Online spending in the United States reached $861 billion in 2020, a 44 percent jump from spending in 2019. A higher amount of this spending occurred on digital marketplaces where multiple businesses can list a variety of goods and services for buyers, with the number of sellers participating on these platforms rising accordingly.
Walmart’s digital marketplace surpassed 50,000 independent sellers in July, for example, and other such sites are predicting sales will continue to skyrocket over the next few years.
This represents a key opportunity for marketplaces to grow their own platforms, but to keep sellers enticed and loyal to their sites over competitors, they will need to provide swift and easy payout experiences. The ability to receive their portion of their online sales more quickly and easily is becoming more important for businesses using these platforms, meaning that supporting instant disbursements could provide marketplaces with a critical competitive advantage as the marketplace economy continues to grow.
In the latest Disbursements Tracker®, PYMNTS analyzes how the digital marketplace space has expanded over the past year, and how this growth has affected the payment needs of both businesses and independent sellers listing their goods and services on these platforms. It also analyzes why supporting instant disbursements to sellers is becoming key for marketplaces.
Around The Disbursements World
Small- to medium-sized businesses (SMBs) are also flocking to digital marketplaces in higher numbers, with 43 percent of such companies now reporting they are selling their products or services on these platforms. This figure will likely continue to grow as more consumers turn to eCommerce sites for more of their purchases. SMBs are still waiting weeks to receive their payments from these marketplaces in many cases, however, causing friction as they look to manage their own cash flows and take advantage of the benefits of selling on these platforms. Offering faster payouts to SMBs could allow marketplaces to keep businesses engaged as the marketplace economy becomes more competitive.
Consumers’ ongoing shift to eCommerce is also making many businesses’ account receivable (AR) processes more complicated, noted Rohan Thrambrahalli, CEO of marketplace technology provider UpstartWorks in an April PYMNTS interview. Part of this complexity is due to the fact that many of the larger-scale marketplaces, such as those run by Amazon or Walmart, can introduce chargebacks or other fees to companies’ purchase orders (POs) that can in turn increase companies’ reconciliation times for those pay
ments, he explained. It is therefore crucial for marketplaces to reduce these pain points to keep sellers satisfied.
The need for swift disbursements is becoming more critical in multiple industries outside of the marketplace economy, including insurance. More insurance firms, most notably digital-first InsurTech startups, are taking steps to ensure they can support the quick claims payment experiences more claimants are anticipating. InsurTech Lemonade still holds the record for the fastest-ever insurance claim processed online, having finalized one users’ claim — not including payment — in three seconds in 2017 through the use of artificial intelligence (AI). The use of automation in this industry has only ramped up in the years since, with another InsurTech, Tractable, claiming 25 percent of its claims are now processed through the use of automation.
For more on these and other stories, visit the Tracker’s News & Trends.
Swappa On Why Providing Secure, Instant Disbursements To Independent Sellers Is Key
Participating in digital marketplaces provides both consumers and sellers with key benefits, allowing smaller businesses or individual entrepreneurs to reach a broader audience and to compete on more even footing with larger competitors. Many of these advantages can be stripped away if payouts to these sellers are overly complex or time-consuming, however.
Providing swift ways for sellers to receive their funds is therefore essential, explained Ben Edwards, CEO of used electronics digital marketplace Swappa in a PYMNTS interview.
To learn more about why offering instant disbursements to marketplace sellers is becoming crucial for marketplaces, visit the Tracker’s Feature Story.
Deep Dive: How The Pandemic Has Shifted Marketplace Sellers’ Payment Needs
The draw of online shopping, especially on digital marketplaces where buyers can find a variety of potential products, has only increased over the past several years for consumers — becoming more attractive to both SMBs and independent sellers wishing to reach a diverse market of customers. Many of these online sellers are still attempting to recover from the economic impacts of the past year, however, making fast payouts essential.
To learn more about how marketplace sellers’ payment needs are changing and how implementing instant disbursements can help these platforms keep businesses and independent sellers engaged, visit the Tracker’s Deep Dive.
About The Tracker
The Disbursements Tracker®, a PYMNTS and Ingo Money collaboration, is the go-to monthly resource for the latest trends and changes in the digital disbursements space, covering developments occurring in the government, insurance and retail sectors as well as instant payments adoption’s global progress.