Theoretically, a business can use any number of channels to reach customers. If they have the scale to meet demand, a brand can retail directly to customers, wholesale to other retailers, sell in stores, and online. However, among these channels, the online marketplace stands out. It dominated online B2C sales while cutting down the noise for B2B and specialty sellers.
Online Marketplaces: Malls, Catalogs, and Tradeshows
What makes an online marketplace so attractive to consumers? In a way, what made malls work for so long stands for a marketplace such as Amazon.com or eBay. As we will see below, direct-to-consumer marketplaces dominate online spending. As Cin7 Founder Danny Ing observed recently, people go to the mall because it encompasses more of what they want as a whole person. Similarly, a B2B marketplace attracts retailers looking for suppliers across a range of categories. Finally, specialty marketplaces do the same for customers in a certain niche.
The B2C Online Marketplace
Without a doubt, direct to consumer marketplaces represent the most mature and active of these category of sales channels. Marketplaces represent a large portion of online spending in every market. In fact, half of the consumers around the world that shopped online spent their money in a marketplace. Moreover, 75% of that spending went through just four marketplaces, including Amazon and eBay. Wide selection, discounts, and delivery incentives all bring tens of millions of customers to shop regularly on marketplaces. Consequently, experts see marketplaces as essential channels for retailers. While marketplaces may limit margins, they also allow retailers to sell to way more customers than they can through other channels.
The B2B Online Marketplace
If a B2C marketplace resembles a mall, a B2B marketplace looks like a combination of things. Typically, it parallels a cross between industry trade show and distributor catalog. So, a brand that wants to start wholesaling or to enter new markets can use B2B marketplaces to find retail partners anywhere in the world. A brand posts images and descriptions of their products, and retailers place bulk orders. Thus, brands and wholesalers can fulfill more bulk orders quickly, and in more places, than they could a few years ago. This makes B2B marketplaces particularly appealing to some sectors, like fashion and apparel.
The Specialty Online Marketplace
A specialty online marketplace reduces general noise by focusing on particular product categories or propositions. The category includes both B2B and B2C marketplaces. For example, marketplaces such as Joor and NuOrder bring fashion brands and retailers together. Meanwhile, Etsy offers consumers a selection of particular kinds of direct to consumer products.
Australian Retail: Ready for Amazon’s Marketplace?
While all brands must decide what marketplaces fit in their strategies, Australian retailers feel the question more acutely right now. With Amazon Australia launching as early as October, retailers, especially in fashion, may wonder what to do. Will Amazon Australia pose a threat to their business or will it help them reach more customers and expand their footprint?
Join Cin7 and their special guests at our upcoming Are You Amazon-Ready? breakfast conference. We’ll talk about how Amazon will impact the Australian market and what fashion and apparel retailers should do to get Amazon ready. Click below to register for the event near you.
Melbourne, Wednesday, 11 October, Rydges Melbourne, 7:30 a.m. to 9:30 a.m. with special guest Jo Munro, Managing Director, The Savvy Shopaholic @ The Executive Muse.
Sydney, Thursday, 12 October, Rydges Sydney Central, 7:30 a.m. to 9:30 a.m. with special guest Nick Lavidge, CEO and Founder of Alley.
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