Before we dive into this allow me to give a definition of a marketplace and a platform making sure we’re aligned with the same context on those terms.
A marketplace is a place where people can shop products or services by one brand or several brands. A marketplace handles the transaction up till the payment itself. A marketplace can be an app, a website or a local store.
A platform connects buyers with sellers. A platform can offer a marketplace as a service in the format of an app, website or local store.
In short. The marketplace is the shopping itself. The platform is the host and service provider for the marketplace. Well.. that’s just a definition. If you have a look at Shopify, Amazon, or even Decathlon, the distinctiveness between being a platform or a marketplace blurs as they both are necessary to serve customers’ demand. The definition of both blend into one hybrid definition. They leverage one another. If you want to read more on this, I’ve found this a great article articulating also the pros and cons but that shouldn’t be your concern.
In short, my personal tip: don’t fuss about the definition as this will keep evolving over time and a definition is just a mental model to cope with our inability to get to a first principle approach.
BUT … it is important to pick the marketplace (or platform – see what I did there) that matches your product type and, if you feel this matters to you, your brand. The marketplace is the match for your product. The platform is rather more of importance on the brand image you think you need to express.
Allow me to dig a bit deeper.
Let us keep it close to home for now (no USA or China examples)
Decathlon probably figured out by now (again – pure assumption from my side) that the only way to grow is to become a marketplace first, maybe later even a platform. As offline retail stores only can grow as much until their local footprint is saturated, there’s relatively not much growth left unless you expand the square meters. Simple, right? Online is a different story.
Doing both would be very ambitious, but feasible. You could just build more stores as Hunkemöller did (p16). Again… it should fit the product & product type and thus the logic and costs. I’ll get to that logic in a minute.
There a few reasons for retailers to move in this direction of becoming a marketplace. I’m not claiming I know them all, yet there are some benefits that come to mind when altering this business model:
- More products to sell and thus widening your target audience by category, brands, or interest
- Cost efficiency of existing retail square meters (pick-up in-store, return handling, workshops, etc.)
- “Infinite” growth by online expansion (return per € is potentially higher than offline)
- Offline to online processes are easier to set up, maintain and change according to expansion than the other way around.
One new service that caught my eye in the Decathlon strategy: travel. Good move to keep your fans close and offer them something more. If done well, they could incentivize user-generated content to purpose a very nice organic and cost-efficient exposure over time. Product + Travel = test = good review & pictures. Share that on social and you got very nice leverage towards a (potentially new) audience. Read: Instagram = discovery = shopping.
There’s a reason why pure players grow so fast. They don’t have a legacy of offline and complex retail handling (stock, logistics to stores in spread-out locations, …). The other way around: retailers have far more benefits in the end due to their experience of making it possible to buy anywhere (make that near where) you want. Pure players allow you to buy any time you want. I’m not sure which one the customer prefers, to be honest, yet there’s a logic to it and it comes down to products and product types.
Depending on the marketplace or platform you tend to see different strategies and ways they approach the market. And they all have their reasons. It has a certain emotional and product type-driven logic to it.
Selecting a marketplace or platform to join
Ok. So… A lot of agencies tend to strategize about these marketplaces and platforms but that only makes sense if you’re planning on becoming a marketplace or a platform.
For most of us, it only comes down to deciding if a marketplace makes sense for your
business product and product types. After this simple concept, you’ll be able to pick a marketplace far more easily yourself.
You could maybe use some extra coaching or help on how to organize this or to tackle this challenge step by step. Yet… the question remains fairly simple: “Is a marketplace something I could consider for my
business product or product type?” It will also make it easier to spot if something probably sells or not by a competitor using a marketplace or joining a platform.
Belgium is not The Netherlands
- 2dehands.be – open platform (don’t handle transactions) for anything used.
- Booksinbelgium.be – open platform for second-hand books by people and shops (tnx Michael Van Den Reym)
- Becycled.be/nl/ – open platform for new and second-hand bikes (tnx Michael Van Den Reym)
- Listminut – open platform to get a little job done in the house, around the garden, … (tnx again Michael Van Den Reym)
- Beslist.be – actually an affiliate site (?) for all types of products
- Autoscout24.be – open platform for second-hand cars
- And I’m forgetting a lot of others for sure
It makes sense for 2dehands.be to be a platform rather than a marketplace as the transaction of anything used is far more a challenge than a convenience. If you’re buying a bike, car, or even some clothes, … you’ll eventually want to see them at pick-up and then close the deal or not. I would state that the secondhand buyer is even more critical than the firsthand buyer as the products are not new and thus come with an extra layer of challenges.
Notice that in Belgium we have mostly platforms (don’t handle transactions) that serve as a gateway to a product or service. Nothing like bol.com or amazon.com. Seems like no one is willing to take on the challenge to deal with the transactional part of the sale on an open platform.
Notice that we haven’t got any specific second-hand Elektro marketplace. The first Belgian retailer that comes to mind is Elektro Loeters. Not second-hand, but mainly stock sales.
Let us assume Mediamarkt was Belgian. Mediamarkt would probably never become a platform or marketplace opening up to other retailers or companies as electronics are mainly high research products. It wouldn’t make sense unless the research can be altered in services of product specialism by third parties. As said before, not up to us to strategize. Up to us to navigate the current market and adapt along the way.
Could it be that allowing to open up the infrastructure to serve a marketplace is far more complex than dealing with own stores? Probably yes. More different types of products than the sellers are used to handle translates itself into more logistical challenges, more specific processes, better data handling, complex IT, and even more (educated) staff.
OK. Enough on the platform stuff.
Some practical examples to sketch how you can think about this
The single most important question to ask: is the customer opting in on a challenge or not when buying my product?
For instance. Does it make sense to sell headboards of beds on beslist.be? Personally, I don’t think so. Few questions come to mind. Who buys this separately? Depending on the type, the brand, how to attach it, what color this headboard really is, … I’d think you would need to research a bit to order this. Besides the potentially low effort to research, the odds of selling this as an apart item seems like a no-go to me.
Besides the shitty integration (pictures missing in the feed), all the inventory comes from one supplier: La Redoute. I get it. It’s easier to go all-in with all the inventory than to select the categories that would really fit the marketplace/platform. The reason for this could be anything: getting eye-balls and give impression report to the C-level? Not being equipped with the right tools to split the feeds? No insights on that level? No time? Junior profiles? Could be anything. Whatever.
If people are in for a challenge, they opt in for friction and trigger the reward mechanism. That could be discovering all features, information about how to use the product and the fit for the problem, etc. meaning these products are research-heavy and as a platform, you should heavily invest in content, feature comparison, tools to help you pick and select, etc. So it also makes sense for certain businesses to open a second, third or fourth retail store. High-end products, the use of video, audio, … it all makes sense now, right? Feeding the challenge, while removing friction on the platform as much as possible.
So… all those Belgian platforms not being marketplaces totally make sense, right? Bikes need research. Lots of friction. Cars. Books, although with a simple pre-read chapter, some pictures, and clear payment en delivery options could do just fine. Amazon started with books. Rings a bell?
If customers aren’t in for a challenge, they’re choosing convenience over the challenge. That’s where platforms come in easily where friction should be as low as possible to shop and buy. This also means that if you, as a reseller, choose to go for these kinds of low effort products (for example fast-moving products), you’re basically competing on removing friction and tap into the pay rate of the market to reach buyers that will evaluate you on the same playing field of your competitors. In the end, it will be very hard to build up a sustainable contribution margin.
Removing friction is the macro (internet) trend. Opting in on the challenge is the emotional connection with every act.
Same pattern everywhere
Allow me to give you an example that recently was on the radio. All major banks in Belgium will team up to redesign and repurpose the current network of ATMs (in Dutch).
For convenience purposes, it makes sense that they partner up to make an as frictionless as possible network for all. Within a five-kilometer range of almost every city or village, you should find an ATM, despite which bank.
As services get more digitized but the currently existing (but finite) need for cash, this is a win-win-win situation. Lowest distance to cash, fewer costs for all, more convenience, and no challenge whatsoever for the customer.
Trimming down the office spaces and allowing to move even further in the macro trend of digitizing their services leverages the possibility for better customer responsiveness (customer intimacy model) while lowering friction (operational excellence) and rides the macro trend of renting space (pay for using) instead of owning (pay for the asset).
Think of it as “Is my product type a challenge or not” and you know what to do. If you sell products that are a challenge to buy, you probably better of with your own e-commerce website. If not, you could consider a marketplace or platform – for instance if you’re selling Nike sneakers – as one will do the small amount of research elsewhere online. Or offline.
Need some feedback or help.
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