Marketplace mania is taking hold in Australia: Will shoppers see Amazon clones everywhere?
Friday, November 3, 2017/
Christmas shopping is heating up and as global retail giants start setting up their Australian operations, local online retail platforms are determined to become one-stop shops catering to every customer desire.
Earlier this week troubled department store Myer said it would try teaming up with other “retail partners” to sell lifestyle goods through the ‘Myer Market’ platform, creating a separate online retail portal to the store’s main site.
Meanwhile, other online retail success stories had good news to share about their forays into the marketplace world. Catch Group’s Catch marketplace, which launched in June, now generates $1 million in sales a week.
When Catch marketplace launched five months ago, Catch Group co-founder Gabby Leibovich told SmartCompany the business had learned from “Jeff Bezos and his mates — he says marketplaces are leading the world. The consumer wants variety”.
Catch Group chief executive Nati Harpaz says there is “no limit” to the number of businesses that can join the marketplace, but with more than 400 businesses applying each week, the retailer is charged with finding the partners that best fit what customers want.
He observes when a “sexy word” like “marketplace” pops up in the retail sphere, everyone wants to use it, but says Catch has a unique advantage in the space because it is focused on Australian businesses, and the core of the business is about maintaining control over its own stock.
“Our pitch is to build an Australian competitive advantage, and a lot of Australian brands, they’re coming on board,” Harpaz says.
Catch isn’t the only business with a focus on variety, with 2017 Smart50 member MyDeal Australia announcing it has signed up 50 fashion retailers to its platform over the past month. The company is also looking to offer holiday deals through a partnership with Travel Ignite Group from next week, founder Sean Senvirtne told Business Insider.
The spectre of Amazon is never far away from discussions about Australian online retail, but beyond the reality of the monolith’s Australian launch, local retail leaders say their move towards a marketplace format has more to do with customer demands for a huge variety of products in one place.
“We think we have the best of both worlds, a potent core offer of unbeatable value products, with the marketplace providing an amazing assortment of categories and products, seamlessly wrapped around our amazing specials,” he said in a statement this week.
Catch thinks it can generate around 40% of overall sales through the marketplace side of the business in the next 12 months.
The multi-seller retail format has also extended to businesses which previously only stocked their own brands: online fashion retailer Esther rebranded to Esther and Co earlier this year, with the $5 million business welcoming other fashion brands onto its site for the first time.
Curating a desired range key
Retail analysts have previously told SmartCompany the sector is set for a shake-up not merely because of the new options offered by retailers like Amazon, but also because of the strength of these retailers when it comes to dealing with several different brands and item lines.
“Amazon’s closed system allow a consistent and high quality consumer experience that will potentially win over many consumers in Australia and steer them away from traditional bricks and mortar stores,” Euromonitor International senior research analyst Hianyang Chan said in September.
However, setting up a retailer business that sells or partners with third party brands effectively is incredibly challenging, says founder of Adore Beauty, Kate Morris.
Reflecting on the rise of marketplaces, she says while retailers have championed the idea that this is what customers want, she has not heard such strong calls for shoppers for more marketplace formats.
“One of the challenges for marketplaces is ‘how is it not just like eBay?'” she asks.
“I haven’t really heard anyone from the customer side saying this is what shoppers are after.”
Adore Beauty stocks a variety of makeup products and Morris says she is glad she has control over the lines and logistics for delivering these to customers, reflecting that for some retailers moving to a marketplace format, the challenge will be in delivering consistent service to customers across a variety of third party brands.
Overall, any business looking to partner with a third party has to ask whether the products on offer are the ones your customers actually want, rather than just volume.
“When part of your value offering is in the curation, you need to make sure this is the kind of product your customer is going to be interested in and like,” she says.