The marketplace model is one of the most popular business models in e-commerce. It’s easy for consumers to understand and can become big business over time. In this post, we explain what a marketplace is and show some examples of currently popular marketplaces. Then we take a look at how some companies are trying to improve on this proven model to stay ahead of the competition.
Last updated on September 5, 2022
Marketplaces are the future of commerce. They’re a great way to reach new customers and increase sales while increasing your brand awareness.
There are several ways retailers benefit from marketplaces:
The German online retailer AboutYou has launched its own marketplace. With this change, AboutYou can now offer its customers an even larger range of products on its own plattform.
In just over five years since it was founded, AboutYou has developed into one of the most promising fashion marketplaces in Europe – not only because AboutYou sells everything from shoes to underwear, but also because AboutYou wants to be perceived as a fair player on the market, which one offers good quality at fair prices.
The company is growing rapidly and is constantly expanding the product range through the marketplace business. About two thousand new suppliers have joined the AboutYou Marketplace in the last few months.
It is important to note that About You is one of the leading companies in Germany in the field of influencer marketing. In addition to working closely with influencers, the company has set itself the goal of digitizing the offline shopping experience. In addition, the online shop lives almost exclusively from the smartphone app: 86 percent of the approximately 143 million user sessions per month take place on mobile devices or smartphones.
About You seems to have hit the mark with this strategy, which is also reflected in the number of customers. The number of active About You customers has risen steadily and was around 10.7 million in the third quarter of 2021/22, an increase of almost 34 percent compared to the same quarter of the previous year.
AboutYou can look back on an eventful year – In the 2020/21 financial year, the company not only exceeded the sales mark of one billion euros for the first time, but also dared to go public in June 2021. In addition, AboutYou was included in the SDAX less than three months after the IPO. The IPO was a success: in addition to a capital inflow of around 100 million euros at the beginning of July, the shares rose by 50 percent on the first day of trading. They are currently trading at around 20 euros.
The company is currently represented in 26 European markets and generated around EUR 229.5 million in the first quarter of 2022/23.
The company divides its sales into the DACH (Germany, Austria, Switzerland) and RoE (Rest of Europe) segments. The About You online shops in Germany, Austria and Switzerland form the DACH segment; 23 other markets, currently comprising 23 other European countries in which the company is active – including Norway as of Q3 2021/22 – make up the RoE segment. The TME segment comprises three core areas: software as a service, branding and advertising solutions and other services. The classification of About You as a tech company is important – says co-founder Tarek Müller in a Spiegel interview and positions that they see themselves as a technology company that happens to sell fashion. Around 48.7 million euros were achieved in this quarter through sales in the TME segment.
AboutYou co-founders were part of the team that founded Zalando, which went public in 2014 with a valuation of $5 billion.
Only a decade old, Wayfair is already the world’s largest homewares retailer. In fact, Wayfair has annual sales of over $2 billion and employs nearly 4,000 people across North America.
In fact, Wayfair was founded back in 2002 by entrepreneurs Niraj Shah and Steve Conine under the name CSN Stores. After initial success in the domestic market, the company was renamed Wayfair in 2011. Despite this, the United States remains Wayfair’s largest market, with more than 80 percent of net sales generated in that country.
Wayfair opens its marketplace to international home decor brands. The company is the largest online furniture retailer in the United States, with more than 1,300 brands listed on its marketplace. However, Wayfair has not been available to international consumers as long as other marketplaces such as Amazon and Etsy, giving Wayfair an opportunity to capture new market share by expanding its product selection.
This announcement comes shortly after Wayfair’s acquisition of Design Within Reach (DWR), another furniture giant with a significant presence in the US market. DWR’s CEO told Business Insider that they will continue to operate separately from Wayfair going forward — but this acquisition could help accelerate their global expansion plans due to shared logistics platforms and data systems between the two companies.
But Wayfair doesn’t just sell furniture: the company also offers a marketplace for kitchen and bathroom products, as well as lighting options like chandeliers and ceiling fans. His latest venture is into outdoor items like grills and fire pits – and yes, these are all items you can buy on his website!
Wayfair’s success stems from its emphasis on modern design and customer experience. The company’s efforts to improve the customer experience are paying off. In 2017, it reported $2.7 billion in revenue and a 22% year-over-year increase in active customers. In June 2018, the average order value was almost $500 – an impressive number for an online retailer!
Marketplaces are growing globally and especially in Germany. The country has been a marketplace hotspot since eBay launched in 1999. Today, tech giants like Amazon and eBay continue to expand their presence across the country, bringing with them millions of new users every year. And those markets have paid off: Germany was ranked as one of the top online consumer markets in the world, accounting for around €1,000 million in e-commerce sales (about $1 billion) last year alone.
What makes German consumers so attractive to retailers? First off, there’s an impressive level of trust from customers and sellers alike – thanks largely to Amazon’s presence in the market since 2005 (and its reputation as an efficient brand). When you consider that Germans spend more time online than any other group in the world – averaging over 150 hours per month – it’s clear why so many retailers want a piece of this pie!
But that’s not the end of the story: Germany is also home to one of the most competitive e-commerce markets in Europe. With over 6,000 online stores selling everything from groceries and fashion to electronics and travel, retailers are always looking for new ways to stand out from the crowd — and that means turning to off-Amazon marketing strategies.
Zalando is an online platform for clothing, shoes, accessories and cosmetics. The company is one of the top-selling online shops in Germany and has both international brands and local labels in its range. Zalando was founded in Berlin in 2008 and employed around 17,000 people at the end of 2021. In 2020, it recorded strong growth: sales rose by almost 30 percent to a total of around 10.35 billion euros. For the same year, Zalando reports a profit of 234.5 million euros.
Compared to its competitors, Zalando has the best product selection and most brands. The company was founded in 2008 by Robert Gentz and David Schneider.
The company operates through two business segments: Marketplace and Fashion Brands. The Marketplace division includes the online shops of brands such as Adidas, Converse and Levi’s. This division also includes Zalando’s own private label collection “Zalando Essentials”.
Zalando SE operates a large number of websites for the sale of its products. The revenue differences between these websites become clear when comparing the e-commerce net sales of each URL: zalando.de generated 1.943 million euros in 2020, while zalando.ch brought in 827 million euros in the same year – a difference of about that 2.3 times. Zalando’s other websites, such as zalando.nl and zalando.fr, were also very successful: they each achieved sales of over 500 million euros in 2020.
The Otto Group is an international trading and service group with 30 large corporate groups in more than 30 countries. In the 2020/21 financial year, it achieved total sales of around 15.64 billion euros and a profit of around 971 million euros. It employs 50,000 people worldwide.
The Otto Group operates in three main business areas: multichannel retail, service and financial services. The core business is multichannel retail, which includes the sales channels e-commerce, catalog and over-the-counter trade and generated sales of around 12.1 billion euros in the 2020/21 financial year.
The best-known subsidiaries include the fashion retailer Bonprix, the toy store myToys and Manufactum, a supplier of household goods. In the Services division (including logistics service provider Hermes), sales in the 2020/21 financial year were around EUR 2.74 billion. The financial services segment – with companies such as the EOS Group or the Hanseatic Bank – generated the lowest turnover within the Otto Group at 814 million euros.
OTTO is growing fast and wants to make sure it offers its customers the best possible experience. That is why the OTTO marketplace is expanding its product range and adding new product categories such as furniture and household goods to its range.
With more than 1,300 brands, Douglas could become the most important beauty marketplace in Europe. In 2020, Douglas was already the top-selling online shop in the beauty segment in Germany with total sales of 425 million euros. Meanwhile, Douglas is present in more than 80 countries worldwide and serves 1.1 billion customers every year.
Douglas also owns online retailer Douglas Beauty, an e-commerce site that sells beauty products through its own website and third-party platforms such as Amazon and Zalando. Douglas has a head start compared to its peers in the marketplace space: as of 2017, it has more than €650 million (US$717 million) in liquidity with no debt whatsoever!
In addition, Douglas made a significant acquisition in the past year. In July 2018, the company acquired French beauty retailer L’Occitane en Provence for €1.7 billion (about $2 billion). This was the company’s first acquisition since going public in 2017 and gave Douglas access to the online retail space as well as brick-and-mortar stores. The purchase also helped Douglas expand into new markets such as China, which is one of the key growth drivers today.
The future of marketplaces is bright. With more and more people turning to online shopping for convenience, it’s no wonder these platforms are growing so rapidly. They are also becoming more sophisticated with their features and services, making them even more attractive to their users. The only question that remains is whether this trend will continue in the next decade!
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