By Adrien Nussenbaum, Co-founder and CEO of Mirakl, and Forbes Councils Member
Courtesy of Getty Images
The story of American retail is often framed in terms of David and Goliath. There is arguably no greater example of the “American dream” than a successful small business, a local mom-and-pop store, that serves its loyal customers a unique product line with friendly, personal service. Standing against these small retailers are the big-box chains; journalists have written headlines about Walmart for the past two decades, constantly targeting the retail behemoth’s role in trampling smaller competitors.
As retail has shifted online — particularly given the dramatic growth of e-commerce over the last 18 months — Amazon has supplanted Walmart as the small business boogeyman. In 2015, Wired published an article that examined Amazon’s role in the demise of small bookstores, and the online giant has since expanded into every other retail sector under the sun. From groceries to fashion to gardening equipment, smaller sellers are reevaluating what it means to remain competitive in a retail ecosystem dominated by online shopping.
The rise of e-commerce, overnight shipping, and near-real-time fulfillment has conditioned U.S. consumers to expect any product to be delivered to their door within 24 hours. Forget brand loyalty and customer service — convenience is king. This paradigm shift has caused big and small businesses to reconsider their relationships. The way I see it, with millions of sellers now digitally enabled, only a tiny fraction of businesses can truly rely on their individual online and physical stores to survive. For everyone else, success requires partnerships with other digital channels to bring together the strongest aspects of each brand, audience and online experience.
Challenged to meet the insatiable and ever-changing availability needs of their customers, big and small businesses are using marketplaces to come together and create a result that’s greater than the sum of its parts. We’re seeing this happen firsthand at Mirakl, as our company offers a marketplace platform for retailers.
So, what’s driving this unlikely marriage between niche players and major chains, and what are the potential outcomes?
The Availability Obsession
From Grubhub to DoorDash to Amazon Prime, American consumers have been conditioned to demand products and services on an increasingly condensed timeline. Customers often expect more from their online shopping experiences, raising the stakes for large retailers that are now competing on more than just price and product assortment.
The marketplace model enables these retailers to dramatically expand their SKU count, increasing their ability to meet customer needs at a moment’s notice without assuming the financial and logistical risk of inventory. In this new environment, brand loyalty is becoming a function of how many needs a retailer can address for the customer, and how quickly those solutions arrive at their doorstep.
Opportunity For Curated Expansion At Scale
The marketplace model enables expansion without brand compromise. By opening the door to smaller retailers playing in the same space, large and small companies can establish true mutually beneficial partnerships. This is an opportunity for retailers to grow their business while simultaneously enhancing their brand identity with new product options, while niche sellers gain access to a significantly larger customer base.
The marketplace also offers more opportunities to experiment, as owners can quickly and easily test new product options without taking on the cost or risk associated with buying inventory. A beachwear designer may consider adding chairs and umbrellas to their assortment or a series of popular vacation novels. Then, upon successful customer response, they may expand even further.
Staying Ahead Of Emerging Trends
The past year was dominated by rapidly changing trends and challenges in supply and demand. Whether it was hand sanitizer, flour, or pools and hot tubs, shopping habits shaped by a global pandemic placed unexpected strains on retailers and their supply chains.
With a marketplace, retailers are able to more easily source in-demand products from their sellers. This may aid in ensuring that they’ll be top of mind for customers as the next trend emerges. Furthermore, they can test assumptions around emerging demands and double down on those products that demonstrate proven success.
What Does It Take To Achieve Marketplace Success?
For marketplace operators, particularly large retailers that develop their own marketplaces, I recommend following a few guidelines:
- Treat the marketplace as an organization-wide priority. The full benefits of a marketplace can only be realized with a business-wide vision and executive sponsorship. Instead of treating the marketplace as a pilot project or limited IT initiative, executive leaders throughout the business must recognize the marketplace as a transformation and embrace the value it can offer from day one.
- Leverage your marketplace as a tool to accelerate core growth objectives. Successful marketplace operators recognize that this model enables them to remove barriers that stand in the way of growth and profitability. Throughout the implementation, launch and scaling of a marketplace, operators should always ask how they can leverage the model to unlock new growth opportunities.
- Put change management at the forefront. Enterprise marketplaces require organizations to adopt a new way of thinking. To guide this transition, an executive sponsor should be appointed to help build support from stakeholders throughout the business. The executive sponsor should engage with every level of the company, including meeting with C-suite executives to achieve alignment and accelerate decision-making.
The availability expectation will not be going away any time soon, and I believe the marketplace model can be leveraged to meet the moment. I’m seeing marketplaces growing among business-to-business (B2B) sellers as well. It’s no secret that we are witnessing a make-or-break moment for e-commerce. Companies are now left with one choice: evolve or be left behind.