It’s important to start by clarifying that typically in the marketplace model, 3rd party sellers control their prices. The marketplace operator takes a commission on the sale, but doesn’t control the price.
However, today one of the largest Marketplace operators decided to wield their power and control 3rd party seller product prices. The Wall Street Journal covered Amazon’s decision to discount third party products ahead of the 2017 holiday season.
The article showcases the fact: Amazon will stop at nothing to gain further market share. Here’s what we know:
This move is significant and retailers need to pay attention. I’ve no doubt the Amazon Effect will immediately hit stock prices across retail, and when we wake up tomorrow we’ll see leading retailers down.
What’s significant about this move by Amazon?
What can retailers do about it?
There is only one option: Just as Sucharita Mulpuru said it five years ago in her doc “Why Every Retailer Needs a Marketplace” - retailers need to launch their own marketplaces. Without the marketplace model, retailers cannot create a more compelling offer for their clients. This more compelling offer = more products and better prices.
Amazon’s latest move is short-sighted, and creates an opportunity for retailers to recruit sellers away.
Join our webinar this week to see how our customer Best Buy Canada is using the marketplace model to offer their customers more, and mind the gaps surrounding their core inventory, to dominate this holiday season.