Online marketplaces are booming in Australia, offering brands and sellers an additional channels to reach consumers and share the logistics load. However, not all marketplaces are equal and Australia’s biggest platforms are pitching sellers on their particular strengths.
Marketplaces – such as Amazon, eBay and Catch – grew 74.8 per cent in the past year alone, according to data from Australia Post, suggesting brands are increasingly taking the marketplace opportunity. That trend is likely to continue according to Kogan’s CEO.
“I think the online retail industry in Australia will continue to grow very quickly and marketplaces are a great thing for the consumer and they’re also a great thing for retailers that have a strong competitive advantage whether it’s the ability to have unique products or a strong brand or a more efficient supply chain,” a spokesperson for Kogan said at Sydney’s Online Retailer conference last week.
“Marketplace will weed out those who don’t have a strong competitive advantage because they won’t be able to compete. Others are going to very quickly win more and more market share from them. So it’s a very exciting time for both being a consumer and having more choice than ever and being a business. If you have a unique proposition, marketplaces are your friend.”
During the same event, representatives from the largest online marketplaces in Australia explained their appeal and how they see the future of marketplaces here.
While each were delivering a similar service – an online platform for brands and sellers to offer products direct to customers – the companies each insisted they were better suited to certain types of sellers and consumers.
The Seattle giant is about relentless efficiency, and that’s what it pitches marketplace sellers on.
Unlike several overseas launches, Amazon launched in Australia with both its retail and marketplace services. According to a company spokesperson from Amazon Australia, the launch here was the most successful in Amazon history and in addition to the recent Prime launch and new fulfilment centre, there are more features coming for sellers.
For now, the biggest appeal remains Fulfilment by Amazon (FBA), according to the spokesperson. The service, where Amazon handles the storage and delivery of stock, as well as customer service, allows marketplace sellers to scale quickly and creates a long term global opportunity.
The service takes advantage of Amazon’s logistics network, including mammoth fulfilment centres in Victoria and Sydney. Utilising FBA also gives sellers access to the Prime shipping service where products are delivered within two days. Amazon argues its a logistics service that would be impossible for smaller brands and sellers to develop on their own.
“Fulfilment by Amazon is probably the biggest opportunity for domestic sellers,” a spokesperson said.
“It’s a very hands off-type of approach that a seller can take about delivering products to the final customer.”
FBA also opens the door to global expansion, according to the spokesperson, because Amazon marketplaces in other countries all operate in largely the same way and expertise gained in the domestic market translates well overseas.
The spokesperson suggested the best thing Amazon marketplace sellers could do is “go wide” – offer as bigger range of products as possible to take advantage of Amazon’s long tail – and provide customers with a highly detailed catalogue and profit information to mimic an in-store experience.
Online retailer Catch, best known for its clearance offers and sub retail prices, also offers a marketplace service for brands. Currently there are around 3000 sellers on the Catch marketplace with 1.4 million SKUs, accounting for 30 per cent of Catch revenue.
But the Catch identity extends to its marketplace and the company is increasingly selective about the brands and products it allows on the marketplace. According to a company spokesperson, maintaining the “DNA” of the Catch brand – “clearance, deals and excitement” – is what differentiates Catch from its marketplace competitors.
“We wanted to launch a marketplace that’s going to be different from the other big ones, which was eBay and Amazon.”
“[Maintaining the excitement] is much more challenging thing to do because you don’t control what the sellers want to sell. Because it’s an open marketplace.”
To solve that challenge Catch is increasingly “curating” its marketplace sellers and asks they mainly sell their clearance range, usually below retail price.
“[Catch] wants your deals range. Because customers come to Catch, they don’t want to buy full price. If they wanted to buy full price they wouldn’t be coming to Catch… So we focus on that,” the spokesperson said.
Catch also reduces the amount of sellers selling the same product, with the argument that, despite reduced competition, it is in the sellers interest to offer the best value and ensure the sustainability of the platform.
Once known commonly by consumers as ‘FleaBay’, Australia’s oldest major online marketplace has changed significantly from its days as an online auction house dealing largely with secondhand goods. The appeal for sellers now is a “marketing and technology platform” with strong mobile and click and collect propositions, and a considerable consumer base, according to eBay.
“We have 21 million visitors a week coming to the site. I think out the next seven ecommerce sites together, we have more uniques than those combined,” a company spokesperson said.
Those numbers rival the biggest newspapers and television stations in Australia and present a significant opportunity for sellers, the spokesperson said
According to a company spokespersons, of the items sold on eBay, 91 per cent are brand new and 90 per cent sell at a fixed price. They also said 60 per cent of traffic and sales come through mobile channels.
“We really led the charge on mobile commerce and our app is thew most downloaded ecommerce app in the world. In Australia alone we’ve had over eight million downloads of the eBay app.”
Another argument offered by the spokesperson is the potential synergy of eBay and instore experiences. According to the spokesperson, eBay’s click and collect proposition can also be a customer acquisition strategy, particularly for larger retailers, some of which see a 70 per cent rate of click and collect on purchases, leading to a 30 per cent attachment rate.