Posted: 2020-09-15 12:28:50
Retailers Do Not Need Marketplaces
Copycat marketplaces fail
From Marketplace Pulse at Marketplace Pulse
Originally published 2020-09-15
However, most marketplaces launched by retailers fail to generate significant sales volume. Because first, the added selection is often already available elsewhere. Second, that selection expands the long tail but not the head. Third, shipping speed and experience are different. Fourth, customer support is often different too. Fifth, the marketplace doesn’t integrate into store pick up or other store-powered experiences.
Even though many retailers are looking at the marketplace Amazon built and are hoping to replicate the same, they approach it less as a business model but rather as a risk-free and investment-free way to patch up their struggling online business. Marketplaces need network effects to work and take size to start spinning the flywheel. They are not add-ons, but rather fundamentally different business models. Retailers are trying to benefit from having them while hoping to keep them as one of the dozen options online. Amazon is not a retailer that also happens to run a marketplace.
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