Comment: The online marketplace opportunity

The songs tell us that it’s the most wonderful time of the year but the build-up to Christmas can be very stressful, especially when it comes to shopping.

But it’s 2017 and much of the stress that used to come with trudging around the shops has been reduced thanks to online shopping.

There’s so much choice, you can browse the virtual aisles from the comfort of your sofa or favourite coffee shop and you don’t even need to stick to the high street stores as online marketplaces, such as Amazon and Not on the High Street, provide shoppers with even more places to pick-up that special gift.

The proliferation of online marketplaces suggests that the UK market is reaching eCommerce maturity, fuelled by a new breed of business with increased digital skills and a desire to access new markets.

However, while there are anecdotes of ‘sofa CEOs’ making a fortune by selling goods online or reselling cheaper products bought in China, the full story of how they are using marketplaces is more nuanced.

10,000 of our members told us they use online marketplaces to trade and we have also seen a spike of new members joining to secure GS1 product identifiers, especially smaller businesses, so they can use online marketplaces as part of their sales strategy.

To better support this growing section of our membership, we carried our market research with White Space to better understand the types of businesses using online marketplaces, and answer the ‘why and how’.

The results – which you can read in our whitepaper The rise of UK’s digital entrepreneurs:  harnessing the power of online marketplaces – were fascinating and we discovered there are many reasons and factors driving businesses to use online marketplaces to trade.

Take motivation for instance. Some sellers start off using marketplaces to sell handcrafted goods which began as a hobby. While other businesses with a more established online presence sometimes sell a premium selection of their full range to test demand.

Online marketplaces are used differently according to a business’ focus. A significant number of sellers have a pure online focus and marketplaces allow them to sell their goods while keeping physical costs down, like rental space. Whereas there is still a small number of businesses who believe there are still opportunities in traditional channels, such as their own stores and own website.

And larger businesses use online marketplaces to increase their reach to international markets.

But the unique thing that came out of the research was marketplace sellers broadly fall into six categories or ‘personalities’ based largely upon their scale and complexity.

Most online marketplace sellers tend to be smaller businesses called Traders and Creatives. Traders were the larger of the two groups (38% of sellers) and have an eye for the latest product trends and crazes, which they buy in bulk and sell fast using multiple online marketplaces. Creatives made up 25% of sellers and they tend to operate from home, have turned their hobby into a business and focus on a single marketplace.

Innovators at 14% and Growers at 12% made up the next tranche of marketplace sellers. Innovators focus on a niche idea or a smaller range, often invented by them, started out online and look to increase awareness. Growers typically start offline, like a family business, but recognised marketplaces could help them reach new customers and reinvigorate their business.

But 8% of sellers are Pioneers with lots of experience using marketplaces selectively based upon product type. The smallest group at 3% were Leaders and these might be large omnichannel businesses but despite their size, marketplaces still represent an important channel, especially as they represent opportunities to sell internationally.

But for all the opportunities provided by online marketplaces, there will invariably be some challenges and these differ depending on what personality the business falls into. For example, Traders need to work on their back-end process optimisation, while Growers need advice on how to integrate offline stock management with new online sales.

We know that many of our newer members using online marketplaces are smaller businesses and considering that SMEs are a significant force in the UK economy, we wanted to use our research to provide useful tips to help these businesses navigate these online platforms.

From advice on how to list products, activating short-term discounting, as well as taxing and shipping considerations, our whitepaper has useful information for businesses to truly harness online marketplaces sellers to help take them to the next level.

Our standards also have their role to play as they help sellers identify their products and assist marketplaces to better manage their catalogues, using unique GS1 numbers to link vital information about the product. It’s no different to a passport for example, where the passport number links to additional information such as the date of birth, nationality and expiry date.

You can read more about the different type of businesses using marketplaces through our whitepaper and why not take our online personality quiz and let us know what type of marketplace seller you are.