New research has found the majority of UK brands are expanding the marketplaces they sell on to reach a broader audience. The average brand now sells on four platforms for third-party (3P) selling. This number is only set to increase with two-thirds (69%) planning to expand the number of marketplaces in the next twelve months.
This research, from Rithum’s The State of 3P Commerce report surveyed 550 retailer and brand executives in the US, UK and Germany to identify growth opportunities through the 3P e-commerce model.
Recent research by RIthum found that three in four consumers (74%) are using more than one marketplace when shopping online, with the average using three. The fragmented nature of online shopping, driven by the popularity of social commerce and consumers’ demand for convenience and choice, is leading brands to increasingly embrace 3P selling.
3P commerce is different for retailers compared with brands. For retailers, 3P commerce helps them access unowned inventory. This is a business model where brands sell products directly to consumers through a retailer’s storefront, typically through a dropship or marketplace approach. This model shifts inventory risk away from retailers, who instead act as facilitators between brands and consumers. For brands, 3P commerce helps them extend their owned inventory to unowned channels. This allows brands to reach more consumers through a multichannel selling strategy.
The report explored the difficulties in on-boarding a new platform. On average it takes seven weeks for brands to bring on a new marketplace and managing an additional sales platform adds complications. The three main challenges of working with multiple platforms raised were: the need to hire more specialised talent, missed or delayed fulfilment and higher operating costs.
Those that have expanded to a new marketplace and struggled claimed the primary issues are: complaints about it from customers, the time and effort required to manage it and the marketplace being too difficult or confusing to use.
Consumers are constantly shopping around, especially with the peak season in full swing, as they browse multiple sites for the best deals and gifts. Brands are now having to expand marketplaces to keep up – and 3P selling is an important part of this.
Marketplaces are ideal for navigating a difficult economy as they create opportunities for brands to liquidate excess or slow-moving inventory in a more profitable way. The wider digital shelf space of marketplaces allows brands to more easily test different product assortments and combinations to see what resonates with customers.
To fully capitalise on the opportunity provided by marketplaces, brands need data-driven decision-making, using data from marketplaces to make informed decisions about inventory and customer preferences.
Our research found that those without a single platform pulling data from across the sales spectrum claimed a centralised tool would be a “game-changer” for making decisions on where to move inventory and which products to push.
– Philip Hall, managing director for EMEA, Rithum
