When the first edition of Digital Commerce 360’s Online Marketplaces Report was written in 2016, big marketplaces, like those operated by Amazon.com Inc., eBay Inc. and Alibaba Holdings Corp., were already well established. But beyond those giants, there were relatively few important multi-merchant shopping portals—particularly in the U.S. Just three years later, online marketplaces are booming globally to become one of the most significant parts of ecommerce. Here are some of the biggest trends we saw in 2019 regarding online marketplaces.
For the first time, Digital Commerce 360 (formerly Internet Retailer) researched and analyzed the Top 100 pure and hybrid online marketplaces around the world. The Top 100 marketplaces sold $1.66 trillion worth of goods in 2018, according to Digital Commerce 360 estimates. Gross merchandise sales on these sites account for 95% of global marketplace sales and 58% of the $2.86 trillion global ecommerce market.
The growth of these sites in ecommerce is a reason many large retailers, including sportswear e-retailer Fanatics Inc., recently began selling on marketplaces.
55 of the Top 100 marketplaces raised a combined$43.0 billion in funding from investors—most of it coming in the last decade. A few large international marketplaces accounted for much of that $43.0 billion in capital. India-based Flipkart, for instance, raised $7.28 billion before Walmart acquired a majority share. Stripping out international companies, 35 U.S.-based marketplaces in the Top 100 raised $4.3 billion, with Wish accounting for 30% of the total.
Apparel marketplace Wish (No. 9 in the Online Marketplaces database) is the latest online marketplace to attract a significant investment: $300 million in a Series H round raised in August. Wish has raised $1.6 billion since launching in 2010, according to Crunchbase.
Wish intends to use the $300 million for marketing and to gain more sellers in Europe and North America and improve logistics, the company says. Wish in January introduced Wish Local, a program that allows consumers to pick up orders at bricks-and-mortar stores the marketplace partners with. It also allows stores to sell their inventory on Wish.com.
The appeal of selling on Amazon’s online marketplace is clear: Amazon has never been more dominant in U.S. ecommerce. It sold $275.86 billion worth of goods globally last year, Digital Commerce 360 estimates. And Amazon disclosed that sales from its marketplace merchants represented 58% of total Amazon’s sales worldwide last year, or $160 billion. 20 years ago, marketplace sellers sold $100 million worth of goods on Amazon and accounted for 30% of Amazon’s sales, the company says.
Amazon also reported:
- 25,000 sellers worldwide sold more than $1 million on Amazon in 2018, up from 20,000 sellers in 2017.
- 50,000 sellers generated more than $500,000 in sales.
- 200,000 sold more than $100,000 up from 140,000 sellers in 2017 and 100,000 in 2016.
- The average U.S. marketplace merchant sold more than $90,000 on Amazon.
Even so, many brands have avoided selling on Amazon because of the platform’s drawbacks. Sellers don’t have access to customer data, they can’t remarket to shoppers that purchase their products and, until recently, they haven’t been given the tools to showcase their brands.
But as Amazon builds out its array of brand-building tools, the retail giant is making its platform a sales channel that’s difficult for brands to ignore. Amazon is giving more tools to marketplace sellers to promote their brands. In addition to paid options such as Sponsored Listings and Sponsored Brands (ads that feature the brand’s logo, three products and custom headline), marketplace sellers that are part of Amazon’s Brand Registry—a program that provides sellers that have a registered trademark with tools to help them control their brand’s representation on Amazon—can use Enhanced Brand Content, videos, have a branded storefront and more. However, while those tools are helping brands build awareness on Amazon, it isn’t clear whether those efforts are actually bolstering their bottom lines.
What is clear is that Amazon’s efforts to lure more brands to its platform are working. 176 retailers in Digital Commerce 360’s Top 500, which ranks the top online retailers in North America by web sales, sell on Amazon. That’s up from 104 in the Top 500 in 2018. Within that subset, 57 are consumer brand manufacturers, up from 14 in 2018.
Those merchants are hardly alone. A survey of 500 brands from marketplace technology vendor Feedvisor finds that 54% of brands sold on Amazon and 72% plan to sell on Amazon in the next five years. The reason is simple: 97% of brands currently selling on Amazon and 84% of those that aren’t said the most compelling reason to sell on Amazon is acquiring new customers. Additionally, 82% of brands agree that advertising and branding opportunities are among the most compelling reasons to sell on the marketplace. And Amazon is driving a significant share of sales for those brands. 44% of those surveyed said Amazon accounts for 26-50% of their ecommerce sales and 32% said it accounts for 51-70%.
Marketplaces that sell new and used shoes—particularly sneakers—have cropped up as a trend to watch among the top marketplaces. There are five such marketplaces in the Top 100: StockX, GOAT, Flight Club, Stadium Goods and Kixify. Collectively, the five grew 30.9% to $1.15 billion in gross merchandise value in 2018, according to Digital Commerce 360. That’s faster than the 22% growth of the entire Top 100 marketplaces and the 14% growth of the overall U.S. ecommerce industry in 2018.
It’s not just startups filling the roster of online marketplaces. Part of the growth comes from big traditional retailers that are launching their own marketplaces by allowing outside merchants to sell directly on their sites in exchange for listing fees and commissions. We classify these as hybrid marketplaces.
In the last couple years, more retailers have caught on to the trend and have launched marketplaces. Others ranked in the Top 1000 that operate a marketplace include: Walmart Inc. (No. 3), Urban Outfitters Inc. (No. 39), J. Crew Group Inc. (No. 53), Albertsons (No. 178) and Crate and Barrel, which is owned by Otto Group (No. 80).
Most recently, Target Corp. (No. 16) launched an online marketplace called Target+ in February that enables third-party merchants to sell on Target.com. Target+ will help broaden Target.com’s assortment in such key categories as home furnishings, toys, electronics and sporting goods, the company says.Favorite