A new report from the Connected Commerce Council (3C) illustrates the economic benefits of online marketplaces for retail brands: Not only do they add value for retailers by facilitating customer feedback and reducing expansion and start-up costs, but they are major engines for revenue generation as well.
Data from the report shows that in recent years, online marketplaces have provided $145.1 billion in economic value to small businesses, including $59 billion in gains from helping businesses reach more customers, $37 billion in increased brand exposure, and nearly $30 billion in cost savings.
“Online marketplaces provide individual sellers and local stores access to millions of customers worldwide,” said Jake Ward, 3C President.
“They provide access to more customers, boost sellers’ legitimacy, and give consumers more confidence than they would have with independent websites.”
We know the major players and well-established names when it comes to online marketplaces: These are the likes of Amazon
However, as shopping has shifted online during the pandemic, more of these curated marketplaces are cropping up in 2020 to facilitate brand and product discovery—and they’re targeting more niche market segments.
These emerging online marketplaces are addressing a major pain point when it comes to online shopping: The difficulty that comes with choice-making.
“Psychology teaches us that faced with the overwhelming number of options, we often choose to do nothing. It’s better for retailers to categorize their offerings to help consumers structure their options—and that’s where curatorial platforms come in,” says Ana Andjelic, strategy executive and author of The Business of Aspiration.
But that’s not all these platforms do for shoppers. Andjelic went on to say that the curation new platforms are providing for shoppers add perceived value, too.
“We are not buying a bag, we are buying a bag that is styled by X or is selected by Y or is part of the collection Z,” she said. “Products are more valuable if they are part of a curated selection. Curation gives them the story, the point of view, the cultural associations.”
That’s certainly the approach we see at work with The Lobby.
Founded by former Google Shopping product lead Abigail Holtz and Y-Combinator alum Chad Remesch, The Lobby is working to bridge the gap between online and in-store shopping.
The platform offers a shopping experience that mimics in-person buying via shoppable video. Influencer-created videos allow shoppers to see details, learn about fit, and get styling tips from familiar faces they know and trust (without leaving the house.)
Plus: Shoppers can try items before they buy them with a 14-day free trial period, aimed at eliminating buyer concerns about returns.
Partner brands for The Lobby are selected based on a variety of factors, including uniqueness and quality of products, innovation, sustainability practices, founder diversity, brand story, and more.
While they were unable to share specific metrics around sales generated for partner retailers, they did share that for emerging brands like Donni, The Lobby has already become a top sales channel.
In the case of another online marketplace italist, shoppers are able to search, discover, and buy from a selection of professionally curated luxury and designer fashion imported directly from Italy.
Founded by Italian entrepreneur Diego Abba, italist partners with more than 1,000 international brands and boutiques who are able to sell their products at the Italian retail price—which is up to 40% lower than prices offered to the rest of the world, including express shipping and import duties.
Italist includes offerings for women, men, and children from brands like Gucci, CELINE, Paco Rabanne, and Opening Ceremony, as well as up-and-coming designers like Khaite, Berluti, and Staud.
Growth and adoption thus far has been strong: Their customer base is up 25% year-over-year, they’ve brought on 50 new partner brands so far in 2020, and 60% of their customers are repeat buyers.
This is good news for independent boutiques across Italy who’ve benefited from the expanded reach the platform provides—especially during COVID-19 shut downs.
Leaning on an AI-powered shopping experience, The Yes is another iteration on the online marketplace (in app form) that allows shoppers to discover relevant, personalized fashion product suggestions by voting ‘yes’ or ‘no’ on items from more than 150 brands, including Prada, Erdem, Everlane, Saint Laurent, and more.
Co-founded by Julie Bornstein (StichFix, Nordstrom
What’s more: Customer loyalty on the platform is strong. 35% of all customers have come back and purchased again within a month.
So will we see more of these curated online marketplaces in the future?
If you ask Andjelic, she believes that even if not through a facilitator of a curated marketplace, it will be imperative for brands to focus on storytelling with a unique point of view looking forward.
“Google and Amazon make everything a commodity, and one of the surest ways to create and preserve a brand’s market is to protect it with a story and a point of view,” she said.
“Brands have to flip the script of their brand strategy from broadcasting product benefits to the story—and to think like curators.”