Top 5 reasons to open a marketplace

Top 5 Reasons Retailers Need to Launch Their Own Marketplace

By Jessica Iandiorio, SVP Marketing at Mirakl.

Let’s start at the beginning.

Own Marketplace

In the late 14th century the concept of a “marketplace” was an open area within a town where a market was held to foster the exchange of goods in economic trade. You could buy everything from eggs to coal to meats to linen from a variety of vendors. The marketplace itself was the heart of any town.

Fast forward to today, and our world of digital e-commerce and omnichannel retail has redefined this marketplace concept.

Marketplaces today represent a digital opportunity for businesses to give customers the products they’re looking for, at the best price, and with high-quality service.

Similar to their 14th century rendition, today’s marketplaces aggregate the goods of third-party vendors. Instead of a town square, transactions occur on a centralized e-commerce platform.

This, in turn, presents an opportunity to provide consumers with more choices, increase site traffic, improve the customer experience and drive incremental revenue with an efficient cost structure. Forrester found that Marketplace sales are generally twice as profitable than direct sales. In fact, Forrester recently conducted a case study on a Mirakl customer, Darty, who saw a 2-3X boost in profit margin over sales for their owned inventory.

Let’s explore some of the reasons building a marketplace can be a major source of growth for your organization:

  1. Expand your product assortment. Adding a marketplace provides retailers the chance to quickly extend their product assortment and available pool of inventory. This applies to both pureplay online retailers as well as multichannel retailers who also sell via brick and mortar. Just look at the growth of Amazon’s Marketplace. Third-party sales on this platform account for 40% (or 40 billion) of Amazon’s annual sales (as of 2015.)
  2. Reduce your inventory risk. Inventory expansion in the the traditional retail model comes with additional risk and expense. You have to plan, buy, store, and ship products – without knowing if customers truly desire them. This often results in wasted dollars and time. But a marketplace allows you increase your product assortment without taking on the perils of merchandising, buying, warehousing, and shipping; it’s risk-free product expansion. And you get to let your customers tell you what they like and don’t, and use that information before investing in in-store product expansion.
  3. Monetize new traffic. The rapid addition of new sellers and products helps Retailers increase their brand footprint online. All of these new product pages are indexed in Google, increasing the discoverability of your site & product offers. More products = more Google love = more traffic = net new customer acquisition! You’re also able to present existing customers with a more comprehensive product offering, increasing retention and share of wallet. Darty saw a 20% increase in site traffic directly coming from marketplace products.
  4. Improve your customer experience. Retail customers want choice, competitive prices, and above all, an outstanding buying experience. A strong marketplace can deliver this in a truly omnichannel relationship between a department store (for example), and its brands both offline and online. This can provide a reliable, positive journey for shoppers, all while increasing their loyalty and their potential to become future advocates.
  5. Drive profitable growth. Financial analysts estimate the margins related to Amazon’s aforementioned marketplace activities to be about 90%, compared to a 5% margin on direct sales. The reason for this comes down to the marketplace model – Retailers do not have any cost of goods sold in this new world. The overhead is minimal, and marketplace platforms like Mirakl make it easy to onboard new third party sellers & products. Product expansion at scale becomes easy & cost efficient, driving increased traffic, sales, and 2-3X more profitable dollars on those sales than traditional owned products.

Creating an online marketplace is an opportunity to enhance and in some cases disrupt an existing business model – for the better. Whether you’ve started to create your own marketplace, or are trying to understand the value of doing so, consider the marketplace as a way to create sustainable & profitable growth, differentiate your business, improve your customer experience, and accelerate your e-commerce to new heights.

Marketplace convenience

Forrester Calls For Retailers To Seize The Marketplace Opportunity

It is interesting to note that hundreds of European retailers have opened Marketplaces for selling 3rd party products, while only a handful of North American retailers have. Is it possible that North American retailers have already surrendered to Amazon? In the report 20 Startups All Retail eBusiness Executives Should Know In 2016, Forrester Research analyst Sucharita Mulpuru notes that, “Amazon’s biggest retail weapon is its third-party marketplace: the company increases the selection for customers but avoids incurring large expenses because it doesn’t own the inventory.”

Given the profitability of Marketplace revenue, it is a surprise that North American retailers lag behind Europe. Consumers today demand frictionless commerce. Educated, informed, and empowered, they are also short of time and easily frustrated by even the slightest hiccup in the purchasing process. Simply put, consumers have come to expect a wide array of product choices with high availability and a fair, competitive price. This can be a tall order for a retailer to efficiently deliver directly to the customer.

A recent report by Forrester Research, “Retailers Must Seize The Marketplace Opportunity” recommends that retailers “develop a strategy and build their own Marketplace, enhance technology capabilities to support the Marketplace strategy, and include additional layers of sophistication such as seller management, quality control, and catalog integration.”

Specifically, the study found that Marketplace purchases are already common because of the convenience they provide to shoppers.


marketplace opportunity forrester


With a Marketplace, retailers enhance customers’ shopping experiences by allowing “consumers to explore, discover, and purchase multiple products and services on a single website.” Marketplaces are the most efficient and agile way to extend product assortment and offer customers more choice.

Download a copy of the Forrester Research report “Retailers Must Seize The Marketplace Opportunity” to learn more about how Marketplaces impact a retailer’s business and get supporting data on why you should build yours now.

Online retail

How can Department Stores & Malls Ride the New Retail Tsunami?

How can Department Stores & Malls Ride the New Online Retail Tsunami?

According to the American Customer Satisfaction Index Retail Report 2015 survey, overall retail satisfaction is declining as Internet retail satisfaction is improving. Even though customer satisfaction with Department Stores actually stayed steady or even improved, foot traffic declined nearly 10%.

This decline in foot traffic makes it difficult for retailers to execute on their two strategic priorities: grow revenues and increase profits from increasingly empowered customers. All too often, those priorities counter each other because growth tends to come with huge costs. One option to reconcile these two objectives is building their own online Marketplace.

The online Marketplace business model is the natural replication of the department store model – federating brands to create a unique shopping experience. By providing customers with more choice, fair prices, and a high-quality shopping experience, Department Stores and Malls can leverage existing brands and offer a unified and truly omnichannel experience – all without disrupting their traditional business model.

The Marketplace model is by far the best and most efficient way to meet customer requirements.


Download our Galeries Lafayette Business case to learn more about how Mirakl can help.