According to the OC&C Strategy Consultants’ Trading Places report, the rise of the online marketplace model is maintaining its momentum as online marketplaces like Amazon, Expedia and eBay drive the largest fundamental shift in consumer spending since the emergence of eCommerce in the 1990s.
OC&C’s report, Trading Places, predicts that by 2025, spending through the leading online marketplaces will overtake the vast majority of eCommerce outlets in established retail and travel categories. When considering aggregate spend, marketplaces in those categories are set to catch up with direct eCommerce ahead of 2025. In 2020 alone, marketplaces accounted for over $1tn of total western consumer spend in these categories, and 40% of total consumer spend online.
Across all of these established categories, the report estimates that marketplace growth will continue at 15% per year in the West and become as large as direct eCommerce by 2025, when it will account for c.45-50% of online spend.
The report offers a striking illustration of the fundamental change in consumer spending habits. Online marketplaces are rapidly becoming the first port of call for both customers and suppliers, and the days of these platforms being a hub for jumbled second-hand stock are well behind us. While Covid-19 has undoubtedly accelerated the shift to online, the inexorable share gain by marketplaces shows no sign of slowingMostyn Goodwin, Partner, OC&C Strategy Consultants
U.S. Online marketplaces dominate European counterparts in the West
Despite many European marketplaces such as Zalando operating successfully, most are simply unable to compete with their U.S. counterparts in terms of size and scale. The largest threat to U.S. marketplaces comes from China, who in Taobao, Tmall (owned by Alibaba), and JD.com posess three of the four largest e-commerce marketplaces globally. All three are expected to expand their presence in Western markets by 2030.
The marketplace scene is continuing to evolve at pace. As well as overtaking direct eCommerce spend in categories such as retail and travel, the report predicts that the next cohort of verticals to benefit from online marketplaces will be those where buyers already use price comparison as part of the purchasing journey. These include real estate, automotive and retail, financial services.
Marketplaces will also grow to scale in new verticals. These include B2B products, where marketplaces are overcoming the longstanding practice in industries built on analogue and relationship-driven interactions by developing a tool that is closely tailored to the specific needs of their verticals. The second-hand goods market is also set to thrive with consumers demonstrating a growing sustainability conscience in their purchasing, which is, in turn, creating a wider pool of geographically diverse buyer and seller segments.