January 23, 2026
Photo courtesy of NRF
NRF 2026 Rewind: Are Online Marketplaces Proven Winners for Retail?
In a session at the NRF Big Show, executives with Best Buy, Nordstrom and Target indicated that despite challenges, online marketplaces are offering numerous benefits, providing seemingly endless aisles of inventory to consumers.
Among the benefits highlighted at the session:
- New categories: Target has benefited from adding more items in home that take up too much space in stores. Nordstrom has been able to fill gaps in online assortments, including items under the $100 price point. Best Buy is able to sell more items complementary to hardware purchases. Frank Bedo, Best Buy’s chief marketplace and e-commerce officer, said, “So, you’re going to Best Buy to buy your TV for the Super Bowl. You can now walk out with a Chicago Bears speaker. Or even a Chicago Bears snuggy.”
- Brand’s full offering: Miguel Almeida, president of digital and customer experience at Nordstrom, said Nordstrom’s online marketplace lets the retailer sell the “full expression of our very best brands.” Among top brands, he estimates 30% to 40% of the product Nordstrom sells online is 1P — or first-party, owned inventory — while the remainder is 3P, or those sold by third-party sellers. He said, “All the different styles, colors, and sizes we can offer through an inventory model that has no risk for us.”
- Discovering product: Online marketplaces enable retailers to test new product with limited inventory risk. Sarah Travis, Target’s chief digital and revenue officer, said, “The online marketplace plays an enormous role in in helping us to identify trends and bring product on much more quickly.”
- Traffic driver: Travis said 10% of Target’s external traffic online comes from buyers of 3P product. She said, “When they come into the platform, they’re also buying 1P, right? We are able to reach more guests and bring new guests into the platform.”
- Profitability: Initial margins on the sale of 3P product are lower than owned product, but the net margin is seen as higher as retailers avoid markdown risks and delivery costs. Almeida said, “If I look at a value creation standpoint, free cash flow and return on invested capital, these are sales that have that are literally risk free. It’s not our inventory.”
One risk is ensuring 3P vendors meet standards for delivery, as well as provide quality imagery and product information within listings. One challenge is reducing friction between 1P and 3P buying teams, and getting buy-in across the organization as online marketplaces are bringing new customers — and driving traffic to support the traditional wholesale business.
Curation can be more complex with a significant uptick in online offerings. Target’s Travis said, “We want to make sure that we deliver curation for our guests and that every moment they have with us feels like Target.”
The greater abundance of items available online can also lead to choice paralysis, or being overwhelmed by too many options to make a selection. Nordstrom’s Almeida expects advances by agentic commerce will further tailor offerings to consumer’s tastes.
“Our digital vision is becoming the Spotify of fashion,” said Almeida. “If you think about Spotify, it’s a virtually unlimited music catalog and yet, for a consumer of Spotify, it does not feel overwhelming. It feels that Spotify knows you. It knows the occasion. It can replay all the music that you love but also very elegantly introduces you to new genres, to new bands. And that’s what we’re trying to do. But instead of bands, we’re talking about brands and talking about fashion. And so that has been the overarching vision that our strategy is aligned to.”
BrainTrust
Shep Hyken
Chief Amazement Officer, Shepard Presentations, LLC
Jeff Hall
President, Second To None
Neil Saunders
Managing Director, GlobalData
Recent Discussions
Discussion Questions
Are online marketplaces offering more benefits than drawbacks for retailers with physical stores?
What do you see as the continued challenges, risks or unrealized opportunities in such platforms?
Poll
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Marketplaces are a relatively simple, low-capital way of expanding choice and widening audiences. If they work, they can generate incremental revenue. But they are not surefire winners. Retailers need to make sure they don’t just cannibalize existing sales, and they cannot be used as an excuse to neglect the core proposition. And of course, there are now so many marketplaces that the strategy is not really a big differentiator – and, just like the retail media bandwagon, not everyone can win in this space!
Online marketplaces are no longer optional, they are fast becoming a mandate in a modern retail channel mix. For retail executives, the real question is whether marketplaces are proven winners, and the answer is yes when they are run with intent. They allow you to expand assortment, enter new categories, and test demand without tying up capital or taking markdown risk. Just as important, they attract new customers who often convert into higher value buyers of owned inventory. The win is not endless choice, it is using the marketplace to strengthen your core P&L and customer relationships. Retailers that treat marketplaces as a disciplined growth engine, not a side project, are already pulling ahead.
Yes — for retailers with physical stores, online marketplaces offer far more benefits than drawbacks when they’re executed thoughtfully as part of an omnichannel playbook. Marketplaces extend a retailer’s reach well beyond its four walls, layering additional revenue streams on top of traditional in-store and direct-to-consumer sales. They give shoppers greater selection and choice — often in categories the retailer doesn’t carry — without the burden of inventory risk, which in turn can deepen engagement and foster loyalty because the marketplace becomes a one-stop shop that meets more of the customer’s needs. In that sense, marketplaces function not just as a commerce channel but as a demand engine, reinforcing brand relevance and keeping shoppers in the retailer’s ecosystem rather than migrating them to pure e-commerce rivals.
Perhaps the biggest strategic upside — especially for retailers with physical footprints — is the ability to trial new brands and products without upfront inventory investment. This “developmental league” effect lets retailers see what resonates with real customers before committing to a full supply relationship or shelf allocation. Over time, marketplace performance signals can inform assortment strategy, private-brand development, and deeper supplier partnerships. In effect, marketplaces become a learning platform that strengthens the core business rather than diluting it.
That said, continued challenges and risks still deserve attention. Marketplaces demand strong digital infrastructure, sophisticated search and discovery, seamless fulfillment integration (especially when tied to store pickup and returns), and clear brand governance to avoid issues such as price erosion or channel conflict. Logistic complexity — particularly for returns and split-fulfillment — remains a pain point, and margins on marketplace transactions can be thinner than direct sales if not carefully managed. But these are operational hurdles, not fundamental blockers. The unrealized opportunities — such as using marketplace data to power localized promotions, cross-sell opportunities, and AI-driven personalization — suggest that the upside is still accelerating. In aggregate, the value of additional revenue, expanded selection, loyalty deepening and low-risk brand incubation makes marketplaces a compelling strategic asset for omni-channel retailers that are serious about long-term relevance and growth.
Online marketplaces clearly offer more benefits than drawbacks for retailers with physical stores, when architected intentionally. What Best Buy, Nordstrom and Target described is less about infinite assortment and more about capital efficiency, faster learning loops, and ecosystem expansion. Marketplaces allow retailers to extend categories, test demand signals, and monetize traffic without taking on inventory risk which is a powerful advantage in a margin-constrained environment. Just as important, 3P isn’t replacing 1P; it’s feeding it. Target’s data showing 3P buyers converting into 1P purchasers reinforces that marketplaces are growth amplifiers, not side businesses.
The real challenges sit in experience orchestration and technology maturity. Choice paralysis, inconsistent content quality, and fulfillment variability can quickly erode trust if left unmanaged. This is where modern digital commerce architecture matters. Composable platforms, real-time data pipelines, and AI-driven merchandising can transform “endless aisle” into curated relevance. AR/VR, rich content validation, and agentic discovery engines help customers confidently imagine products on their phones and bridge the physical and digital gap rather than widening it.
The biggest unrealized opportunity is intelligent curation at scale. Marketplaces won’t win by offering more products but they’ll win by offering better decisions, powered by the right digital foundation.
The shift toward a ‘Spotify of fashion’ model is a brilliant financial move for Nordstrom and Target because it allows them to scale revenue without the crushing weight of inventory risk. However, the real challenge will be maintaining ‘brand soul’; if a marketplace becomes too cluttered, it risks Diluting the premium curation that customers expect from these specific retailers. The success of this strategy hinges entirely on the ‘agentic commerce’ tools mentioned—if the AI can’t perfectly filter the noise, ‘endless aisles’ will quickly turn into ‘endless frustration’ for the shopper. Ultimately, these retailers aren’t just selling products anymore; they are selling their ability to act as a trusted filter in an overcrowded market.
What is retail? We have customers. We sell them stuff, of course, with some semblance of order.
For too long, retailers have eschewed the idea that they are first a store, second a particular selection of brands. If a Target customer or the customer of any other retailer can go to their favorite place first to find what they want/need, why let them go anywhere else?
In that sense, isn’t Amazon the ultimate retailer?
It’s very simple… The Internet is the largest mall in the universe! Online marketplaces are online malls – additional “locations” for retailers to sell. They also expand the market presence, so more brand recognition, if nothing else.
“It’s very simple… The Internet is the largest mall in the universe!” Exactly!!!!!!!!!!! Any retailer that doesn’t understand this doesn’t really understand “retail”.:
As long as there is some semblance of quality and vendor control where 3P marketplace sellers are present. I hate looking at these only to see ridiculous prices, lack of availability, or shoddy quality.
While online marketplaces offer clear benefits, their long-term success is not guaranteed. Many retailers may struggle with the operational complexity of managing third-party sellers, including product quality, pricing consistency, and customer service standards. These challenges can create friction for shoppers and strain internal teams. In addition, not all brands naturally lend themselves to marketplace models, especially those built on curation and simplicity rather than endless choice. Without sufficient scale, strong technology, and disciplined oversight, marketplaces may fail to meet expectations. For some retailers, marketplaces could become a secondary channel rather than a lasting driver of growth
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Marketplaces are a relatively simple, low-capital way of expanding choice and widening audiences. If they work, they can generate incremental revenue. But they are not surefire winners. Retailers need to make sure they don’t just cannibalize existing sales, and they cannot be used as an excuse to neglect the core proposition. And of course, there are now so many marketplaces that the strategy is not really a big differentiator – and, just like the retail media bandwagon, not everyone can win in this space!
Online marketplaces are no longer optional, they are fast becoming a mandate in a modern retail channel mix. For retail executives, the real question is whether marketplaces are proven winners, and the answer is yes when they are run with intent. They allow you to expand assortment, enter new categories, and test demand without tying up capital or taking markdown risk. Just as important, they attract new customers who often convert into higher value buyers of owned inventory. The win is not endless choice, it is using the marketplace to strengthen your core P&L and customer relationships. Retailers that treat marketplaces as a disciplined growth engine, not a side project, are already pulling ahead.
Yes — for retailers with physical stores, online marketplaces offer far more benefits than drawbacks when they’re executed thoughtfully as part of an omnichannel playbook. Marketplaces extend a retailer’s reach well beyond its four walls, layering additional revenue streams on top of traditional in-store and direct-to-consumer sales. They give shoppers greater selection and choice — often in categories the retailer doesn’t carry — without the burden of inventory risk, which in turn can deepen engagement and foster loyalty because the marketplace becomes a one-stop shop that meets more of the customer’s needs. In that sense, marketplaces function not just as a commerce channel but as a demand engine, reinforcing brand relevance and keeping shoppers in the retailer’s ecosystem rather than migrating them to pure e-commerce rivals.
Perhaps the biggest strategic upside — especially for retailers with physical footprints — is the ability to trial new brands and products without upfront inventory investment. This “developmental league” effect lets retailers see what resonates with real customers before committing to a full supply relationship or shelf allocation. Over time, marketplace performance signals can inform assortment strategy, private-brand development, and deeper supplier partnerships. In effect, marketplaces become a learning platform that strengthens the core business rather than diluting it.
That said, continued challenges and risks still deserve attention. Marketplaces demand strong digital infrastructure, sophisticated search and discovery, seamless fulfillment integration (especially when tied to store pickup and returns), and clear brand governance to avoid issues such as price erosion or channel conflict. Logistic complexity — particularly for returns and split-fulfillment — remains a pain point, and margins on marketplace transactions can be thinner than direct sales if not carefully managed. But these are operational hurdles, not fundamental blockers. The unrealized opportunities — such as using marketplace data to power localized promotions, cross-sell opportunities, and AI-driven personalization — suggest that the upside is still accelerating. In aggregate, the value of additional revenue, expanded selection, loyalty deepening and low-risk brand incubation makes marketplaces a compelling strategic asset for omni-channel retailers that are serious about long-term relevance and growth.
Online marketplaces clearly offer more benefits than drawbacks for retailers with physical stores, when architected intentionally. What Best Buy, Nordstrom and Target described is less about infinite assortment and more about capital efficiency, faster learning loops, and ecosystem expansion. Marketplaces allow retailers to extend categories, test demand signals, and monetize traffic without taking on inventory risk which is a powerful advantage in a margin-constrained environment. Just as important, 3P isn’t replacing 1P; it’s feeding it. Target’s data showing 3P buyers converting into 1P purchasers reinforces that marketplaces are growth amplifiers, not side businesses.
The real challenges sit in experience orchestration and technology maturity. Choice paralysis, inconsistent content quality, and fulfillment variability can quickly erode trust if left unmanaged. This is where modern digital commerce architecture matters. Composable platforms, real-time data pipelines, and AI-driven merchandising can transform “endless aisle” into curated relevance. AR/VR, rich content validation, and agentic discovery engines help customers confidently imagine products on their phones and bridge the physical and digital gap rather than widening it.
The biggest unrealized opportunity is intelligent curation at scale. Marketplaces won’t win by offering more products but they’ll win by offering better decisions, powered by the right digital foundation.
The shift toward a ‘Spotify of fashion’ model is a brilliant financial move for Nordstrom and Target because it allows them to scale revenue without the crushing weight of inventory risk. However, the real challenge will be maintaining ‘brand soul’; if a marketplace becomes too cluttered, it risks Diluting the premium curation that customers expect from these specific retailers. The success of this strategy hinges entirely on the ‘agentic commerce’ tools mentioned—if the AI can’t perfectly filter the noise, ‘endless aisles’ will quickly turn into ‘endless frustration’ for the shopper. Ultimately, these retailers aren’t just selling products anymore; they are selling their ability to act as a trusted filter in an overcrowded market.
What is retail? We have customers. We sell them stuff, of course, with some semblance of order.
For too long, retailers have eschewed the idea that they are first a store, second a particular selection of brands. If a Target customer or the customer of any other retailer can go to their favorite place first to find what they want/need, why let them go anywhere else?
In that sense, isn’t Amazon the ultimate retailer?
It’s very simple… The Internet is the largest mall in the universe! Online marketplaces are online malls – additional “locations” for retailers to sell. They also expand the market presence, so more brand recognition, if nothing else.
“It’s very simple… The Internet is the largest mall in the universe!” Exactly!!!!!!!!!!! Any retailer that doesn’t understand this doesn’t really understand “retail”.:
As long as there is some semblance of quality and vendor control where 3P marketplace sellers are present. I hate looking at these only to see ridiculous prices, lack of availability, or shoddy quality.
While online marketplaces offer clear benefits, their long-term success is not guaranteed. Many retailers may struggle with the operational complexity of managing third-party sellers, including product quality, pricing consistency, and customer service standards. These challenges can create friction for shoppers and strain internal teams. In addition, not all brands naturally lend themselves to marketplace models, especially those built on curation and simplicity rather than endless choice. Without sufficient scale, strong technology, and disciplined oversight, marketplaces may fail to meet expectations. For some retailers, marketplaces could become a secondary channel rather than a lasting driver of growth