It’s no secret that the UK retail landscape has undergone a huge period of change, as many retailers have had to pivot their business models at rapid pace to cater to new ways of living and working. Retailers have invested in new technologies and sales strategies to maintain operations in changing circumstances, and to keep up with the rate of wild fluctuations in demand.
Post pandemic, retailers had to consider how they cater to consumer needs both in-store and online. Now more than ever, these businesses are being challenged to provide a seamless shopping experience while simultaneously adapting to the constantly evolving customer needs and behaviors.
About the author
Luca Cassina is Executive Vice President of Customer Success B2C at Mirakl.
The new retail environment is defined by viral trends, sudden surges in demand, and the customer expectation that products must arrive within 48 hours or less. To address these pressures, retailers have been turning to marketplaces; these networks of third-party sellers have enabled retailers to meet fast-evolving consumer demands without the added costs of warehousing, supply chain and logistics for thousands of additional products.
The marketplace success formula
Many of the most important players in eCommerce — including Amazon, Ebay and AirBnB — rely on marketplaces to connect sellers and buyers with ease. However, the marketplace model is not just for these digital giants. Both B2B and B2C platforms are revolutionizing the way we do business by meeting the “anything, anytime, anywhere” expectations of today’s consumers. Enterprise marketplace platforms offer the productivity, agility and flexibility needed to thrive in an increasingly digital world.
In recent years, marketplaces have grown exponentially, helping more brands cater to the ever-changing needs of their consumers. Our own research into this sector found that marketplaces grew by 81% year-on-year in the fourth quarter of 2020, more than double the rate of general eCommerce. Additionally, retailers who leveraged the marketplace model saw a 34% lift in overall organic site traffic, benefiting from additional demand and relevance without the added marketing spend. This impressive growth indicates that companies turned to the marketplace model for flexibility during one of the most complex years in the history of commerce.
With the acceleration of enterprise marketplaces across the globe, sellers from all industries have been taking advantage of the opportunity, with 36% of sellers having joined enterprise marketplaces in the 15 months prior to summer 2021. The marketplace model not only enables retailers to position themselves as trusted shopping destinations online, but also provides shoppers with a vastly widened product offering, all without the added expense of stocking products sold by third-party partners for the marketplace operator. The model allows retailers to curate a selection of sellers that align with their core brand DNA. In turn, this process of curation at scale helps retailers to grow their customer base, increase sales, and foster loyalty without making any sacrifices in terms of brand identity.
Marketplace sellers have also been creating retailer and shopper trust through high customer satisfaction. We found that the most experienced sellers earned an incredible rating of 4.5 out of 5 from shoppers, a clear sign of customer satisfaction. Additionally, enterprise marketplace sellers receive a much lower average of order refund rates compared to generally eCommerce. Across all verticals, shoppers sought refunds on only 3.3% of orders, less than half the rate of eCommerce as a whole (7.2%). In the apparel industry, where refunds are more common, eCommerce sites average 12.6%, while enterprise marketplace sellers again cut the rate in half, at 5.7%.
So where can retailers go from here? We know that the marketplace model offers a superior customer experience, an increased product offering, and considerable growth opportunities.
Consumers are increasingly expecting more variety from their shopping experience, which presents a real opportunity for retailers. Those who adopt the marketplace model, and create a broad ecosystem of sellers, can enable the best possible path forward, allowing them to continue leading in an increasingly competitive digital world.
As businesses continue to welcome in-store visitors, those who are able to be agile and accelerate their digital transformation will be those best positioned to go above and beyond their consumers’ needs. Through marketplaces, retailers will be able to continue to grow their websites and collect data on what their customers really want and need, giving them the insights to continue to refine their offerings. This improved digital experience will keep customers coming back for more, offering retailers a significant competitive advantage.
Now is the time for businesses from all industries to proactively leverage marketplace technology, or lose out to the digital natives who already have.