramatically across the most popular marketplaces, it only makes sense that they will require retailers to adhere to their high standards in order to earn the ability to sell on their marketplace. This means maintaining stock levels, delivering robust product descriptions and images, and fulfilling on time, every time.

ChannelAdvisor simplifies the process of selling across multiple marketplaces while guiding retailers along the path of optimisation. By automating day-to-day tasks, retailers of any size can capitalise on the opportunity presented by marketplaces. Perhaps, most importantly, it also enables them to sell across multiple marketplaces, taking advantage of not just the global behemoths, such as Amazon and eBay, but also the emerging marketplaces, without the complexity of managing sales across each independently. Third-party marketplaces will have a big role in the future evolution of e-commerce and retailers should seize this opportunity to take their business global.