Competitive Advantages Await Marketplaces That Act Now

To maintain the growth trajectory they’ve seen over the past few years, marketplaces need to ensure they have the necessary flexibility and resilience to meet the demands of the changing economy, writes Yael Barak, product lead, integrated solutions at Checkout.com in the PYMNTS eBook “Baseline 2022: What the Next Six Months Holds.” 

With the ongoing war in Ukraine, supply chain issues, inflationary forces and the continued fallout of the COVID-19 pandemic, business resilience is being tested. What will the full impact of these trends be? That’s the million-dollar question. I don’t believe the answer will become clear until we reach Black Friday and the festive period. That’ll likely be the moment of truth.

In the meantime, businesses cannot stand still. That’s especially true for the marketplace platforms that have become ubiquitous in the digital economy. In recent years, we’ve seen massive adoption of these platforms, illustrated by our research last year that found 64% of consumers use marketplaces as their primary destination for ecommerce shopping. A further 50% said they use marketplaces that provide services such as food delivery.

To maintain this growth trajectory, marketplaces need to ensure they have the necessary flexibility and resilience to meet the demands of the changing economy.

How they price for consumers with less to spend is one consideration. They must also look at their costs and margins and analyze how different payment methods fare. As the trading climate becomes more challenging, we’ll see more marketplaces looking for these operational efficiencies. Many will decide to reduce the number of payment methods to the handful that deliver the best financials.

But getting from the point where you know the payment methods you want and to the point of implementing amounts to a significant operational load. This is where we’ll see platforms offload a lot of this work to a payment partner with the data know-how, market experience and established connections with payment networks, all accessed through a single integration.

Marketplaces also need to optimize the seller/worker experience, especially those “service” marketplaces, like Deliveroo, Uber and Gorillas.

To maximize their earning potential, gig workers will head to the marketplaces with an easy onboarding process, low fees and fast payouts. Onboarding benefits from automated identity verification, which makes life easier for the seller and ensures the marketplace is compliant with local regulations and can navigate future obligations. Gig workers will also be attracted to platforms where form-filling is kept to a minimum and doesn’t have them reaching for a translation service.

The test for service platforms will come after the summer when people return from holidays and start using them again. So the work to attract enough sellers and workers has to happen now. The challenges faced right now by the aviation industry serve as a cautionary tale of only concentrating on-demand and deprioritizing the resources you need to fulfill that.

Larger platforms also have an opportunity in how they deal with different currencies. Those that can settle faster and cheaper with their retailers have a competitive differentiation and will benefit by being smarter about the currencies they hold.

Some marketplaces will shortcut their way to success by concentrating on their core markets at the cost of expansion or through consolidation with other platforms. A challenging funding climate will exacerbate this. That’ll leave opportunities for small, local marketplaces to fill the gap.