Gone are the days when we say "marketplace" and you think "Amazon."
Yes, Amazon was first on the scene when it implemented its behemoth B2C marketplace. Yes, they replicated their B2C success with Amazon Business in 2015, responding to a huge market opportunity for B2B digital commerce. And yes, Amazon is number one in eCommerce, constituting 45% of the industry.
But the Amazon story is becoming stale – especially when launching your own marketplace is on the rise.
You don’t need Amazon to meet buyer demands
Online marketplaces where third-party sellers offer products alongside a merchant’s own stock are transforming business models. They’re enabling organizations to capitalize on connecting systems and building networks to offer more value to customers.
Not only do marketplaces enable companies by helping manufacturers, wholesalers, and distributors go direct without channel conflict, but they also improve the customer experience. Customers are no longer simply buying products – they’re buying the experience. Curated marketplaces are the best way to meet buyer demands, with a self-sustained and price-competitive approach that allows businesses to deliver a broad assortment at low cost.
Amazon’s one size does not fit all
Beware Amazon: launching your own online marketplace is gaining traction. According to Gartner, it’s predicted that over 50% of all online sellers will adopt marketplaces or include third-party sales in their eCommerce ecosystems by 2020. And, 15% of medium- to high-GMV digital commerce organizations will have deployed their own marketplaces by 2023.
There are a number of factors fueling this trend. Marketplaces are allowing organizations to diversify their retail portfolio and revenue streams, without having to conform to conglomerates and abide by strict platform terms and conditions.
It also reduces the risk of listing on third-party platforms, where businesses fall to the mercy of Amazon’s strategy. Earlier this year, Amazon stopped supplier orders for no apparent reason. Though Amazon eventually suggested this move was to eliminate counterfeit products, this example became the epitome for why a business’s profitability plan should not be dependent on Amazon.
Why join them, when you can beat them?
Get ready for one of the biggest industry shifts in eCommerce yet. Launching your own marketplace is the antithesis to surrendering to Amazon or losing customers to Alibaba.
The business shift towards marketplaces allows companies to completely own the customer experience, have total control and visibility over their data, and compete with other marketplaces – not just other vendors on the same marketplace.
Other benefits of launching your own marketplace include:
- Increased product inventory
- Increased revenue from additional products and additional share of customer wallet
- Reduced risk of listing on third-party platforms
- Increased overall profitability
- Adoption of new capabilities to better serve customers
Analyst surveys found that only 56% of B2B companies have an eCommerce site and 11% have a marketplace. In theory, this leaves the rest of B2B organizations combating Amazon as it builds its multi-billion dollar marketplace brand – but in reality, there are plenty of marketplaces and digital commerce technology that make up the platform economy.
Mirakl is the leading example of marketplace technology that is better architected to meet real world business challenges versus quick wins from listing on the Amazon marketplace. Research on the Mirakl Marketplace return on investment is staggering. Forrester recently conducted a Total Economic Impact study, which sought to provide a framework to evaluate the financial impact of a Mirakl Marketplace. They found that Mirakl Marketplaces can deliver a significant 162% return on investment within three years and drive revenue up by $412 million over three years. Additionally, the study found that Mirakl customers experienced an average 15% increase in average order size and a 7% increase in physical store sales.
So why join Amazon if you can beat them? Learn more about the technology companies need to drive digital transformation in Mirakl and Zaelab's latest whitepaper, B2B Marketplaces: Welcome to the Platform Economy.
Written by Evan Klein
Evan Klein is the CEO of Zaelab, a leading digital advisory and solutions company. Zaelab accelerates client growth through the continuous innovation of digital platforms and customer experiences. Zaelab removes the complexity and friction of digital platform implementation and operations, and proactively provides clients with leading tools and insights required to deliver exceptional experiences.