VTEX : How ecommerce and marketplace go hand in hand

Marketplaces have risen as one of the most widely adopted trends in the ecommerce space, and for good reason. Companies keep choosing this model because of its relatively low cost of implementation and the added value that it can offer to the customer experience.

This means that more and more marketplaces are appearing everyday, making the market more competitive. Data shows that there's been an explosion of global marketplace unicorns, outpacing the growth in other tech segments.

So, what does this mean for ecommerce? Is marketplace going to be the most important ecommerce business model in the future? Let's find out.

Why the hype?

Marketplace occupies a great position in consumers' top of mind, aided by the success of renowned cases such as Amazon and Mercado Libre. Companies are noticing the trend, too: in 2020, Gartner saw a 100% increase in inquiries about marketplace.

"Clients are trying to understand a little bit more about marketplace: what is the landscape like and what are the platforms. COVID-19 has accelerated adoption exponentially, but it's not the only driver, and there are other considerations for companies, such as sales channel management and the struggle to reach clients wherever they are."

Juliana Sales, Product Marketing Manager at VTEX

This is an important consideration because, through marketplace, retailers can expand their reach to different regions by integrating more third-party sellers, without being responsible for the ownership of stock and logistics or infrastructure. This same strategy can be used to test new products without the need for big investments.

"Our reason for starting a marketplace was the same as the rest of the market: you can't have all the products that clients demand because the market is too spread out."

VTEX client interviewed for a marketplace study

Gartner conducted a poll with ecommerce enterprises, and 73% of the respondents said that they expected their marketplace business to grow in 2021. This aligns with the opinions expressed by some of VTEX's clients, who have pointed to the pandemic as a clear sign that companies increasingly need access to a wider arrange of suppliers and more ways to keep up with demand.

"We noticed that, in order to compete in the current market, all other retail companies had big and bold online marketplace operations. In the end, the risk of buying every single product in every category is ridiculous if you want to compete."

VTEX client interviewed for a marketplace study What about the small entrepreneur?

Marketplaces have been godsends for business owners worldwide, since it's allowed them to sell on different online stores without the need to worry about acquiring traffic for their own websites. Thanks to the way in which some marketplaces operate, some small operations haven't had to worry about logistics or payment either.

This is the other side of the equation: marketplaces take care of some or all of the expenses related to payments, delivery and promotion, while small businesses selling in these marketplaces absorb the risk of buying stock in exchange for bigger exposure and potentially bigger earnings.

Companies still have the ability to sell in more than one marketplace, which makes it slightly more difficult to keep tabs on stock and orders. This, in turn, has highlighted the advantages offered by omnichannel, another one of the big ecommerce trends that seems to be primed for exponential growth.

So, what's the future of marketplace?

We are at the beginning of a process of synergy. Many of the clients questioned by VTEX talked about omnichannel and other trends when discussing marketplaces: seeing this business model as only the first logical step in their ecommerce strategy.

"When it comes to the marketplace offering, I see this as an opportunity to push fulfillment from every channel. You can integrate your sellers' physical stores and distribution centers to dramatically grow the number of fulfillment points and then enable this experience for your customers."

Juliana Sales, Product Marketing Manager at VTEX

The argument for marketplace growth, says Sales, is that you're going to expand your assortment and reach exponentially with very little risk.

"You're basically going to be a channel where sellers can integrate your inventory and then sell their catalog while you get a rebate out of it. When it comes to omnichannel, it's a great opportunity, but it seems more complicated because you have to manage all your fulfillment points and all your distribution centers and make sure that they are integrated."

Juliana Sales, Product Marketing Manager at VTEX

Marketplace is currently seen by ecommerce outsiders as a trend that's mainly controlled by a few big players worldwide. Nevertheless, the speed with which companies, new and established alike, have been adopting it might end up meaning that marketplaces will be the stones with which ecommerce strategies will be built in the near future.

DISCLAIMER: It is important to note that historical financial information or operational KPIs may not be comparable with publicly filed information at SEC, since VTEX did not report its financials in accordance with International Financial Reporting Standards (IFRS) prior to 2019 and certain KPIs definitions may differ from publicly filed information. You are cautioned not to place undue reliance on figures published before July 21st, 2021 as they may not be comparable to the metrics disclosed on the IPO onwards.

Written byLalo Aguilar

Lalo is a journalist with more than 5 years of experience, who now is focusing his story-telling abilities on the world of ecommerce and the quick revolution happening around it.