How Third-Party Marketplaces Can Shape the Future of Ecommerce

Assuming you want to sell online, what would be the medium or platform you should use to store products? This is a very common question that arises regularly in the new eCommerce startups.

Well, you can store products either by creating your own storefront online or by using a third-party marketplace and listing your products. Which one is better and you should go for? Okay, let’s deep dive into the core insights of selling online, and expanding a business with a properly curated approach.

What Is a Third-party Marketplace? 

A third-party marketplace refers to an internet-based platform that offers a wide range of functionalities for users, connecting sellers and buyers without any hassle. It allows users to access the dashboard and use the website interface to connect with the suppliers’ products. 

Third-party Marketplace – Market Share, Growth & Prospect

According to emarketer, it anticipates an almost 30% growth in borderless eCommerce sales in recent years. 

Third-party eCommerce market share is expected to reach almost $6.5 trillion despite the challenging time phase of 2019-2024.

Source: eMarketer

Two years ago the total retail sale was 13.6% which is expected to grow up to 21.8% within 2024. The (% ) of changes denotes the number of sales that increases over the years. In 2019, the total sale was $3.354 trillion with a change of 20.2% of retail sales compared to last year, which rose to 27.6% in 2020. 

Between the years 2023 & 2024, we can see a stable change in sales increment from 8.9% to 8.1% respectively. 

Top 5 OnlineThird Party Marketplaces

The shopping behavior of today’s internet-oriented consumers is different from that of the analog era. People now want to get everything at their fingertips. An online marketplace has everything you need from crockeries, and stationeries to electronics and groceries. 

Investors and entrepreneurs are also adopting e-commerce business models inspired by the success of industry leaders like Amazon, Walmart, Alibaba, and more. Here’s a list of top third-party marketplaces across the globe. You can follow their trail to become the next big name. 

1. Amazon

Jeff Bezos founded Amazon on the 5th of July in 1994 in his garage in Washington. Amazon sells both digital and physical products, including books, movies, music, electronics, toys, housewares, and many other things. It has both B2B and B2C business models and sells items either directly or through other retailers using its marketplace platform.

Market Share: Amazon was expected to account for a 50% share in the retail market in the United States in 2021.

2. Alibaba

Alibaba is the biggest eCommerce company based in China with a large share in the global online business market. It specializes in the B2B eCommerce arena and has a B2C business section as well for end customers. This is a part of Alibaba Group, founded by Jack Ma in 1999.  

It operates in over 190 countries and covers products from 40+ industries. Manufacturers and wholesalers use this third-party platform to connect the retailers. And retailers use its B2C section, AliExpress, to sell directly to customers. 

Market Share: In 2020, Alibaba accounted for 53% of total digital retail sales in China. 

3. Walmart

Walmart was previously a popular brick-and-mortar store, but later it launched Walmart Marketplace and now allows third-party retailers to use their online platforms and offline stores to sell their products. Walmart International expanded its business to 23 more countries outside the USA. Now it has more than 51,00 retail stores and 550,000 partners across the globe. 

Market Share: Walmart has 6.6% of the total eCommerce sales in the USA as of October 2021. 

4. eBay

eBay has a slightly different business model than the above-mentioned three top players. It focuses on B2C sales allowing users to auction their products and reach prospective buyers. It works well as a third-party marketplace as well. It started its journey in 1995, and today the market has accumulated to a state that makes it the 3rd leading retail eCommerce company in 2021. 

Market Share: eBay has a 4.2% market share in the eCommerce sector in the USA. 

5. Rakuten

Rakuten has a unique business model. It receives a commission from the onboarded stores and shares it back with buyers. You can normally buy from a Rakuten store as you do in other eCommerce stores. After each eligible purchase, you will earn cash back every quarter. 

Now Rakuten has more than 2,500 stores, and the number is increasing every year. Originating in Japan in 1998, the Rakuten group is successfully operating in 30 countries and regions as of 2021. 

Market Share: Rakuten has almost 27% of the market share in the total eCommerce industry transactions in Japan. 

How Third-party Marketplaces Can Shape the Future of Ecommerce

Third-party marketplaces can be a good solution for retailers who want steady, and sustainable growth in their business. The factors are including some core functionalities like reviews from the customers, mass product listing, A/B testing, higher social media reach, site structures, and so on. 

Third-party marketplaces come in all shapes and sizes – suitable for small businesses to list their products and reach out to a broader audience. Some websites include high traffic – which provides scope to attract a large customer base.

Even small businesses that run with a tight budget can approach target audiences in the pool of high-traffic acquisitions by third-party services. So, we can see how precisely third-party services can reassemble the shape of eCommerce in near future with a bunch of tremendous features it includes.

According toShopify, it has reported that third-party marketplaces acquire half of the total $5.86 trillion global eCommerce sales volume. 

In most cases, if a brand puts its storefront in a reputed third-party service, won’t need to be tensed about issues raises commonly like speed, reliability, or securities.

E-commerce Platform vs Third-party Marketplace: Are They Same?

Third-party marketplaces stand for you there to make sure precise brand awareness, which is a must for any brand itself. Even, just after entering into a third-party service, you still get to stock out a corner of your storefront while you didn’t stick your branding all over the storefront. 

On the other hand, let’s talk about E-commerce platforms. An E-commerce platform provides all the facilities to create your own shop(online presence), and showcase products to potential customers. 

An E-Commerce platform basically comes with three packages – Open Source (e.g. OpenCart, PrestaShop), Software as a Service (SaaS), and headless eCommerce. They all require different customizations, and technical solutions,  allowing you to perform fully hands-on maintenance of an eCommerce operation.

Open Source platforms require editing, and working with software internal codes giving you access to make a fully functional online storefront, but the thing is, without having the required skillsets, you can’t implement those.

From that point, SaaS and headless eCommerce like Shopify, and Wix E-Commerce, can be a simpler solution. They don’t require much customization, and the features can be easily implemented across your online storefront.

Third-party marketplaces leverage these tasks with simple interfaces. They take care of other backend tasks through their automated features built for the brands, especially for the small, medium budget ranged businesses. 

In a nutshell, all the third-party marketplaces can be addressed as an “E-commerce Solution” with multiple brands and vendors – stocking a large number of products and providing optimal solutions for the inventories. But, an E-commerce platform is more like a dedicated software system, allowing brand/business owners to tailor their customized interface or look to the customers.

Benefits of Selling on Online Marketplaces

  1. Getting Connected with Intent-driven Audience

One of the most beneficial parts of online marketplaces is, that connect retailers with intent-driven audiences. It helps to curate audience interests and meet up needs according to their interests in particular products, topics, and more.

With the help of AI(Artificial Intelligence), it can catch up with audience behavior, and divide them into different segments – at the endpoint, they just drive products, and information to that specific customers – belonging inside the segment.

  1. Simple and Converting Customer Experience

Back in the old days, people used to purchase online to lower the cost having convenience as well. But nowadays, customer experience – entering into the online shop to make a purchase, should be smooth, fast, and hassle-free. 

As the industry is growing faster the customers’ expectations are also rising. Industry experts on opinion-based website CXnetwork stated that 68% of the CX (Customer Experience) experts believe that customers are more likely to visit the website repeatedly which ensures a smooth UX(User Experience).

  1.  Good Exposer For Your Business

Think about some of the biggest third-party marketplaces like Amazon, and Alibaba – both have millions of user interactions every day. Using these platforms to sell products will be more efficient and bring more sales than starting your own platforms. Retailers can be touched by a good number of users among millions – thus it increases exposure bringing better brand awareness at the same time.

  1. Generate More Revenues

There’s no constraint of loyalty for the third-party marketplaces. It’s completely up to you – how many marketplaces you try to sell products online and increase your net higher. For example, a third-party eCommerce can be suited well in a  particular area, if you want to sell abroad –  choosing a native eCommerce will help you to reach out to the exact customer base resulting in more sales. 

  1. Logistics Support

The logistical work involves a bunch of work that are also burdening staff, especially for the small businesses. Third-party marketplaces take care of logistical works like delivery, and shipping with simpler inventory management systems. So, In case, you have a lack of budget to hire customer staff, third parties do that for you since it is already a part of the service you’ve purchased.                                                                           

Keys to Creating a Successful Third-Party Marketplace

Creating a successful third-party marketplace is more like participating in a marathon run, not just a sprint. It requires hard work, perseverance, and of course consistency. As the competition is rising rapidly among all other marketplaces, it needs to be cost-effective with lower risks for the retailers to offer products, and capture customer mindset. Here we’ll discuss 3 keys to creating a successful third-party marketplace.

  1. Start with a Niche and Expand Your Reach Gradually

If you’re a debut and just starting from scratch, you mustn’t compete with eCommerce giants like Amazon, Walmart, and Target – which acquire huge traffic with wider category reach. For example, Albertsons which launched back in 2018 having set the goal to offer more than 40,000 specialty products but has since stopped operations even without sharing the reasons publicly. 

According to Eric Gervet – Lead Partner for Knowledge & Research – Kearney has shared that “One cannot compete on assortment alone with a goal to beat Amazon” in an interview with Retailtouchpoints. 

But in specialized categories where Amazon is also unable to provide services in every single type of product, sourcing them to your storefront, and creating an angle to building a community with services, can have you a scope to stand out. 

For most retailers, the ultimate goal is to expand – offering a wide range of products without losing their core brand insights. That requires organic growth to the existing niche model. The point behind organic growth is to leverage differentiated eCommerce experience to the existing customers. 

  1. Achieving Seamless Integration Through Curation

Curation is indeed the most important factor to make sure of before getting into marketplace implementations right. A highly curated marketplace focuses on range extension – analyzing needs, and demands by categorizing them regularly. 

 Joe Sawyer, CMO at SaaS solution Mirakl said “Brand alignment is the key”. Curation is something that ensures a proper and thoughtful process that your business represents to the customers – at the same time recognizing promises that businesses make to the consumers.

The seller vetting process is the most popular way to maintain curation. Marketplaces like Lands’ End, and Yahoo Shops went through online forms and participation that are invited only to filter and ensure a customer-friendly brand association. It will make sure the consumers connect with the marketplace comfortably.

  1. Retailers Should Have Control Over Seller Selection Process Who Maintains Their Standard

Seller selection is another critical part to acquire marketplace success. In most cases, sellers remain invisible to end consumers, yet marketplaces take the risk of selling products with faults or poor customer support systems. That’s why it won’t help to allow sellers to get connected directly with consumers, resulting in brand erosion. However, these risks can be minimized by taking some proper steps.

One just needs to  “Understand what marketplace sellers type would and what would they do” in the beginning, and select sellers maintaining those criteria at its level best. If all the things are done well, then we can expect to have a thoughtful curation, which ensures accelerated growth.                                                                        

Are We About to Experience a Marketplace Saturation Point?

Over time, the rapid growth of the technology, especially the advantages it puts in web technology has been tremendous. The online presence of the people has increased remarkably. And so the marketplaces become more centralized to expand their business operation. 

Thus, the question arises whether we may face a marketplace saturation point or not. Well, apparently, we can see that the number of global eCommerce is escalating, but what about the number of consumers – becoming regular to purchase online? Yes, they are also growing synchronously. Even, to be precise, the growth is exponential since online marketplaces have been able to create huge positive impacts and facilities with reliability among the consumers.

So, what saturation point is meant to be? When the market becomes maximized with something that surpasses the market needs, then a company can achieve further growth only by outranking the competitors’ market share or by coming up with a product that will create demands beating all other competitors.

Expand Your Marketplace- Go Beyond Just Product Listing

Okay, let’s imagine you’re on a sales page where the page is filled with mass products, and you switched to another page where you found more information, just not only mass products enlisted. Which one would you prefer to click on for further steps? The answer would definitely be the second one.

E-commerce features that contain only product listing has been outdated since all other related factors have been improved – which are completely customer-oriented. There was a time when people would visit eCommerce sites for convenience and to save time as well. 

Now, they don’t worry much about products or cost-effectiveness, most of the time they commemorate their experience that was made last time. User experience makes consumers feel the flexibility of using a website, which reminds them of the next purchase. 

E-commerce runs with only product listing are more likely to be a “Plug and Play” type process, and aren’t that much user friendly. With the advancement of technology, people are no longer interested in deals that lack information. 

A recent survey published by Statistica stated that 88% of the business owners provide attention to CX(Customer Experience) as it is found relevant to compete in the industry. Besides, a soothing customer experience plays a role to convert customers into leads (customers who make purchases). However, here are some good practices to broaden your marketplace. 

  • Optimize your communication channels. In the beginning, you may start with e-mails which are pretty slow to respond to the customers. Adding a  live chat feature can do it for you.
  • Social media integration – make sure a proper social media presence and keep them updated publishing content regularly.
  • UX(User Experience) – ease of navigation, and simple UI for the eCommerce system is a must. Don’t ever let your customers confused about any features or steps that are likely to be performed. 
  • Put more attention on inventory management. Take orders as per your capability to deliver them on time. Accepting orders beyond your capability will result in customer complaints, and hamper your value propositions.
  • Audit your storefront, communicate with retailers, and often come up with exciting deals, and offers. 
  • Re-invest revenue to build up sustainable eCommerce architecture and approach investors with a solid foundation, vision.  

Are We All Chasing Amazon? – Maybe No

E-commerce giants like Amazon, Alibaba, and Walmart –  are not direct competitors to a newly established marketplace. The thing is to find out lackings that Amazon or any other giants are unable to accomplish, which can be an edge to take your spot on. 

To be precise, building a brand from scratch takes huge time where Amazon plays under the sway of a ruler. It has gained massive user interaction over the years and positioned too well growing up in tendon, which is also indisputable.

So, think about Amazon since they were at once a start-up, how they tailored the business, and understand their capabilities to evolve from the very beginning. However, it’s uncertain to state that Amazon will rule the eCommerce third-party marketplaces in the next decades too. 

Maybe someone has yet to come up with even better solutions, competing with Amazon. Since we are standing in the blink of the fourth industrial revolution, we have more opportunities, and more technical skills to cope with – thus, it’s also attainable to outrank Amazon in near future. 

Final Thoughts

Third-party marketplaces have grown up to be a better solution to meet up needs without high time consumption on physical outreach. Once people would make purchases online due to distance or time constraints but nowadays eCommerce has gained a solid foundation with its reliable and fast delivery process. We don’t belong in the old school days anymore. 

Third-party marketplaces connect both the buyers and sellers on the same platform, and complete the transaction process within a couple of minutes. Online shopping provides more clarity as well as customer review-based service. That’s why customers are moving towards eCommerce stores and entrepreneurs are investing in online marketplaces.


Leave a Reply