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2019 Retail Tech Trends: marketplaces

Competition between the largest marketplaces will intensify: In 2019 more than half of global B2C eCommerce sales will come from Tmall, Amazon and JD.com (source: Forrester Online Marketplaces Tracker, 2015 To 2018 (Global)). JD wants half of its revenues to come from abroad in 10 years’ time and will leverage its partnerships with Google and Walmart to develop its online presence in the US. AliExpress is expanding aggressively overseas offering more competition to Amazon’s and eBay’s marketplace dominance in the US. After Russia, the US is AliExpress’s largest market. AliExpress differentiates its cross-border marketplace from those of Amazon and eBay by selling cheaper made-in-China products that are particularly attractive to younger online buyers. In Europe for example AliExpress buyers are on average, 5-7 years younger than Amazon or eBay buyers. In response, Amazon’s is selling more Chinese products on its platform, although less than 2% of Amazon’s sales comes from Mainland China, about a third of its marketplace sellers are Chinese.

Marketplaces will consolidate their share of the online luxury goods market: A tenth of global online luxury sales came from the marketplaces Yoox Net-a-Porter, Farfetch and Matchesfashion.com in 2017 (source: Forrester Luxury Retail Forecast, 2018 To 2023 (Global)). JD recently created its own online store Toplife in collaboration with Farfetch and Alibaba created Luxury Pavillion to sell specific luxury brands online. Luxury retailers often use marketplaces to rapidly penetrate new or highly concentrated markets, Valentino became the latest luxury brand to sell to Chinese luxury buyers through Luxury Pavilion. Chanel recently announced a partnership and minority stake in Farfetch to develop more personalised online experiences. Richemont recently bought luxury marketplace Yoox-Net-a-Porter to increase its online share of sales to 14%. Collaboration between marketplaces is increasing, Yoox Net-a-Porter recently started selling its products on Luxury Pavillion to gain access to the Mainland China luxury market.

Marketplaces will showroom their brand through bricks & mortar stores: Alibaba is expanding its Hema bricks & mortar stores in China to grow omnichannel shoppers. Hema stores open for more than 18 months process twice as many online orders as offline orders and the average spend of omnichannel shoppers is twice the spend of pure online or offline shoppers. JD and Tmall are deploying their logistics networks to help China’s 7 million family-run convenience stores manage and replenish their stock using a smartphone app. Amazon is offering Prime subscribers discounts and free delivery at Wholefoods stores to grow the loyalty of its frequent shoppers. Amazon Prime shoppers spend on average twice as much on Amazon compared to non-Prime members.

Marketplaces will continue to diversity their revenue streams: Marketplaces understand consumer purchase behavior and use it to introduce own private labels products. Investing in private label products was one of the highest priority business goals for Amazon US marketplace sellers in 2018. In direct competition to Google, Amazon’s revenue from online advertising continues to see rapid growth, Amazon doubled its revenues in the first nine months of 2018 from its “other” category which primarily includes sales of advertising services. In Southeast Asia Alibaba’s migration of its Lazada marketplace to its Tmall platform will grow digital advertising spend through its proprietary self-service ad platform Alimama, a competitor to Google’s Adwords. Eighty percent of online and offline buyers in Metropolitan China used Alibaba’s propriety payments platform Alipay to pay for goods. Seventy percent of Alibaba’s marketplace Gross Merchandising Volume is settled through Alipay's escrow and payment processing services.

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