Will a third-party marketplace step up and give Amazon a run for its money?
A new survey of over 1,000 U.S. brands finds online marketplaces to be their strongest growth opportunity, although some are looking for options beyond Amazon.com.
The survey from Feedvisor, an Amazon repricing platform, found 53 percent believe e-marketplaces are their greatest source of opportunity, up from 43 percent last year. That’s followed by mobile/app commerce (47 percent) and social media marketing (44 percent) — both of which outpaced e-marketplaces the prior year.
“From a consumer’s standpoint, e-marketplaces offer a more convenient shopping experience to discover, compare, and purchase products from an array of brands on a single platform,” the study states.
Beyond consumer appeal, their growth is being driven by retailers, such as Kroger, launching their own online marketplaces.
The Feedvisor survey found 18 percent of brands surveyed are selling on Walmart’s marketplace. Asked about expansion, 21 percent said they would consider expanding to Kroger, outpacing others including Instacart, 17 percent; Target, 16 percent; and Walmart, 13 percent. Twenty-seven percent would consider expanding to Google Shopping.
However, the survey showed Amazon dominates online marketplaces in the U.S.:
- Seventy-eight percent of respondents are currently selling on Amazon’s marketplace, up from 55 percent last year;
- For 47 percent of brands with an Amazon presence, the platform represents more than half of their company’s overall e-commerce sales, up from 42 percent the prior year;
- Sixty-one percent of brands on Amazon have seen their overall revenue increase by up to 30 percent in 2020 due to the pandemic.
Amazon marketplace’s strengths include its reach, given its daily traffic, extensive product assortment, fulfillment infrastructure, customer analytics and marketing services.
The top reasons to sell on Amazon (either directly or third-party) were found to be new customer acquisition, increased sales volume, market share, access to customer insights and analytics, and generating brand awareness — all cited by at least 88 percent of respondents. Sixty-percent of brands put their most popular products on Amazon.
The top reason to leverage e-marketplaces aside from Amazon is to build brand awareness, cited by 57 percent; followed by driving sales, 52 percent; and product liquidation, 43 percent.
- 42 percent More Brands Are Selling on Amazon Now Than Before COVID-19, According to Feedvisor Brand Survey – Feedvisor
- Brands, Amazon, and the Rise of E-Marketplaces – Feedvisor
DISCUSSION QUESTIONS: How much of an uphill battle do retailers face competing against Amazon with their own online marketplaces? Which advantages (reach, product range, fulfillment capabilities, shopper analytics, advertising tools, etc.) will be the hardest versus the easiest to compete against?