Trends in marketplaces, a short introduction
Nothing changes as rapidly as the online landscape; also when it comes to trading platforms. Through the combination of rising sales and technological advancements, a broad scala of trends and new developments can be found. In this paragraph an overview can be found of the latest developments in trading platforms. These trends are sometimes still in an experimental phase, which means that the market may not necessarily move towards that direction. Still it remains important to anticipate to these changes, to be able to properly motivate the choice for doing business with a trading platform, and find out how future proof the platform is.
Supporting the entire buying process
Trading platforms have extended their original role of merging supply and demand. More and more platforms support the entire buying cycle: orientation, the purchase itself, payment, service and logistics. Examples like Amazon and Ebay have been continuously extending their role in this buying cycle through adding multiple services. Amazon is offering lockers to store and pick up deliveries and started pilots to deliver via drones in rural areas. Ebay has started a cooperation with Argos, to add their over 600 stores as pick up points for Ebay deliveries. In the Netherlands, the take-over of Bol.com by Ahold also implies the adding of all Albert Heijn supermarkets as a pick up point for Bol.com.
Converging in role and functionality
The broader trend of convergence between product brands and retailers is also visible when we look at trading platforms. Comparison sites have started placing “buy buttons” and payment facilities where as department stores have started with shop in shop partnerships,
even with former competitors, to extend their assortment. Well known examples of platforms that opened their doors for other sellers are Zalando and Wehkamp.
In this way these companies add missing products and product categories to their assortment. Also social media and search engines tend to follow the trend off adding buy functions to their sites (think of Google Shopping, Facebook and Twitter experiments with buy buttons). In this way, comparison sites, marketplaces, search engines, department stores and web shops become lookalikes and converge in their role and functionalities.
Facilitating small local players
Trading platforms are an important channel for both large players and product brands as well as for small local players.
More often, local players bundle their forces to offer consumers today’s convenience, like online buying, online payment and (combined) home delivery. A well-known example in the Netherlands is Negen Straatjes in Amsterdam. These local boutiques have started a common online platform to explore the offline brand recognition of their shopping district also in the digital world. Other examples in the Netherlands are Miinto and Locals United. These platforms offer a bundled assortment of multiple small fashion boutiques, like TopShoe does for small shoe stores. Rechtstreex is an example of an online platform that offers the possibility to buy fruits and vegetables directly from local farmers via an online trading platform.
Placing the consumer in the driver’s seat
The power has shifted to the consumer. Even in legal matters, consumers can play a role. Ebay receives thousands of complaints per year and started a pilot with a system that selects a random set of consumers as possible jury members in a dispute between Ebay and a specific consumer. The jury members are simply asked to vote for either Ebay or the consumer, and when over 13 consumers have voted, the system made a binding decision. Step by step, consumers take over roles that traditionally have been fulfilled by retailers or other parties. Consumer reviews are another example of this phenomenon.
Always nearby via mobile
The growing use of mobile devices also applies for online trading platforms. Mobile for trading platforms also explicitly fulfills the need to compare prices when consumers are in physical stores and tend to buy something.
Increase in Outlet function
A growing number of companies envision trading platforms as an outlet for their ‘obsolete’ stock: products that go out of the collection, returned products, refurbished products, ex-lease models, showroom models or rest parties. Some trading platforms specifically aim for this outlet function, like Vente Exclusive, iBOOD or Groupon.
Outlets can give sales an enormous boost. There are even product brands that realize over 70% of their revenues via outlets and specifically produce for outlet channels. These companies often have a multi-brand strategy. This prevents that the A-brand price level suffers the effects of the outlet strategy, while the company still can realize high volumes via the outlet channels.
Diverse logistic models
The growth in online trading platforms also results in an increased diversity in logistic models. At eBay ordering and payment takes place at the eBay platform while storage and delivery are done through the product vendor. At other platforms like OTTO the product brand remains the stock keeping party and is the delivery to the consumer executed by the trading platform in a cross-dock model. Returned products however remain at stock at the trading platform warehouse.
DIY retailer Praxis in the Netherlands has a different model: product suppliers and other web shops in the DIY industry can sell their products via Praxis.nl. They deliver directly to consumers, while the service and warranties remain with Praxis. These type of models provide retailers the opportunity to offer the long tail to their customers, whereas product brands do not have to start retailing themselves.
New omnichannel optimization tools
An increasing number of retailers are selling through multiple marketplaces next to each other. Optimization across all channels is the new challenge. They only want to sell products with high margins in their own channel at the moment stock become scarce. And they may want to react with price changes or promotions if competitors on a marketplace do the same. The higher the number of channels, the larger the need for automated optimization via ‘business rules’ and constant monitoring of the platforms. Logistic service providers already tend to offer this optimization opportunity to service sales via multiple trading platforms from one central stock.