Seizing Marketplace Opportunities: A Practical Guide to Online Expansion

While Amazon and Alibaba have been the predominant online marketplaces for several years, the field is becoming more crowded, with new players entering the fray seemingly every day. These range from peer-to-peer platforms like eBay to third-party marketplaces integrated into traditional ecommerce operations like that of Walmart — and hundreds of variations in between. There are currently more than 125 marketplaces with 1 million or more monthly site visits — approximately 50 in the U.S. alone — according to management consulting firm Alvarez & Marsal (A&M).

The scale of the online marketplace universe is staggering: A&M estimated that in 2019, marketplace sales worldwide accounted for approximately $2 trillion. With growth projected to continue at 20%-25% YoY, that number is set to reach $5 trillion by 2025. That’s a lot of zeros, and an opportunity that is becoming increasingly hard to ignore.

But navigating the dense marketplace landscape can be fraught with concerns about cannibalisation, brand erosion, overexposure and lack of control over the customer experience. Building a successful multi-marketplace strategy involves:

• Viewing marketplaces as their own channel, not just something tacked on to existing e-commerce operations
• Looking beyond Amazon to find the optimal marketplace mix for your brand
• Knowing exactly what role marketplaces play in your larger strategy to inform critical decisions about pricing, assortment, marketing/advertising and effective product listings that will drive traffic and conversions.