If you’re a fashion retailer then there may be some good news and a new venue to sell on. Urban Outfitters and their sister brand Anthro both opened marketplaces this month.
Details are sketchy thus far. The marketplaces, although live, are currently in a test phase so aren’t open for new sellers.
“This month, both the Urban and Anthro brands launched their new online marketplace. This exciting new feature enables a curated assortment of third party sellers to list and sell merchandise on our brand websites. After a thorough test period, each brand plans to expand its marketplace to include complimentary brands, products and services with a goal of expanding the online assortment offered to the customer and increasing site traffic.”
– Richard Hayne, CEO, Urban Outfitters on Q1 2019 Earnings Call
It will be interesting in the light of Tesco, Halfords and Gameseek closures so far this year, to see which marketplace strategy Urban Outfitters take – a closed curated marketplace or one more open and inclusive.
The big advantage of third party merchant sales is that they are generally more profitable than retail sales. There’s no stock holding and devaluation and potentially no fulfilment costs, it’s simply a case of processing the payment and passing the order to the merchant.
If Urban Outfitters choose a closed marketplace, it effectively becomes little more than a drop ship model with select retailers or brands offering a curated selection of products. The issues with this are that retailers are less engaged as they’re restricted as to what they can offer and for the marketplace they don’t see the full benefit of a vastly expanded range.
To become a true marketplace it’s a requirement to accept that if one of your third party merchants has a better product or better price than you, then that’s the offer displayed to the buyer. This is what Amazon got so right – they’re fixated on doing what’s right for the customer and that takes precedence over protectionism and wanting to sell their own merchandise.
We’ll be watching Urban Outfitters with interest, especially as they’ve expanded beyond fashion into Home and Gifts making them attractive to an even greater range of third party merchants.
