The marketplace business model has had a dramatic overhaul in recent years. The biggest driving forces behind this shift are intertwined: the rise of ecommerce and, of course, the COVID-19 pandemic. As a whole, the popularity of online marketplaces has been steadily climbing for years, but recently, this growth has accelerated to the point the entire landscape has evolved.
In March 2020, about 40% of UK shoppers said they were shopping online more, compared to before the pandemic. By February 2021, this share has grown, reaching approximately 75%. UK consumers are buying more goods online than ever before, and by the end of 2021, online sales will make up almost a third (30.2%) of overall retail spending. This is 11% more than the share in 2019, pre-pandemic.
Retailers have naturally had to adapt to these changing consumer habits, so there’s been a similar uptick on that side of the equation too, which continues to fuel even more growth. It’s a self-fulfilling prophecy: more retailers selling online means more choice, which in turn attracts more customers.
Marketplaces played a key part in this ecommerce boom due to the sheer amount of choice and convenience offered. The online equivalent to a booming high street or department store, marketplaces gather everything you could possibly need or want under one roof; all you need to do is tap on your smart device and your shopping will be delivered straight to your door within days. Combine the dizzying amount of choice available with various lockdowns preventing us from being able to go to physical stores, and you have a recipe for growth-fuelled innovation.
The marketplace landscape has evolved to cater to almost every type of shopper too. Consumers can explore specialist marketplaces like Feelunique and ASOS, hosting all their favourite beauty or clothing brands in one place, all the way through to multi-category marketplaces like OnBuy, offering upwards of 36 million products across 17 departments. Increasingly, the world of ecommerce is being designed to bring you exactly what you want, when you want it.
There is another force at play here, too: mobile shopping. It’s predicted that 54% of total ecommerce sales will come from mobile by the end of 2021, up from 34.5% in 2017. We’re never very far from our phones, and with the increasingly smooth user journeys and tempting exclusive discounts offered by many apps, a quick click can turn into a shopping spree very easily.
For retailers, marketplaces are a very attractive prospect. Rather than sinking time and resources into building your own website (which can be impossible for some without the means to hire experts in IT, SEO, marketing, and so on), you can just start selling. All you have to do is list your products, and you’re instantly put in front of millions of loyal users. The platforms will even market your products for you – sounds perfect, doesn’t it?
However, with this wave of growth, new challenges are highlighted. There is a rising threat posed to retailers by the very platforms that supposedly support them. The marketplace business model wherein the platform is itself a retailer has now become the norm – to the point that a monopoly was created, cutting out the competition in favour of their own sales. Retailers are growing ever more tired of being undercut by platforms they can’t feasibly compete against, of ‘own brand’ copies of their unique products, and of rigged searches that deliberately leave them in the dust.
Is facing competition from the platform that’s supposed to help them sell fair to retailers? No. Is having one platform slowly taking over and crippling the competition good for buyers long-term? No. So, what can be done?
This threat, facilitated and accelerated by these digital technologies, has contributed to a significant landscape shift, with challenger brands on the rise. Aiming to disrupt the status quo and offer a better platform to shop and sell through, OnBuy has challenged the monopoly of the marketplace-retailer model and course-corrected the model back to where it should be – there to securely connect buyers and retailers.
By simply connecting retailers to buyers while offering the choice and convenience that customers expect, OnBuy has fast become a trusted alternative. The marketplace has seen a notable increase in big brands selling on the platform in recent years, including LEGO and Swan.
This model has changed the way marketplaces work for retailers, which will ultimately save the quick, convenient shopping experience we’ve come to rely on in recent years. More and more retailers are choosing the platform that offers them a level playing field, without the myriad of dirty tactics they’re up against elsewhere. They’re choosing partnership instead of having to sacrifice sales in the hopes of reaching a wider audience. They’re choosing a new frontier in ecommerce.
This article was first published in our Cross-Border Payments and Ecommerce Report 2021–2022, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.
About Cas Paton
A highly driven and passionate entrepreneur, Cas Paton is the founder and CEO of UK-based OnBuy.com, the UK’s fourth largest marketplace. Known for his expertise in the ecommerce industry, Cas is an inspiring leader who frequently contributes to the sector and offers guidance and advice to other businesses all over the world.
Founded in the UK in 2016 by Cas Paton, OnBuy has a simple vision: to be the best choice for every customer, everywhere. The brand has established itself in the ecommerce sector as a pure online marketplace that doesn’t compete with retailers. This fair and transparent approach provides an exceptional experience for buyers by levelling the playing field for retailers. Offering 36 million products, OnBuy gives thousands of verified online retailers the platform to provide competitive prices and exceptional value to customers. From household names to independent retailers, buyers can shop securely for products from a wide range of categories, such as electricals, beauty, home and garden, toys, and baby supplies.