The growing power of the e-marketplace

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The growing power of the e-marketplace

As many globally minded retailers have already learned on the ground, competing against well-entrenched domestic players is difficult. To gain acceptance with foreign consumers online is no different than through bricks-and-mortar expansion — you need to localize your offer and your operations.

Capitalizing on that reality, third-party marketplaces have become an increasingly important driver of growth for online retailers. This is especially evident in developing markets where consumers often navigate directly to these marketplaces, many of which have become well-recognized and trusted brands. Their selection and convenience provide value for consumers, while their scale and reach provide merchants access to a large base of potential customers.

In addition to cost-effective customer acquisition in often unfamiliar territory, the marketplace infrastructure offers sellers a range of essential support services — including payment, fulfillment, customer service, marketing and promotion — necessary to operate their businesses. Without the capital investment, time and risk required to launch their own country- or region- specific e-commerce operations, many retailers are finding that e-marketplaces can be a quicker, easier and more efficient way to tap into growth markets around the world.

Alibaba Group, China’s most popular e-commerce destination, is the world’s largest e-marketplace company with gross merchandise value — the value of all merchandise sold — of $272.8 billion in 2013, nearly twice that of Amazon. Alibaba exclusively operates a third-party platform business model consisting of two main e-commerce sites: Taobao, where consumers sell to other consumers, and Tmall, where retailers sell directly to consumers.

Amazon, the world’s largest e-retailer, offers products from its own inventory  as well as products sold by others on Amazon Marketplace. The company’s total 2013 GMV is estimated at more than $140 billion, with $73.5 billion generated by third-party sellers.

Amazon continues to disrupt markets whenever it enters a new category. The company is expanding AmazonFresh, an online grocery service it first began testing in Seattle in 2007. Amazon Fashion is another emerging business. While Amazon has sold apparel, shoes and accessories for years, the company has intensified its focus on the fashion category in the past few years, targeting contemporary, high-end brands.

eBay ranks as the third-largest e-marketplace with total GMV of $76.4 billion. While it offers only third-party products, the company’s reported GMV does not distinguish its B2C business from its C2C business.

Japan’s Rakuten operates the world’s fourth-largest e-marketplace. Total GMV of $18.1 billion is derived primarily from its domestic online shopping mall, Rakuten Ichiba. The company launched its first e-commerce operation overseas in Taiwan in 2008. In 2010, Rakuten acquired Buy.com, one of the leading U.S. e-marketplace companies (now Rakuten.com).

MercadoLibre (literally “free market” in Spanish) hosts the largest online commerce platform in Latin America. It began operations in Argentina in 1999 and rapidly expanded to Brazil, other South American countries and Mexico. In 2001, MercadoLibre entered into a strategic alliance with eBay, gaining proprietary market information and acquiring eBay’s Brazilian unit, which helped to consolidate the company’s leadership position in the region. The strategic alliance ended in 2006, just prior to MercadoLibre’s IPO in 2007. The company’s GMV in 2013 was $7.3 billion.

In addition, a growing list of retailers including Sears, Wal-Mart, Best Buy and Tesco are incorporating third-party marketplaces into their own online storefronts. This provides their customers with much greater choice without having to look elsewhere and allows the retailer to capture a greater share of e-commerce revenue.

https://nrf.com/news/2015-top-250-global-powers-of-retailing