Key Takeaways from Year 1 of the Macy’s Retail Marketplace
Platform business models aren’t just for digital-native retailers. Market leaders across industries, from The Kroger Co. to 1-800-FLOWERS, are using marketplaces to undertake a significant digital transformation, using new sales motions and technology approaches to outpace more traditional competitors.
Macy’s Inc. stands out as one of the most iconic retailers in the United States, and is leading from the front with the launch of its curated digital marketplace in September 2022. The company’s innovative approach to launching a digital marketplace has already drawn major attention and delivered significant results.
Macy’s Vice President of Marketplace, Josh Janos, sat down with Mirakl co-CEO Adrien Nussenbaum at Mirakl’s 2023 Platform Pioneer Summit to share more about what the iconic retailer has learned during the first year of their retail marketplace.
4 Strategies to Build a Thriving Digital Marketplace
1. Commit to executive buy-in and cross-functional operations
From the beginning, Janos recognized the need for a company-wide commitment to the marketplace strategy.
"I always say a marketplace that starts as someone’s side project is going to stay as someone’s side project,” said Janos. “We spent a lot of time talking to the executives in the organization, and we had 25 teams across Macy’s working to implement the marketplace. This wasn’t just to pitch them on why the marketplace is important, but also to listen and to understand their concerns.”
2. Capitalize on emerging partner brands
Macy’s set ambitious goals for expanding their seller base, and they focused specifically on up-and-coming brands to fuel the evolution of their digital marketplace.
“We started in September of 2022 with only a handful of sellers live, but by the end of the fourth quarter we had 500 brands live on the marketplace,” said Janos. “We added another 450 brands by the end of the first quarter of 2023, and we’re looking to grow by about 2,000 brands this year in new categories, styles, sizes, aesthetics, and demographics… We’re seeing a lot of opportunity to seek out emerging brands online and make sure they understand that they can come into our marketplace and learn from the experience. We’re really proud that those brands eventually have the opportunity to move into our physical stores — we’re moving one of our first brands to store this fall.”
3. Optimize across all channels
The guiding light for Macy’s is to work across channels to deliver the right product to the right customer at the right time.
“We’ve got a dropshipping model and now we’ve got marketplace as well. On a day-to-day basis we’re thinking about how to optimize our customer experience, our business operations, and our partner relationships."
“How does our customer want to shop at Macy’s, and how do we bring them to the right channel? Where do we want to invest our inventory? What are the preferences of our brands and our sellers? We use these questions to optimize performance and opportunities for our 40 million customers, as well as our vendors and sellers,” said Janos.
4. Deliver a consistent customer experience.
“When we set out to build a marketplace, we knew we needed to bring an experience that was on par with what our customers already expected from Macy’s,” said Janos. “We know that we have omnichannel shoppers, and they want to have the flexibility to be able to return things in store. When we look at customers that are purchasing marketplace products, their average order value and units per transaction are about 50% higher than those who don’t purchase marketplace products. We’re seeing very highly engaged customers who are really loving the different options we’re giving them.”
The Macy’s retail marketplace sets the course for long-term growth
One year later, Janos and the Macy’s team are blown away by the rapid growth that they’re already seeing with their retail marketplace.
“We grew 50% from Q4 2022 to Q1 2023. There’s not a lot of times in a merchant’s or retailer’s career where you can say you’ve done 50% more in Q1 than you did in Q4, but that’s the growth trajectory of the marketplace model.”
