Today’s online shoppers have grown accustomed to a wide selection of in-stock products at competitive prices that can be delivered within days. It’s a high bar.
Since many of these expectations were first set by customers’ experience with Amazonit’s no surprise that third-party marketplaces have become a key tool for many retailers to meet these consumer demands. Kroger, Bed bath and beyond, michaels, Hudson Bay and Macy’s are just a few of the retailers that have waded into market waters recently.
“Part of what makes working in retail so fun is that the customer and their buying habits are a moving target, they’re constantly changing,” said Matt Baer, Chief Digital and Customer Officer at Macy’s. during a session at the 2022 NRF Big Show. “Over the past two years, we’ve seen an incredible acceleration in customer buying behavior, and at the heart of that is accelerated adoption of digital channels. At the end of the day, it’s our job to create the best experience for customers no matter how their buying behavior changes, and that’s part of the reason why we’re launching a marketplace in the second half of this year.”
Unlike Peloton shopping or baking sourdough bread, the heightened consumer preference for markets looks like pandemic-propelled behavior that’s here to stay. A new study of the Mirakl marketplace SaaS platform, conducted by the Schlesinger Group, found that after significant gains at the start of the pandemic, marketplace usage remains high. In 2019, 42% from U.S consumers reported buying exclusively, or a lot, from marketplaces. This number increased to 57% in 2020 and stable at 57% in 2021.
Other Mirakl research findings include:
- Convenience is the main reason online shoppers are increasingly turning to marketplaceswith their expanded assortments and fast delivery;
- Marketplaces now represent 50% of online purchases made by “power shoppers”. consumers who shop online once a week or more; and
- Consumers are inclined to choose marketplaces from retailers they already know and trustbut these marketplaces must deliver the same experience that customers expect from the brand.
Why consumers are turning to marketplaces
The Mirakl survey probed 9,000 consumers through new countries. US respondents to the survey said that 43% of their online purchases are now made on marketplacesand looking to the future, 92% of US consumers expect to shop at the same rate or more in the coming year. Millennials are the largest cohort of market shoppers, buying on markets 79% time.
But this is not an American phenomenon. Brazil saw a 75% increase in the use of online marketplaces by consumers, and Singapore and Australia have each seen 65% bumps over the past year.
So why are consumers around the world increasingly turning to marketplaces? In a word – convenience. When consumers ranked their most important online shopping criteria, items in stock, variety of products and quick delivery were the top three, all things the market model is uniquely suited to offer.
“Over the past year and a half, we’ve spent a ton of time and resources improving the foundations of our business,” said Baer of Macy’s, which is working with Mirakl to build its future market. “So if a customer comes to Macy’s, can they find what they’re looking for? Do they have the information they need to make a decision with confidence, and then do we provide a good after-sales experience? It seemed like a very natural next step to start a market. This will allow us to broaden and deepen our core categories and easily transition to new or adjacent categories.
“It will also allow us to stay ahead of trends because [changes in consumer preferences] happen very quickly,” Baer added. “And then it also helps us accelerate some of our strategic initiatives in terms of selling diverse and women-owned brands as well as sustainable products. So we really see our market as a catalyst to support our current business strategy.”
The Rise of the Online Power Shopper
A preference for marketplaces is particularly prevalent among what Mirakl called “power buyers,” consumers who shop online. once a week or more, a group that tends to be retailers’ most frequent and profitable customers.
The large majority (83%) of sophisticated shoppers in the United States believe that online marketplaces are the most convenient way to shop, according to the Mirakl survey. And this preference translates into purchases: on average, US electricity buyers make 50% of their online purchases on marketplaces, against 43% for the average American consumer.
What was particularly noteworthy was the preference of these buyers in terms of Who marketplaces they use: 87% said they trust the online marketplaces of brands they have already established relationships with. This means that hard-earned consumer trust and customer engagement provide a “halo effect” for market transactions.
Tips for Getting a Cheap 3P
Shoppers are clearly open to buying third-party products directly from retailers they already know and trust. But that means the right implementation is crucial for these retailers to maintain brand loyalty. In this regard, the Mirakl study identified three crucial factors for any enterprise market:
- Reviews of sellers and products;
- Quick delivery; and
Product Quality Concerns (46%) and negative reviews (45%) are the top reasons US consumers are hesitant to buy from a third-party seller, demonstrating how important third-party sellers are to providing a satisfying customer experience. Once again, the brand equity that retailers have built comes into play, with about half (51%) of consumers stating that they are more likely to buy from a third-party seller if that seller works with a retailer they trust.
Offering reviews and maintaining a good post-purchase experience are also critical to a retailer’s market success. When purchasing products from third-party sellers, most U.S. respondents (63%) research a seller before making a purchase, and 71% said they check reviews first. And despite the supply chain issues, 88% of US consumers surveyed said they expect their packages to arrive within 3 to 5 days or less. A standard 46% expect their products even faster, in just 1 to 2 days (excluding perishable products such as groceries).
“The most important thing is that the customer has a smooth experience and that their relationship with the assortment or the seller is the same, if not better, when they buy an item from the marketplace,” Baer said.
Before the online boom, many brick-and-mortar retailers stood out for their merchandising, but the marketplace model is changing that by bringing brands closer to the Everything Store format launched by Amazon. Baer said retailers can retain their competitive edge by continuing to do what they’ve always done well. In other words, adding a marketplace doesn’t mean the end of merchandising.
“I think Macy’s has the best merchants in the world,” he said. “They’re still going to come up with an assortment strategy, and then they’re going to figure out the best way to meet customer needs and execute that strategy. The market becomes just another tool in their toolbox. We have this ability to differentiate ourselves with the curation of our assortment online and with the experience that we offer. I am convinced that with the market platform, you can achieve this conservation at scaleand it becomes a really powerful tool to unlock new opportunities for the trader to achieve their goals.