The market model, even more profitable and expandable than the traditional e-commerce model, is not new, but it has become much more democratic with the digital explosion. In France, we experienced 3 major fundraisers in the technology and commercial sectors last year:
- Miracle, the leading French publisher of marketplace solutions: 472 million euros
- ManoMano, DIY and garden market: 300 million euros
- Back Market, a player in the overhaul of electrical and electronic devices: 230 million euros
Today, this model is experiencing rapid growth, highlighted by the constant entry of new players to different models: B2C, B2B and C2C. Following the aforementioned new unicorns, new packaged offerings are emerging, such as Octopia (supported by the Casino Group and its subsidiary Cdiscount) which offers a market under the prism of services. It offers a platform in SaaS mode, native access for 15,000 independent vendors registered with Cdiscount, as well as a European logistics network to optimize last-mile delivery.
The big question that retailers are asking themselves today is which strategy to adopt: develop their own market or sell in existing markets?
A Booming Activity
Accelerating e-commerce penetration rates creates many opportunities and encourages retail players to act. Consumers have flocked to e-commerce and want access to a growing selection of products, attractive prices and delivery options. The model is very popular among consumers, 66% of them prefer markets over traditional retailer sites.
Proof of this enthusiasm, markets alone today account for 62% of e-commerce sales worldwide, up from just 10% in 2008. The trend is similar for France where market weight rose from 8% of revenue in 2012 to 32% in 2020.
The number of markets and their activity is growing. In 2020, globally, it far exceeded the already significant growth rate of the e-commerce sector. So, according to a The Miracle Study published in May 2021, “ in the fourth quarter recorded a growth of 81% over the previous year, twice as much as the e-commerce sector Cdiscount, for its part, estimates that it can double in terms of turnover within 5 years, especially thanks to its subsidiary Octopia.
This trend will continue to accelerate, supported by the cumulative effects of growing investments (from distributors, retailers and technology suppliers), as well as increasing supply thus increasing the attractiveness of platforms, including market growth. It completely depends. Again proof of this brand enthusiasm for this new sales channel, the report said ECompany market indexthe number of vendors in the markets has increased by 36% in the last 15 months.
Reasons for success: victory victory victory effect
Markets are part of the famous virtuoso circle described by Jeff Bezos in 2001. The more and more quality sellers there are in the market, the more consumers there will be and the better quality sellers will register on the platform. The model is very extensible and allows the creation of real winning networks for market operators, for sellers and for buyers, win win win trio. It is in this context that Octopia (with its catalog of 15,000 qualified resellers available to any new entrant looking to create their own market) launches this virtuous circle and consequently facilitates market time and success rates when launching a market. .
Operators will be able to multiply their offer and source at low cost. Depending on the model, they will be able to delegate delivery and inventory management to vendors. They will be able to increase their online presence, their visibility, reach a wider audience and increase sales. As for consumers, they will benefit from a much larger selection of products than in stores or traditional e-commerce, compare offers, access more attractive prices thanks to competition between sellers and earn time in research, ordering and payment.
They are right at the heart of platform strategies whose model is based on generating traffic to legitimize market attractiveness. For consumers, shopping on the market must be a guarantee of simplicity and above all speed. Amazon is obsessed with the user experience and tracks all possible performance metrics, response times, customer reviews and devises new ways to improve and optimize the shopping path and user experience of product research to purchase. There are many ways to improve the user experience: competitive prices, product variety, short delivery times and more delivery and customer service options. Giants stand out for their ability to create privileged relationships with their customers. Amazon and many others use artificial intelligence to analyze the interactions of all visitors to customize the shopping experience in real time. Amazon generates 10-30% more revenue from personalization alone.
The model has become essential, it is also increasingly attractive to B2B and is a real boost to growth. ” They allow us to be very reactive to the trends that are happening very fast today. Without time to understand, products appear on social media. “, Says the general director of Miracle. They stimulate e-commerce by developing product offerings, while improving the novelty and quality of content published online. Vendors have benefited from strong demand growth since the onset of the health crisis and have gained relevance at no cost.
In order to embark on an adventure, retailers must define their strategy in relation to this sales channel and choose the right model, the right partners, the right product and pricing strategy and, above all, the right image strategy to adopt. One of the biggest risks is the loss of direct contact with consumers and the deterioration of the brand image.
Elisabeth Denner is the European partner in charge of Consumer Goods and Retail activities at BearingPoint.
With more than 25 years of professional experience, she supports many distributors in their transformation through the retail value chain towards a “more unified” trade.
About Bearingpoint :
BearingPoint is an independent management and technology consulting firm with European roots and a global reach. In addition to consulting, the company also offers advanced technological solutions and invests heavily in innovation, at the service of its clients. With an international network of more than 10,000 employees, BearingPoint supports its clients in more than 75 countries and helps them achieve measurable and sustainable results, thanks to Unified Commerce.
Since October 2019, BearingPoint has chaired the ESCP Retailing 4.0 teaching and research chair, which aims to develop in-depth prospective thinking on the retail and distribution of tomorrow.