Let’s start with some statistics.
According to industry analyst eMarketer, the value of U.S. consumer spending on online marketplaces in 2024 is expected to hit $468.3B. The same research group predicts Walmart’s online marketplace sales alone to jump by 20.3% in 2024 to reach $10.9B.
Consumer demand for this type of shopping format continues to grow. Therefore, it is unsurprising that more and more U.S. retailers are adopting a marketplace model to serve their audience alongside their more traditional e-commerce offering.
Amazon and eBay are the originals, of course, but traditional retailers such as Walmart, Target, Kroger, and Macy’s have all launched their own marketplaces too—in a move that has helped augment the number of ranges they can sell, while—in many cases—not adding to their fulfillment burden.
In a tight-margin U.S. retail market where the cost of doing business continues to inflate and consumer willingness to splurge is curtailed, clever ways of finding new revenue streams, such as launching online marketplaces, are a natural move for retailers to make.
New Online Marketplace Strategy
This November marks the first anniversary of the launch of arts and crafts retailer Michaels’ MakerPlace, which was launched—in the company’s words—to “better support the tens of millions of creatives visiting Michaels.com each month.” By bringing this new marketplace into the world, the retailer opens up access to a huge number of additional third-party sellers.
Instantly, Michaels was able to quadruple the number of ranges it sold online by adopting a marketplace model—giving it a clear opportunity to find new audiences and drive revenue the business would otherwise have missed out on.
Elsewhere, department store chain Kohl’s has gradually expanded its marketplace over the last few years, supporting long-running efforts to reduce inventory costs.
In 2025, Macy’s digital marketplace will celebrate its third birthday. Macy’s says setting up a marketplace helps it test and customize assortments, as well as provide its partner brands with new distribution options and tools that help them grow their business with the department store.
We explore some of these examples in more detail in a white paper focused on the five megatrends set to impact retail in 2025—including a look at the revamped Bed Bath and Beyond, and how it wants to curate a narrower offering through its online marketplace as it plans to reestablish itself after a turbulent few years.
Why a Retailer Should Launch Their Own Online Marketplace
It is an obvious starting point to look at the success of Amazon as a reason why traditional retailers are adopting the model used by the digital titan. As RSR Research managing partner and distinguished U.S. retail analyst, Brian Kilcourse, tells us, “Retailers need strategies in place to stop consumers defaulting to Amazon.”
Essentially, they need to ask themselves “How do I improve the value proposition so that we become a destination”—and the move to a marketplace model is part of that, as is launching additional services for customers and developing loyalty-enhancing programs.
But we definitely should look beyond the success of Amazon as a reason for launching a marketplace because there are so many other justifications for taking this route.
Drop-shipping or giving partner brands responsibility for fulfillment can help increase customer choice with limited logistic and inventory investment—something that should be attractive to all retailers, as long as these partners can deliver a customer experience in line with brand expectations.
And with Macy’s, marketplaces enable retailers to test and learn. Partners selling through the marketplace can come and go quickly or be extended to other channels if a retailer’s audience demands—for example, a great seller on the marketplace might also find a successful home in that retailer’s store estate.
Fundamentally, retailers’ journeys into online marketplace development are about diversifying routes of supply in a market where supply chain disruption has been only too regular over the last decade. And—perhaps most importantly of all—online marketplaces are a real revenue booster at a time when retailers should be welcoming any additional income stream they can find.
Online marketplaces are one of many methods retailers planning for 2025 should consider to boost their bottom line. The market growth figures for this format speak for themselves.
Retailers looking to generate new revenue streams should talk to Exhance today about how our solutions can drive post-transaction revenue and customer loyalty to support their omnichannel strategy.
