The Business Case for Selling on an E-Marketplace
In the dynamic world of commerce, the rise of e-marketplaces after the pandemic has reshaped the way businesses operate and consumers shop. From Amazon, the pioneer that redefined retail, to Walmart, the embodiment of everyday low prices, and Zalando, the fashion-savvy destination of Europe, these e-marketplaces have not just adapted to change; they’ve fueled it. As Jeff Bezos envisioned, Amazon is becoming something entirely new, transcending its roots as an online bookstore to become a tech juggernaut, while Sam Walton’s legacy continues to shape Walmart’s commitment to innovation and customer satisfaction. Zalando, founded in Berlin, has captured the hearts of fashion enthusiasts across Europe. In this report, we delve into the e-marketplace landscape, uncovering the business case for selling on these digital platforms. We explore their rich histories, the unparalleled sizes of their customer bases, and the opportunities they present for brands seeking growth and prosperity. From the dominance of fashion ecommerce to the power of return on investment (ROI) as a strategic compass, we delve into the dynamics shaping the ecommerce landscape of today and tomorrow.
Types of E‑Marketplaces
Amazon: An online marketplace giant
“What we want to be is something completely new. There is no physical analog for what Amazon.com is becoming.” – Jeff Bezos.
A Brief History
Amazon, founded by Jeff Bezos in July 1994, began as an online bookstore. It quickly expanded and started to include a wide range of products, becoming one of the pioneers of ecommerce. In 2002, Amazon introduced Amazon Web Services (AWS), which revolutionized cloud computing and became a significant source of revenue. Over the years, Amazon’s relentless focus on customer service and innovation led to the development of products like the Kindle e-reader, Amazon Prime subscription service, and the expansion into original content production through Amazon Studios. Today, Amazon is not only a global ecommerce giant but also a major player in cloud computing, digital streaming, and numerous other industries, solidifying its position as one of the world’s most influential and successful tech companies.
Selling on Amazon
Amazon is a highly regarded e-marketplace, thanks to its extensive customer base, trustworthiness, and excellent customer service. Selling on the Amazon Marketplace provides brands with a vast and ready-made customer base, making it an enticing platform for expanding their reach. To get started, brands can create an Amazon seller account and choose between two primary selling plans: Individual or Professional. They can then list their products, set prices, and optimize product listings with high-quality images and informative descriptions. Fulfillment options, including Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM), cater to different seller needs. Brands can also leverage Amazon Advertising to promote their products and boost visibility. Additionally, Amazon’s payment processing, customer reviews, and Prime membership advantages further enhance the platform’s appeal. Maintaining excellent customer service, effective inventory management, and monitoring customer reviews are crucial for long-term success on the Amazon Marketplace. By utilizing Amazon’s vast resources and customer base, brands can significantly increase their sales and brand recognition.
Amazon is a globally recognized brand, with millions of loyal customers. An overwhelming 89% of US shoppers express a preference for Amazon over other ecommerce platforms due to its consistent delivery of desired products in branded brown boxes, earning trust, as Forbes once noted. The rapid ascent of Amazon’s popularity has prompted predictions of it surpassing tech giants like Microsoft, Tesla, and Alphabet. Statistics, taken from Investing in 2022, underscore Amazon’s potential dominance.
- Amazon’s valuation exceeded $1.105 trillion
- With a brand worth of $350 billion, Amazon trails only Apple, surpassing Google and Microsoft
- Amazon boasted a user base of 300 million
- Of these active users, a staggering 197 million individuals visited Amazon.com on a monthly basis
Walmart: An Influential E‑Commerce Platform
“I’ve always had a strong bias towards action.” – Sam Walton.
A Brief History
Walmart’s history is a testament to the vision of its founder, Sam Walton. What began as a single discount store in Rogers, Arkansas, in 1962 quickly evolved into a retail phenomenon. Sam Walton’s strategy of offering “Everyday Low Prices” and a relentless focus on customer satisfaction set the stage for Walmart’s remarkable growth. Over the years, Walmart pioneered the concept of the “big-box” store, introducing larger retail spaces stocked with a wide range of products, from groceries to electronics, all under one roof. This approach resonated with consumers, and Walmart’s footprint expanded rapidly, spreading across the United States and eventually reaching international markets. Walmart’s commitment to innovation and adaptation to changing market dynamics, including embracing ecommerce and digital technology, has allowed it to maintain its position as one of the world’s largest and most influential retailers. Today, Walmart continues to serve millions of customers daily through its physical stores and its ever-expanding online presence.
Selling on Walmart
Selling on the Walmart Marketplace gives brands an opportunity to tap into the immense reach and trust that the Walmart brand has built over the years. To become sellers on the Walmart Marketplace, brands can apply and, once approved, list their products on the platform. Walmart offers various fulfillment options, including letting brands handle shipping themselves or leveraging Walmart Fulfillment Services for a seamless customer experience. What makes Walmart Marketplace appealing for brands is not just its vast customer base but also its reputation for quality and value. Shoppers associate Walmart with reliability and affordability, making it a desirable platform for brands seeking to establish or expand their presence in the ecommerce space. The platform provides a chance for brands to connect with the millions of customers who rely on Walmart for their shopping needs, offering a compelling reason for companies to consider it as a valuable e-marketplace option.
As of October 2022, Walmart ranked as the world’s foremost company in terms of revenue, boasting an impressive annual income of approximately $570 billion, according to the Fortune Global 500 list. Furthermore, it stands as the globe’s most extensive private employer, providing livelihoods for a staggering 2.2 million individuals. This retail giant is unique in that it’s publicly traded while remaining under the steadfast control of the Walton family, who maintain ownership of over 50 percent of Walmart through their holding entity, Walton Enterprises, as well as their individual shares. Notably, in 2019, Walmart claimed the top spot as the largest grocery retailer in the United States, with a substantial 65 percent of its impressive $510.329 billion in sales stemming from its domestic operations.
Zalando: A fashion e‑marketplace
“To be a driver of positive change, diversity and inclusion must be at the heart of everything we do.” – David Schneider.
A Brief History
Zalando, founded in Berlin in 2008 by Robert Gentz and David Schneider, has quickly risen to prominence as a leading online fashion and lifestyle retailer in Europe. Initially, the company started as a platform for selling shoes but expanded rapidly to offer a wide range of fashion products. Zalando’s commitment to providing an extensive selection, seamless shopping experience, and a strong focus on customer service led to its substantial growth. It became a go-to destination for fashion enthusiasts across Europe, offering an array of brands and styles to cater to diverse tastes and preferences. Today, Zalando has established itself as a significant player in the ecommerce landscape, continuously innovating to enhance the online shopping experience for its millions of customers.
Selling on Zalando
Selling on the Zalando Marketplace offers brands access to a well-established and fashion-savvy customer base across Europe. Brands interested in joining the marketplace can apply and, once accepted, list their products on Zalando’s platform. Zalando provides brands with various tools and resources to optimize their listings, including high-quality images and informative descriptions. With a focus on fashion and lifestyle products, Zalando’s marketplace attracts consumers seeking the latest trends and styles. It’s an appealing ecommerce platform for brands looking to expand their market presence in Europe. Zalando’s reputation for quality and its commitment to delivering a seamless shopping experience make it a valuable choice for brands seeking to tap into the European market and connect with fashion-conscious shoppers.
In Berlin, as of May 5, 2022, Zalando has strengthened its bonds with customers by expanding its loyalty program, Plus, and enhancing customer engagement in areas like Beauty, Lounge, Designer, and Pre-Owned. During the first quarter, Zalando’s active customer base grew by 5.2% (a remarkable 17% growth over the past year), nearing 49 million users. The popularity of Zalando Plus memberships surged, showing an impressive 150% year-over-year increase. In addition, the Partner Business segment experienced robust growth, constituting 32% of Fashion Store GMV in the first quarter. A multitude of international and local companies now utilize the platform to boost the sale of their fashion and beauty products. This progress positions Zalando well on its journey to achieving its 2025 target of having 50% of Fashion Store GMV generated through its Partner company.
The Benefits of Selling Fashion E‑commerce
Fashion ecommerce stands as the preeminent force within the global ecommerce landscape. The fashion realm, known for its cyclical nature, demands adaptability from ecommerce enterprises, given the perpetual transformations it undergoes. This industry, characterized by its density and dynamism, regularly witnesses the emergence of new buyers and sellers. With the fashion sector, encompassing apparel, accessories, and footwear, valued at a staggering $820 billion in 2023, its supremacy within the ecommerce sphere is unequivocal. Forecasts predict an extraordinary ascent, projecting its worth to surpass a monumental $1.2 trillion by the year 2027. The driving forces behind this remarkable growth story revolve around two pivotal variables: penetration rates, defined as the proportion of active, paying clientele, and the share of online retail. Analysts anticipate a surge in ecommerce prevalence, climbing from 47% this year to a substantial 60% by the year 2024. Fashion ecommerce statistics, derived from Statista, unveil a vertical growth trajectory across all major subcategories.
- Apparel (Women’s, Men’s, Children’s) – Reduced digital barriers of entry empower clothing retailers to seamlessly market, vend, and deliver products worldwide. As a consequence, both global revenues and revenue per user are poised for robust expansion. In the United States, the apparel market is poised to burgeon to $416.4 billion by 2025, up from $385.3 billion in 2022. Meanwhile, European consumers are predicted to spend an impressive $999 per capita annually on fashion-related items by 2025.
- Shoes (Sneakers, Athletic, Leather, Textile, and More) – The shoe segment, an integral component of ecommerce fashion, demonstrates substantial growth, ascending from $365.5 billion in 2022 to a towering $530.3 billion by 2027. Athletic footwear is projected to contribute significantly, with an anticipated revenue of $63.5 billion in 2023.
- Bags and Accessories – Within the fashion accessory domain, double-digit growth is evident, particularly in the fashion accessory market, expected to advance at a compound annual growth rate (CAGR) of 12.3% from 2016 to 2026. The Asia-Pacific region leads the charge as the fastest-growing market. Even with the most conservative estimates, bags and accessories emerge as one of the most resilient segments in ecommerce fashion.
- Luxury Items (Jewellery and Watches) – The global jewellery sector anticipates reaching an impressive $307 billion by 2025, with ecommerce platforms fuelling 20.8% of luxury goods transactions this year. Furthermore, the projection for luxury watch expenditure is a noteworthy $9.3 billion by that time, representing a substantial portion of the overall sales landscape.
Maximizing Returns on Investment (ROI) in 2023
Return on Investment (ROI) measures the profitability of an investment in simple terms. For instance, if your ROI is 55%, it means you’re making a 55% profit on your investment. To put it differently, for every $100 invested, you’re earning $55 in profit. For Amazon sellers, ROI specifically indicates the net profit compared to the cost of the product, expressed as a percentage. You can calculate ROI using the formula: ROI = (Net Profit / Product Cost) * 100%.
To illustrate, let’s consider a straightforward example: You purchase 10 items (say, sculptures for interior design) and ship them to Amazon at a cost of $20 each, totaling $200 as your investment or product cost. Amazon sells these sculptures for $70 each, with a commission of about $30 per sale. Once you sell all the sculptures, you earn $400 from Amazon, resulting in a net profit of $200. In this case, your ROI is 100%, indicating that you’ve not only recouped your initial investment of $200 but also made a 100% profit, totaling $200. A good ROI typically exceeds 100%, allowing you to double your earnings. However, an ROI of 50% is also considered solid for steady growth. With a 50% ROI, you can double your earnings in two months. The ideal ROI varies depending on your goals, market conditions, and long-term strategies. For instance, a 10% ROI might be acceptable if it contributes to gaining a larger market share or improved rankings in the long run. Ultimately, your acceptable ROI depends on your unique circumstances and objectives. The tools provided by AMZScout make it simple and speedy for Amazon sellers to compute their ROI.
Listing New Trends in E‑Marketplaces and E‑Commerce
- Leveraging Network Effects and Community Building – With the relentless advancement of technology, the potential of network effects has become increasingly evident. Businesses are now more capable than ever of connecting with their target audiences and fostering strong, engaged online communities. This shift emphasizes the significance of word-of-mouth marketing, where satisfied customers become brand advocates, driving customer acquisition and loyalty.
- Real-Time Data Analysis and Adaptation –Technological progress has bestowed e-marketplaces and businesses with the ability to harness real-time data analysis. This capability enables rapid adaptation to changing market trends and consumer preferences. Staying agile and responsive to market dynamics is a key driver of success in the digital commerce landscape.
- Rise of Vertical Marketplaces – One of the defining trends in the future of e-commerce is the prominence of vertical marketplaces. As more consumers turn to online shopping, the demand for niche and specialized products continues to grow. Vertical marketplaces, focusing on specific product categories or industries, are well-positioned to cater to this demand. These marketplaces offer a more personalized shopping experience, which enhances customer satisfaction and loyalty.
Start Selling on Marketplaces with E‑Marketplace.com
“Marketplaces to the exponential power of E” is E-Marketplace.com’s powerful tagline, powerful because it states a truth that is already understood and accepted, and which will inevitably continue to scale. E-Marketplace.com is a pivotal resource in the world of e-marketplaces, e-commerce, and multi-channel sales and marketing. We are dedicated to assisting individuals, businesses, and organizations in navigating and thriving in the complex landscape of contemporary multi-channel commerce. Our expertise extends to various sectors, including retailers (B2C), wholesalers (B2B), brands (B2B2C), virtual events and conferences, digital transformation initiatives, and e-marketplace operators. For retailers operating in a progressively interconnected and competitive environment, E-Marketplace.com goes beyond establishing an online store. We specialize in developing and enhancing multi-channel presences, optimizing delivery systems, and streamlining supply chains to ensure a comprehensive and effective sales and marketing strategy.
Wholesalers, recognizing the post-pandemic shift towards online operations driven by cost-effectiveness and efficiency, benefit from our guidance in establishing cost-effective sales channels that reach retailers in diverse global markets. Brands, eager to extend their marketing strategy beyond websites and social media platforms, can count on E-Marketplace.com to provide a broader commercial perspective. We collaborate with brands to enhance their market reach and profitability, recognizing that a website and Instagram presence are just the starting point. In the era of digital transformation, we offer solutions that enable businesses to deploy cohesive platforms addressing cross-functional requirements. This scalability helps companies expand their global reach, reduce operational costs, and enhance customer satisfaction. E-Marketplace.com also extends its expertise to e-marketplace operators, aiding them in remaining competitive through feasibility studies, proof of concept, implementation, and continuous improvement efforts.
Our comprehensive skill set encompasses branding and design, e-commerce, virtual trade shows and events, customer engagement, social media management, photography, illustration, video production, point-of-sale integration, stock control, supporting sales agent networks, multi-channel marketing, sales team management, CRM, analytics, big data, and artificial intelligence. At E-Marketplace.com, we exist to address the pressing challenges of today’s multi-channel business landscape. We help businesses evaluate their multi-channel opportunities, assess return on investment, and develop unique business cases. Our process begins with an initial consultation, followed by preliminary research to gauge the potential size of opportunities on platforms like Amazon. We engage in candid discussions, providing detailed proposals free of charge to guide companies towards their multi-channel success.
The digital commerce revolution has dawned, and e-marketplaces stand at the forefront, beckoning businesses to seize the opportunities they present. Amazon, Walmart, and Zalando have carved their niches in the global market, each a testament to innovation, adaptability, and customer-centricity. In the vast realm of e-commerce, the trends we’ve explored—network effects, real-time data analysis, and the rise of vertical marketplaces—are guiding lights for businesses seeking relevance and resilience. The essence of success lies in the ability to adapt, to foster communities, and to leverage data for swift adaptation. As we conclude, remember that E-Marketplace.com is more than a resource; it’s a partner in navigating the complex world of multi-channel commerce. From retailers to wholesalers, brands, and e-marketplace operators, we are here to help you not just establish an online presence but to thrive in an interconnected world. Let us be your guide in the era of digital transformation, ensuring your growth, reducing costs, and enhancing customer satisfaction. Together, we can embrace the future of commerce with confidence and ambition.