Will Marketplaces Take Over eCommerce Completely?

The world is becoming one big marketplace — even if the marketplace doesn’t always look like one. That’s not some ancient riddle updated for these roaring days of digital commerce and payments, but informed knowledge passed along by Adrien Nussenbaum, CEO and co-founder of Mirakl, during the latest edition of the PYMNTS Matchmakers interview series.

In that recent discussion with Karen Webster, Nussenbaum talked about how his company is bringing back-end marketplace services — which include merchandising and fulfillment tasks — to a host of retailers and brands in a variety of retail niches. The deeper foundation of the talk, however, was about how such digital technology is making it easier for sellers, brands and consumers to connect with each other — and how eCommerce, in one sense, is becoming a battle of various marketplaces, services and ecosystems (and not just because of the requirements of surviving and thriving in a world dominated by Amazon).

Video Game Origins

The story of Mirakl — a French startup that recently raised $70 million in a funding round led by Bain Capital — began some 13 years ago, when Nussenbaum and the company’s other co-founder launched an online marketplace “for everything related to video games,” he told Webster. “We felt that marketplaces would become the dominant business model,” in large part, because such operations constructed “a network effect that created critical mass” for the products and sellers. Those marketplace benefits, along with the strength of the back-end technology used to power them, became even more apparent after Nussenbaum and his partner sold the operation to a European firm, and helped the operation grow toward $150 million in sales.

The new goal for the two entrepreneurs? That would be providing “turnkey marketplace technology” for retail and brand clients, technology that would enable them to work with sellers that range from manufacturers to distributors, to specialized resellers — for instance, the skateboarding lifestyle products sold by Urban Outfitters via its online retail site. With all retailers facing increasingly fierce competition, such marketplace services can, according to Nussenbaum, enable them to “offer greater choices, and greater convenience and prices, and be able to operate on a par with what Amazon can offer.”

Marketplace Concept

Let’s pause for a minute and dig deeper into the concept of online marketplaces. When people hear the word “marketplace” used within the context of eCommerce, thoughts naturally turn to Amazon’s third-party marketplace — a source of significant growth for the company, and the reason why many smaller merchants are able to remain in business these days. However, there is much more to the marketplace concept than that, Nussenbaum said.

First of all, the term “marketplace” is more about a “business model” than a website with “a big red sign” on it, proclaiming its existence as a marketplace. Retailers can, do and — according to Nussenbaum — should sell products from other brands and sellers on their sites, but labeling such activity as a “marketplace” is not necessary if the back-end technology and tools are there. In turn, having that technology — which Nussenbaum said is similar to the tech that powers the Amazon marketplace — enables those retailers to easily scale their operations with additional, massive amounts of workers or too many logistical challenges.

The marketplace might not announce itself as such, but it’s basically operating as one, even without the specific label — and that’s going to increasingly be the case in the coming years, he said. After all, consumers want what they want, and they don’t want to waste too much time looking for it. So, having as much variety as possible — along with chances for shopper discovery and upsells — is vital to bringing nearly any retailer or brand into the future.

“Having a marketplace is the natural extension of any retailer,” Nussenbaum said.

What does that really mean, though? For starters, it means accountability and transparency — not only to provide a relatively easy, turnkey offering, but to build trust among all the marketplace participants, which is one of the most important tasks in eCommerce in 2019, as PYMNTS has regularly documented.

It means automated, preset shipping and fulfillment work, for instance, via the back-end Mirakl tool. “Any seller who receives an order has to go through a very defined workflow,” Nussenbaum said, with the software keeping track of time to delivery and other metrics that are vital to customer satisfaction, as well as to the reputation of the retailer or brand through which consumers are making those purchases. It also means focusing on other analytical points, such as how pricing impacts consumer behavior, and identifying top seller trends — all of which can help the clients on the other end improve their product mix and sales strategies.

Experienced Shoppers

According to Nussenbaum, such technology and services — that is, the larger move toward more online marketplaces, and the wider adoption of marketplace trends — appeal to a potentially lucrative type of digital shopper.

“Marketplace buyers are more mature [than] non-marketplace buyers,” he told Webster. “These are people who have experience buying from third parties, and have no anxiety about eCommerce.”

That may be true, but, as Webster pointed out, it’s probably not always clear to many consumers — even the most sophisticated online shoppers — that what they are doing is buying via the marketplace model. Nussenbaum agreed, though, in the end, it might not matter. It’s the sales that count, after all. To get those sales, he predicted that even more retail operations will adopt the marketplace model in the coming years, even if only the back end.

“If you look out 10 years from now, no business still alive will be without some form of marketplace business integration,” he said, “though it won’t always be called a marketplace.”

It seems that a marketplace, by any other name, might turn out to be just as sweet and lucrative.