Opportunities for Brands to Create and Sell in Marketplaces

Marketplaces now account for over 60% of all e-commerce sales globally … and growing 20%+ year on year. eBay remains the most visited marketplace in Australia, despite many newer players entering the space. Australians now shop on Amazon, Catch, Kogan, MyDeal, OZSale, and countless other variety stores both domestically and internationally. This isn’t slowing down any time soon.

"Our curated marketplace has already reached 20% of our total online revenue (GMV) in the first half of the year." - Julie Walbaum, CEO of Maisons du Monde

There are two key opportunities for brands to leverage both on and off site through marketplaces. The first opportunity is to list your brand on existing online marketplaces. When my team at Mosaic Brands (Noni B Group) rolled out across leading marketplace channels, we saw more than 80% of orders coming from new customers. This validated the value to reach new customer segments and grow the existing customer database. It can work for brands across both markdown and full price offerings and is a profitable way to introduce and acquire customers to your brand. Additional benefits include brand awareness, acquisition, clearance, and additional direct to consumer sales at a higher margin than wholesale.

As one of Australia’s largest retail groups, we had a significant customer database across nine iconic brands. This enabled the transition of a vertical fashion brand to cross-selling across the group and eventually building our own marketplaces. At inception, I was always conscious of margin erosion from clip-of-the-ticket sales and while there is value to top line growth through incremental sales and commission, we largely expanded the range offering at wholesale margins. Successful marketplaces today almost always demonstrate 1P, 2P and 3P characteristics that drive growth including 1P across higher margins, 2P across both margins and risk reduction, as well as overall SKU count and selection size through 3P methods. Strategically, the models work extremely well collectively.

My learnings for overall success is to bring range expansion to the existing range and where your customers are vs. building out an additional venue. At Mosaic, we built multiple new brands and sites in our growth team and while we had a tremendous database to market and sell to, success only came where trust and engagement already existed back on the brands sites. We found that fashion and emotive categories work fantastically with homewares and accessories and even non-traditional categories like outdoor and hobby.

Catch.com.au - Australia, Category Sales Oct 2018 - Oct 2019 (desktop)

Dividends are double digit multipliers and an investment in headless marketplace technology is quickly rewarded. I’ve been involved in a dozen marketplace implementations and can firmly say, the investment upfront in a proven system and technology far outweighs bolting onto an existing eCommerce stack. Managing vendors, payments, product feeds, advertising opportunities, and much more are required vs. just adding some product to an exisiting transactional site.

Today, marketplaces remain fantastic drivers of growth and allow significant range expansion without the traditional investment in inventory. Customers clearly prefer shopping in online marketplaces and variety stores and growth is far outstripping traditional e-commerce. Significant value is being added every day through range expansion across verticals, brands and even services with many marketplaces successfully offering financial service products and travel options.

The sky is the limit to expand your range.

About Mike Fowler

Mike is an eCommerce veteran, senior leader & growth strategist for some of Australia's best retailers. Formerly at Afterpay as Director of Merchant Services APAC, General Manager and founder of the growth team at Mosaic Brands (Noni B Group) developing and launching 9 iconic multi-category online marketplaces, including: Noni B, Rockmans, Millers, and Rivers, as well as Head of Digital at Blue Illusion. Member of the Australia Post Customer Advisory Group with more than 15 years experience in helping retailers leverage eCommerce, CX, payments, & logistics opportunities to maximise growth.