Online marketplace

Online Marketplaces

Place to be for B2C and B2B?

Munich, August 03, 2022

The retail trend of online marketplaces:

Opportunities, pitfalls and tips for implementation

Online marketplaces are a retail-megatrend – experts predict that more than half of all e-commerce sales in the DACH region will be generated on online marketplaces as early as 2024. So it’s no surprise that many retailers want to take advantage of the lucrative opportunities these marketplaces hold for them. But not all attempts at implementation have been successful. While more than 100 new online marketplaces have been created in the DACH region in recent years, 30 marketplaces have had to close down in the same time period. This fluctuation exemplifies that the implementation of a marketplace should follow a few practical tips to avoid serious mistakes.

Woman packing packages

During the pandemic, even the last retailers that still resisted the trend towards e-commerce were forced to recognize the enormous importance of online sales channels. However, the evolution towards digital commerce had already been set in motion a long time ago – and seems to be unstoppable to this day. Online marketplaces in particular are quite popular with customers and retailers alike. These platforms offer both parties a virtual framework in which they can trade with each other.

The biggest online retailers all have their own marketplaces and their success demonstrates the potential of the concept. Many retailers now want to implement the marketplace approach themselves – preferably with a proprietary solution. But a successful implementation requires a great deal of caution: Only a well-planned and well-designed roll-out promises the desired success in the marketplace business. Three basic rules help to ensure a successful implementation.

Three basic rules for success in the online marketplace business

First

Planning and perseverance for long-term success

A marketplace is not just an additional sales channel, but an entirely new business model. Accordingly, aspiring online marketplace retailers should ensure that the implementation of their marketplace is commercially reasonable. Retailers should therefore clearly define their goals, strategies and target groups before implementing their marketplace – otherwise the required effort quickly gets out of hand. Looking back on numerous successful marketplace projects, the experts at KPS also recommend conducting a feasibility study before the actual implementation. A long-term plan is also often a big success factor, as retailers need to invest a lot of time and money for the implementation of a sustainably successful marketplace. However, realistic planning already requires a lot of expertise in the marketplace business. Getting advice from specialists with prior experience in digital transformation can help avoid costly mistakes during this process.

Second

One booth today, the whole marketplace tomorrow: Experience pays off

The success of major marketplace operators is strongly related to their longstanding experience. That is why experts at KPS recommend starting with gaining experience by selling your own products on existing marketplaces, rather than immediately building your own solution from scratch. This way retailers can get to know their competition and anticipate potential problems with their own marketplace implementation later on. This approach also enables a gradual transition from trading on external marketplaces to a complete shift to a proprietary marketplace. Finally, companies with efficient solutions could potentially even completely decouple their own retail business from their marketplace and generate their revenues from fees or the sale of logistics services.

Third

It’s about the journey: Staying flexible to seize opportunities

No matter how an individual entry into the marketplace business looks like, there will always be unforeseen developments, problems and opportunities. The software foundation for a marketplace should provide the necessary flexibility for such cases right from the start. This kind of setup enables retailers to grow along with their challenges and learn continuously, rather than being constrained by a rigid IT corset. This enables them to optimize marketplace implementation in order to gain competitive advantages. Professional consulting can help laying a solid foundation for this.

Realizing added value with marketplace know-how

The marketplace concept offers various opportunities for differentiation and for responding to market developments favorably. Retailers should seize this opportunity. In doing so, they can seize many advantages for their own business: The opportunity to scale sales, test their own product range, collect useful customer data and generate new revenue streams.

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