Depending on where you were in the spectrum, five years ago may have been the golden age of ecommerce marketplaces for you. There were fewer competitors as the bulk of the ecommerce was done via Ebay, Alibaba, and Amazon. Even just as recently as 2018, the top 100 online marketplaces (with the lion’s share going to Amazon, then Ebay and Alibaba) usurped $1.6trillion of the globe’s $2.8trillion ecommerce business. In 2017 the amount of ecommerce sales was at $2.3trillion to give you an idea of growth, and by 2021 it is expected to be double that.
In 2019 Amazon still reigned supreme in ecommerce of course. While the bulk of their success is in the United States, other places like Germany, Japan and the UK represent significant consumers as well. Ebay is still holding some share, and Alibaba has a significant front due to its presence in China.
Despite these three monoliths dominating the market for the most part, 2019 saw a departure from this trend. Smaller ecommerce shops are not only popping up, but doing well.
So, how are small ecommerce marketplaces surviving against the monoliths? Do they matter? And what are still the top spots?
MARKETPLACES ARE INVESTOR HOTSPOTS
We mentioned the top 100 ecommerce marketplaces above, and 55 of them raised $43billion from investors. Flipkart (later acquired in large part by Walmart) raised over $7billion. Out of those 100 marketplaces, 35 of them raised 4.3 billion in the U.S. When you exclude Flipkart’s international transaction, Wish raised roughly a third of that money. This massive amount of investment empowers new marketplaces to not only exist, but to take a small percentage of share.
WISH
Wish is one of the quickest growing competitors to companies like Amazon. After raising over $1.6billion in the last decade it has become a serious competitor. While being dedicated to being an ecommerce marketplace with their large advertising spend (we’ve all seen their ads by now), they also connect with brick and mortar. By allowing brick and mortar to not only sell online but also allowing local consumers to pick up locally, they are exploring a number of online-to-offline options.
AMAZON
No review of ecommerce platforms is complete without Amazon of course. They are monolithic in the U.S., with most of their $280bn coming from the continental U.S. (and smaller percentages coming from Japan, Germany and the UK). They have a wide variety of vendors ranging from tiny to massive. They have 25K vendors selling over a million per year, 50K generating over $500K—but the majority being the 200K vendors selling in the low 100k’s. Despite these big numbers from the top roughly 275,000 sellers, the average seller sold just under $100K.
Amazon retained it’s dominance in 2019 clearly. No surprise there. What may be a surprise is that many brands (hovering around 50%) are still boycotting Amazon in terms of direct selling due to their drawbacks. These drawbacks include algorithmic issues, ranking issues, badge issues and overall abuses and fraud. More importantly however, big brands lack the critical tools and analytics they need—especially accessing customer data for remarketing, and tools needed to showcase their brands that align with their brand strategy. In 2020 however, the tools Amazon has been building to empower brands may become more effective—allowing them to promote their brand beyond sponsored listings to sponsored brands. Their brand registry is becoming stronger. The approximate 50% of brands selling on Amazon is expected to grow to over 70% in the next few years.
It isn’t clear whether Amazon’s efforts on the brand front will truly convince more of them to abandon their unofficial boycott. They are still waiting for the ability to acquire client information and have more powerful branding opportunities. In the meantime, vendors selling those brands reap the benefits.
TRAINERS
If you’re not part of the trainer head sub culture – it’s a thing. The prices and margins are ridiculous, just ask Nike, Vans, Supreme, Air Jordan, and Balenciaga. You may not know that last one, but Balenciaga sold over a billion euro in 2019. While you can find many options on Amazon, the people paying top margins are purists and want to buy on specifically trainer sites. They buy on Amazon too, but the ecommerce marketplace for trainers is incredible.
Out of the top 100 marketplaces, there are five trainer sites: StockX, GOAT, Flight Club, Stadium Goods and Kixify. And yes, we are still talking about shoes. These five account for over a billion dollars in revenue—and are growing quickly, having grown 30% in 2018 alone. When you compare that to the overall list of 100 marketplaces, that’s in the top 20% in terms of growth (although these numbers may be significantly higher if you take out the curve that Amazon’s numbers create).
THE BIRTH OF THE HYBRID
Trainer marketplaces are an example of one specific niche, however the majority of growing top 100 marketplaces are hybrids. Hybrids are those selling their own brand(s) but that also allow others to sell on their platform via listing fees and/or commissions. This strategy has been especially successful for vendors who have products within the same niche, or want to piggyback on the other brand or that brand’s traffic (for a fee).
So—what does this mean for ecommerce professionals and companies in 2020? Amazon is still a go to if it’s the right fit of course. But, other platforms are growing and looking into niche platforms (like those in the trainers sector) or hybrids where you can leverage an existing brand’s platform and traffic could do very well for you.
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