Focus on... Marketplace Growth
Updated: Aug 6, 2021
As we’ve emerged from the pandemic-induced digital-only era, the new retailing reality has crystallized. Marketplace heavyweights -- Amazon and Alibaba at the forefront -- have cemented their leadership positions, appealing to shoppers as their de-facto ‘everything store.’ Across the retailing spectrum, and fueled by social’s rising influence on commerce and swift time-to-market, an ever-growing collection of digitally-native brands (DNVBs) benefitted from the unique consumer conditions to attract scads of new shoppers. Meanwhile, life looks dire for legacy brands and retailers that feel the squeeze from these retailing bookends.
Forced to transform, a set of pioneering retailers have refreshed the retailing formula, borrowing from the success of the marketplace model to develop their own networks of third-party sellers that complement and expand their own assortment. The marketplace movement is built on the notion that retailers can retain and grow their shopper relationships by playing the role of matchmakers. By collecting sellers, and flexing their merchandising muscle, retailers can broaden their offerings, to stay fresh and relevant to their shoppers.
And, the returns suggest that these enterprise marketplaces have found a path forward and an escape from the closures and bankruptcies marking their legacy peers. According to the Enterprise Marketplace Index from Mirakl, enterprise marketplaces grew 81%, double the growth rate of the broader direct-to-consumer eCommerce market, even during a period of massive digital growth.
When deconstructing marketplace growth, the Index highlights the benefit of compound growth: more sellers, selling more. Marketplace sellers swelled 46% year-over-year, as retailers recruited and onboarded at an accelerated pace to meet the immediate shopper demand spurred by the pandemic. Concurrently, alongside the rise in sellers, GMV (gross merchandise value) per seller jumped 24%. Together, the product of these two factors -- seller growth and growing sellers -- delivered the 81% growth in marketplace retail.
The real prize for retailers, though, is the contribution to top and, more importantly, bottom-line. The Index states that the average seller generates $109,766 in total GMV, and, when factored by marketplace commission rates, retailers saw a gross revenue contribution of nearly $15,000 per seller.
In an industry that typically shoulders massive inventory carrying costs, the marketplace model provides a unique opportunity -- reduced reliance on owned-inventory, and a near-direct bottom-line contribution to boost profits.
See the entire Enterprise Marketplace index here.