Majority of UK Brands Expand Online Marketplaces They Sell On

Three in four consumers are using more than one marketplace when shopping online, with the average using three.

The average UK brand now sells on four online platforms for third-party (3P) selling, according to Rithum research. Two-thirds, meanwhile, are planning to expand the number of marketplaces in the next 12 months.

The company surveyed 550 retailer and brand executives in the US, UK and Germany to identify growth opportunities through the 3P ecommerce model.

Recent research by Rithum found that three in four consumers are using more than one marketplace when shopping online, with the average using three. The fragmented nature of online shopping, driven by the popularity of social commerce and consumers’ demand for convenience and choice, is leading brands to increasingly embrace 3P selling.

3P commerce is different for retailers compared with brands. For retailers, 3P commerce helps them access unowned inventory. This is a business model where brands sell products directly to consumers through a retailer’s storefront, typically through a dropship or marketplace approach.

The model shifts inventory risk away from retailers, who instead act as facilitators between brands and consumers. For brands, 3P commerce helps them extend their owned inventory to unowned channels. This allows brands to reach more consumers through a multichannel selling strategy.

The report explored the difficulties in on-boarding a new platform. On average it takes seven weeks for brands to bring on a new marketplace and managing an additional sales platform adds complications. The three main challenges of working with multiple platforms raised were: the need to hire more specialised talent, missed or delayed fulfilment and higher operating costs.

Those that have expanded to a new marketplace and struggled claimed the primary issues are: complaints about it from customers, the time and effort required to manage it and the marketplace being too difficult or confusing to use.

Philip Hall, Managing Director for EMEA at Rithum, commented, “Consumers are constantly shopping around, especially with the peak season in full swing, as they browse multiple sites for the best deals and gifts. Brands are now having to expand marketplaces to keep up  – and 3P selling is an important part of this.”

“Marketplaces are ideal for navigating a difficult economy as they create opportunities for brands to liquidate excess or slow-moving inventory in a more profitable way. The wider digital shelf space of marketplaces allows brands to more easily test different product assortments and combinations to see what resonates with customers.”

“To fully capitalise on the opportunity provided by marketplaces, brands need data driven decision-making, using data from marketplaces to make informed decisions about inventory and customer preferences.”

“Our research found that those without a single platform pulling data from across the sales spectrum claimed a centralised tool would be a “game-changer” for making decisions on where to move inventory and which products to push.”

“Those that succeed will also need to embrace technology, specifically, artificial intelligence. Onboarding to a new platform can be a time intensive task for those with a wide catalogue of products. AI can solve this issue by taking existing product descriptions and reworking them to the exact needs of the platform, making this hugely laborious task much faster.”