Lengow indicate that as much as 60% of digital sales already happen in marketplace channels. These platforms have become a vital part of the Internet’s DNA. Clearly, we’re in the golden days of the marketplace, but what trends can we expect to unfold in this area in the future?
Through our conversations with clients, investors and technology and services providers, we've gathered a list of the main trends we expect to see going forward. To help you navigate the fast-changing world of marketplaces, here are 5 marketplace trends to watch:
5 Marketplace Trends That Will Takeover In 2019
1. Marketplaces will continue to outpace traditional e-commerce
According to a recent report, the marketplace model has grown faster than the traditional model over the past five years, and this trend is set to continue. In 2017, the marketplace model accounted for an impressive 41% of digital commerce sales, a rise from just 17% in 2008. Evidence suggests that in 2019, the marketplace model will continue to outpace the traditional model, which means we can expect to see a strong burst of new marketplaces that will very successfully fulfill the needs of their markets.
So why are marketplaces outpacing the traditional model? The answer is simple. Marketplaces are better positioned to address consumers' needs, as they offer an increased depth and breadth of products and services, as well as reduced prices. According to a recent study, the growth of the marketplace economy is expected to double in the five year period between 2017 and 2022, growing from $19billion to $40billion. Clearly, marketplaces represent both the present and the future of ecommerce.
2. The rise of hyper-vertical and hyper-local marketplaces
With the birth of the Internet, the world was beset by large global marketplaces, such as eBay and Amazon, which sold everything from books to furniture, and second-hand vehicles. These huge, horizontal marketplaces grew rapidly, in large part due to the unprecedented variety of products they stocked, and the knock-on benefits of economies of scale. However, in the last decade, the marketplace landscape has begun to adapt. Marketplaces increasingly became more specific, offering specialized products or services in order to carve out dominance within a niche.
For example, Glovo, a marketplace founded in Barcelona in 2015, allows customers to order any item they want from local shops and restaurants. By pitching their service at a hyperlocal level (catering to the specific needs of a specific city), Glovo have been able to win business from global competitors. Similarly, Staymarta, a platform similar to Airbnb but for Christian-friendly accommodation, found great success as a hyper-vertical marketplace, cornering the market for a very specific service. In 2019, we’ll see more of these hyper-vertical and hyper-local marketplaces creating new markets and conquering market share from larger, horizontal marketplaces. These platforms will become more specialised in the services they provide, and the demographics they aim to reach.
3. The consolidation of B2B models
Although they are often less well-known than their B2C counterparts, B2B marketplaces are becoming a force of their own. The large volume and high fragmentation that typifies B2B environments, combined with the relative lack of competition from digital pure players, has lead to oceans of opportunity. In fact, it’s estimated that by 2020 B2B marketplaces will be worth $6.7 trillion. We expect two different types of marketplace owners to emerge in the B2B environment: marketplace pure players, and B2B manufacturers.
Marketplace pure players are able to identify these oceans of opportunity and gather together buyers and sellers who previously experienced difficulties and inefficiencies when transacting in (mostly) offline environments.
B2B manufacturers are encountering a number of challenges when seeking to reach their customers directly. These include facilitating smooth buying experiences, maximising conversions, harnessing customer data, and navigating channel conflict. The online marketplace model can help with this challenge of meeting modern customer expectations.
By creating their own online marketplace, B2B manufacturers provide a space in which customers can engage with them directly. Furthermore, marketplaces allow manufacturers to access and own their own customer data, which can be analysed and leveraged to create more effective sales models. The marketplace model also enables manufacturers to fulfil their sales through channel partners, which means they mitigate the most prevalent risks of B2C channel conflict.
In 2019, we can expect to see more and more consolidation of B2B models, as manufacturers continue to harness the power of online marketplaces, setting up their own channels through which to target customers directly. Marketplaces have already disrupted B2C industries, and we expect the same impact to happen with B2B models.
4. A rising mix of marketplace owners
In the coming years, the industry will see significant diversification in terms of who owns online marketplaces, and how they are used. Although entrepreneurs and ventures will continue to be the main agents behind marketplaces, they will no longer be the sole owners of them. Increasingly, marketplaces will be owned by manufacturers, retailers, retail associations and public administrations.
Research shows that, as of 2018, 12% of retailers have launched their own marketplace and a further 32% are planning to launch one, with the added benefits of data ownership and autonomy. For example, Las Dalias, a market in Ibiza that has been around since 1954, is well-known for its hippy market where customers can buy clothing, jewellery, craftwork and the like. Recently, they have set up a joint digital marketplace so that people can shop for their products all year round.
Similarly, city councils, public bodies and retail associations are also beginning to digitise their brands and engage with marketplace models. For example, the UK Government have recently created a ‘Cloud Marketplace’, a catalogue of AgID-qualified IaaS, PaaS and SaaS services to help PAs choose the right cloud for their specific needs. Another interesting example is Vilatenda, an e-commerce Marketplace promoted by the Vila-real City Council and Vila Real Business Center, where local shops can sell their products quickly and easily.
Therefore, the future of marketplaces is one in which they are driven and owned by a wide variety of organisations, public associations and even municipalities, which will open up even more industries and services to the retail advantages of the marketplace model.
5. SaaS-powered marketplaces will become the norm
As the marketplace industry continues to consolidate, technology providers are gaining a clear understanding of the needs and wants of marketplace owners. This allows providers to offer a SaaS solution that meets these needs in an easy-to-implement, cost-effective solution.
Due to their unique versatility and scalability, SaaS-powered marketplaces are set to become increasingly widespread. These have the capacity to integrate back and front-office solutions, automate seller onboarding and cataloguing, provide logistics integration and manage payments. As such, they’re a particularly effective choice for businesses looking to set up a marketplace within a constrained budget (under 50.000€) and short implementation periods (under 6 weeks). They are thus ideal for ventures and retailers who lack their own IT team, or need to kickstart the marketplace business without investing six figure digits into the project.
Through a SaaS solution such as Shopery Marketplaces, ventures and retailers are empowered to build and scale marketplaces that are responsive, intuitive and offer SEO-friendly experiences. Shopery helps businesses streamline time-consuming and costly tasks such as vendor cataloguing and commission management. All this is delivered for a monthly fee which equips businesses with a personalised marketplace suite, complete with a backend. With a more diverse offering, these marketplaces can then attract more traffic, enabling clients to monetise their platform through commissions or monthly seller quotas.
Put simply, in 2019, SaaS-powered marketplaces are set to become a key trend as they enable ventures and businesses to launch and scale their digital marketplaces.
In 2019, various marketplace trends will take the model from strength to strength. As marketplaces consolidate their dominance, we’ll also see the emergence of hyper-vertical and hyper-local marketplaces, out-competing larger horizontal/global companies such as Amazon and eBay, cornering the market by meeting more specific customer needs, and offering limited products and services. Furthermore, as ventures and manufacturers continue to create their own marketplaces, we will observe the consolidation of B2B models, accompanied by a diversification of marketplace ownership, with retailers and public administrations increasingly entering the field.
Perhaps the defining marketplace trend of 2019 will be the emergence and success of SaaS-powered marketplaces. As the demand for marketplaces continues to grow at an unprecedented rate, the value of using SaaS to power those marketplaces will become increasingly clear. SaaS powered marketplaces will give their owners the integrated software, data, and tools to give them the edge over their competitors - an important trend to watch.