Is Amazon at risk of losing its marketplace crown?
If you think of an online retail marketplace, there’s a good chance that either Amazon Marketplace or eBay will spring to mind. And there’s good reason for that – they are the oldest, biggest and most widely used platforms for third-party sellers looking to offer their goods to a global audience of consumers.
But that duopoly hasn’t stopped the growth of rival marketplaces, some of which operate in specific international markets, and some of which aspire to global success. Alibaba’s AliExpress, for instance, is one of only a few platforms accessible to small Chinese businesses looking to market their products directly to the rest of the world.
That ecosystem of smaller rivals to Amazon and eBay is looking particularly healthy at the moment, buoyed by a wave of acquisitions and investment from some big names. In September, for example, American retail giant Walmart decided to up its stake in Indian online marketplace Flipkart to 80%, as part of a $3.5bn deal.
So, what’s the state of play? Is Amazon Marketplace at risk of losing its crown?
Amazon and eBay have both been hit by a significant dip in user numbers in recent years, allowing some of the upstarts in the online marketplace sector to steal a march. Etsy, for instance, has nearly doubled its average monthly users since 2020, riding a wave of resistance to the unsustainable, mass-market products often found on online retail marketplaces.
However, despite these challenges, Amazon’s revenues from third-party sellers are still looking healthy. In fact, in the first quarter of 2023, Amazon had achieved 18% year-on-year growth, thanks partly to the income generated from commissions, fulfilment services and shipping fees.
Amazon Marketplace’s success, of course, is largely down to its scale and the breadth of its product offering. A broad product inventory will obviously be more broadly appealing to consumers, which can help marketplace providers to scale up. It’s a pattern that is apparent among many of the top online marketplaces.
Broad appeal, then, seems to be the answer. And that opens up a lot of possibilities for retailers of all stripes looking to get a piece of the marketplace action.
That’s translating into a particularly active acquisitions market in the ecommerce space. On top of Walmart’s acquisition of Flipkart, South Korean search engine Naver bought recommerce platform Poshmark in January 2023 in an effort to build out its ecommerce operations.
Of course, it’s still worth treading carefully. Online marketplaces haven’t been immune to the recent spate of layoffs in the big tech world, and according to the South China Morning Post, at least 89 Chinese ecommerce platforms shut down last year, with weak consumer spending and fierce competition causing problems in the majority of cases.
As with any business, then, online marketplaces will still need to show customers why they should spend with them, and then return for future purchases.
