Marketplaces are among the most important sales channels in online retail. Even after the corona boom in e-commerce, they are recording above-average growth compared to the rest of online retail. For many retailers, marketplaces offer opportunities to offer their products to a larger audience. In today’s blog, we look at the opportunities offered by marketplaces and show what newcomers need to bear in mind.
Online marketplaces often act as intermediaries – they bring customers and traders together in one place. In doing so, the traders still have the decision-making power over their products and the marketplace providers receive a commission for their services. Often they also act as traders themselves on their marketplaces – so they benefit from a mixture of proprietary trading and platform business.
The trend has already become apparent in recent years: online marketplaces were increasingly used by retailers as additional sales channels. Digitec Galaxus, Amazon or eBay have now become the second most important digital sales channel for many behind their own online shop. This was also reflected in turnover – marketplaces grew at an above-average rate in recent years. This trend seemed to continue last year, at least among the largest ones. Although the entire Swiss online trade recorded a decline in turnover of 2.8 per cent, some marketplaces are now showing a different picture.
Revenue growth of the largest marketplaces 2020-2022.
*Estimation from Carpathia
Great opportunities, low risk.
Due to the great success and low risk, more and more online shops are switching to a marketplace model, both in Switzerland and internationally. In other words, they include third-party suppliers in their online shop and thereby diversify their product range on the online shop. This has advantages for all parties involved: the marketplace operator can react more quickly to demand trends, traders reach a larger audience and customers benefit from a wider range of products on a web shop. However, the great success of marketplaces has also fuelled competition. Particularly with large providers, retailers and brands sometimes stand side by side and fight for attention.
Joining new marketplaces or even becoming a marketplace yourself is no longer technically witchcraft. Companies such as Tradebyte have specialised in precisely such interfaces and today enable numerous online traders to offer their products on different marketplaces – and this across national borders. Those who go this route should prepare themselves accordingly. A strong increase in sales is nice, but it also brings challenges in the areas of storage, packaging and shipping. Anyone who ships abroad – such as to Switzerland, the United Kingdom or Norway – has to take into account not only product and pricing policy decisions but also, among other things, regulations and specifications for customs clearance when importing and exporting goods, tax aspects and the obligation of a local fiscal representation. Those who do not want to or cannot handle this themselves are best advised to rely on the solution of a fulfilment or cross-border provider.
A success story.
The German jewellery company Julie and Grace, which today offers its products on numerous Swiss marketplaces and relies on the cooperation with MS Direct, faced the same challenge. Instead of a cross-border solution, Julie and Grace decided to set up a warehouse in Switzerland and do the fulfilment directly in the country. All of the jewellery retailer’s Swiss orders – from all platforms and marketplaces – come together at MS Direct. From warehousing to packaging, shipping and returns processing: everything is included in the comprehensive service package.