Heard on the Street: Amazon’s marketplace model is coming to a store near you, but as more retailers dive into the craze, investors should step back and ask why they need it
which started its marketplace in 2009, saw gross merchandise volume—total sales through its platform—double in 2020, according to estimates from Marketplace Pulse. Pre-pandemic, growth was a more muted 35%.
Retailers have their own reasons to embrace the approach, including to introduce new categories. Kroger, for example, is using a marketplace platform to sell goods fromIn some cases, the marketplace model might help retailers get around picky vendors. Hudson’s Bay, for example, can’t get its hands on the newbags that its shoppers want but is able to offer them through its resale marketplace, says Adrien Nussenbaum, Mirakl’s co-founder and co-chief executive.
The newer crop of marketplaces seem to be trying to avoid both risks by being more selective with sellers. A lousy integration with in-store experiences can also hurt, notes Juozas Kaziukėnas, founder of Marketplace Pulse. Shoppers could get frustrated if they can’t pick up and return marketplace items at the store, for example.
That has its merits, but there are also two cautious takeaways. First, that these retailers need marketplaces to spot trends isn’t a ringing endorsement of their grasp on the market.Consider the sample of apparel sellers that have built marketplaces: J.Crew, which launched in 2018, buckled under the pandemic last year. In the five years before Covid-19, both Express and Lands’ End saw total revenue shrink by a compound annual average rate of 1.
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